82 FR 5367 - Adjustments to Civil Monetary Penalty Amounts

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 11 (January 18, 2017)

Page Range		5367-5373
FR Document		2017-00421

The Securities and Exchange Commission (the ``Commission'') is adopting a final rule to implement the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the ``2015 Act''), which amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (the ``Inflation Adjustment Act''), as previously amended by the Debt Collection Improvement Act of 1996 (the ``DCIA''). The 2015 Act requires all agencies to annually adjust for inflation the civil monetary penalties that can be imposed under the statutes administered by the agency. Pursuant to this requirement, this final rule performs the first annual adjustment for inflation of the maximum amount of civil monetary penalties administered by the Commission under the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and certain penalties under the Sarbanes-Oxley Act of 2002. This adjustment will apply to all penalties imposed after the effective date of this final rule for violations after November 2, 2015. For violations that occurred on or before November 2, 2015, the Commission is reinstating the penalty amounts in the Commission's prior penalty adjustments performed under the DCIA.

Federal Register, Volume 82 Issue 11 (Wednesday, January 18, 2017)

[Federal Register Volume 82, Number 11 (Wednesday, January 18, 2017)]
[Rules and Regulations]
[Pages 5367-5373]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-00421]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 201

[Release Nos. 33-10276; 34-79749; IA-4599; IC-32414]

Adjustments to Civil Monetary Penalty Amounts

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (the ``Commission'') is
adopting a final rule to implement the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015 (the ``2015 Act''),
which amended the Federal Civil Penalties Inflation Adjustment Act of
1990 (the ``Inflation Adjustment Act''), as previously amended by the
Debt Collection Improvement Act of 1996 (the ``DCIA''). The 2015 Act
requires all agencies to annually adjust for inflation the civil
monetary penalties that can be imposed under the statutes administered
by the agency. Pursuant to this requirement, this final rule performs
the first annual adjustment for inflation of the maximum amount of
civil monetary penalties administered by the Commission under the
Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, the Investment Advisers Act of 1940,
and certain penalties under the Sarbanes-Oxley Act of 2002. This
adjustment will apply to all penalties imposed after the effective date
of this final rule for violations after November 2, 2015. For
violations that occurred on or before November 2, 2015, the Commission
is reinstating the penalty amounts in the Commission's prior penalty
adjustments performed under the DCIA.

DATES: Effective Date: January 18, 2017.

FOR FURTHER INFORMATION CONTACT: James A. Cappoli, Assistant General
Counsel, Office of the General Counsel, at (202) 551-7923, or Stephen
M. Ng, Senior Counsel, Office of the General Counsel, at (202) 551-
7957.

SUPPLEMENTARY INFORMATION:

I. Background

This final rule implements the 2015 Act,\1\ which amended the
Inflation Adjustment Act.\2\ The Inflation Adjustment Act previously
had been amended by the DCIA \3\ to require that each federal agency
adopt regulations at least once every four years that adjust for
inflation the civil monetary penalties (``CMPs'') that could be imposed
under the statutes administered by the agency. Pursuant to the
requirements of the DCIA, the Commission previously adopted regulations
in 1996, 2001, 2005, 2009, and 2013 to adjust the maximum amount of the
CMPs that could be imposed under the statutes the Commission
administers.\4\
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\1\ Public Law 114-74 Sec. 701, 129 Stat. 599-601 (Nov. 2,
2015), codified at 28 U.S.C. 2461 note.
\2\ Public Law 101-410, 104 Stat. 890-892 (1990), codified at 28
U.S.C. 2461 note.
\3\ Public Law 104-134, Title III, Sec. 31001(s)(1), 110 Stat.
1321-373 (1996), codified at 28 U.S.C. 2461 note.
\4\ See Release Nos. 33-7361, 34-37912, IA-1596, IC-22310, dated
November 1, 1996 (effective December 9, 1996), previously found at
17 CFR 201.1001 and Table I to Subpart E of Part 201; Release Nos.
33-7946, 34-43897, IA-1921, IC-24846, dated January 31, 2001
(effective February 2, 2001), previously found at 17 CFR 201.1002
and Table II to Subpart E of Part 201; Release Nos. 33-8530, 34-
51136, IA-2348, IC-26748, dated February 9, 2005 (effective February
14, 2005), previously found at 17 CFR 201.1003 and Table III to
Subpart E of Part 201; Release Nos. 33-9009, 34-59449, IA-2845, IC-
28635, dated February 25, 2009 (effective March 3, 2009), previously
found at 17 CFR 201.1004 and Table IV to Subpart E of Part 201; and
Release Nos. 33-9387, 34-68994, IA-3557, IC-30408, dated February
27, 2013 (effective March 5, 2013), previously found at 17 CFR
201.1005 and Table V to Subpart E of Part 201.

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[[Page 5368]]

The 2015 Act replaces the inflation adjustment mechanism prescribed
in the DCIA with a new mechanism for calculating the inflation-adjusted
amount of CMPs. Each agency was first required to use this new
mechanism to adjust the maximum amount of its CMPs \5\ in an initial
``catch-up'' adjustment.\6\ Pursuant to this requirement, the
Commission issued an interim final rule adjusting its CMPs on June 27,
2016 (the ``June 2016 interim final rule'').\7\ After performing the
catch-up adjustment, each agency must now perform annual adjustments
for inflation, and publish these adjustments in the Federal Register by
January 15 of each calendar year.\8\
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\5\ The 2015 Act also applies to minimum penalty amounts and
penalty ranges. See 28 U.S.C. 2461 note Sec. 5(a). All of the
statutes administered by the Commission, however, only include
maximum penalty amounts. Thus, in this final rule, we only refer to
the effect of the 2015 Act on maximum penalty amounts.
\6\ 28 U.S.C. 2461 note Sec. 4(b)(1); Office of Management and
Budget, Implementation of the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (February 24, 2016) (``2016
OMB Guidance'') at 1, available at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.
\7\ Release Nos. 33-10104; 34-78156; IA-4437; IC-32162 (June 27,
2016).
\8\ 28 U.S.C. 2461 note Sec. 4; 2016 OMB Guidance at 4.
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A CMP is defined in relevant part as any penalty, fine, or other
sanction that: (1) Is for a specific amount, or has a maximum amount,
as provided by federal law; and (2) is assessed or enforced by an
agency in an administrative proceeding or by a federal court pursuant
to federal law.\9\ This definition applies to the monetary penalty
provisions contained in four statutes administered by the Commission:
The Securities Act of 1933; the Securities Exchange Act of 1934 (the
``Exchange Act''); the Investment Company Act of 1940; and the
Investment Advisers Act of 1940. In addition, the Sarbanes-Oxley Act of
2002 provides the Public Company Accounting Oversight Board (the
``PCAOB'') authority to levy civil monetary penalties in its
disciplinary proceedings pursuant to 15 U.S.C. 7215(c)(4)(D).\10\ The
definition of a CMP in the Inflation Adjustment Act encompasses such
civil monetary penalties.\11\
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\9\ 28 U.S.C. 2461 note Sec. 3(2).
\10\ 15 U.S.C. 7215(c)(4)(D).
\11\ The Commission may by order affirm, modify, remand, or set
aside sanctions, including civil monetary penalties, imposed by the
PCAOB. See Section 107(c) of the Sarbanes-Oxley Act of 2002, 15
U.S.C. 7217. The Commission may enforce such orders in federal
district court pursuant to Section 21(e) of the Securities Exchange
Act of 1934. As a result, penalties assessed by the PCAOB in its
disciplinary proceedings are penalties ``enforced'' by the
Commission for purposes of the Inflation Adjustment Act. See
Adjustments to Civil Monetary Penalty Amounts, Release No. 33-8530
(Feb. 4, 2005) [70 FR 7606 (Feb. 14, 2005)].
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II. Adjusting the Commission's Penalty Amounts for Inflation

This final rule implements the first of the required annual
adjustments under the 2015 Act for all penalties under the Securities
Act, the Exchange Act, the Investment Company Act, and the Investment
Advisers Act, and certain penalties under the Sarbanes-Oxley Act.
As the baseline in calculating these new penalty amounts, the
Commission uses the penalty amounts in the Commission's June 2016
interim final rule. The penalty amounts in that interim final rule used
the new inflation adjustment mechanism in the 2015 Act as part of the
``catch-up adjustment'' required by that Act. The Commission affirms
that the amounts in the June 2016 interim final rule were correct and
that the adjusted amounts were appropriate.\12\
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\12\ The 2015 Act provided that agencies could seek approval
from OMB to reduce the amount of the catch-up adjustment required by
the 2015 Act (a ``reduced catch-up determination'') if: (1) The
otherwise required increase of the maximum amount of the CMPs
administered by the agency would have a negative economic impact, or
(2) the social costs of adopting the otherwise required increase of
the maximum amount of these CMPs would outweigh the benefits. See 28
U.S.C. 2461 note Sec. 4(c); 2016 OMB Guidance at 3. As part of the
June 2016 interim final rule, the Commission determined that it was
not necessary to seek a reduced catch-up adjustment determination,
but requested comments on whether the Commission should reconsider
this decision. See Release No. 33-10104 at 8. The Commission did not
receive any comments on this topic and the Commission affirms its
decision not to seek a reduced catch-up adjustment determination.
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Pursuant to the 2015 Act, the Commission now adjusts the penalty
amounts in the June 2016 interim final rule by multiplying these
amounts by the percentage change between the Consumer Price Index for
all Urban Consumers (``CPI-U'') for October 2015, and the October 2016
CPI-U.\13\ OMB has provided its calculation of this multiplier (the
``CPI-U Multiplier'') to agencies.\14\ After multiplying the June 2016
interim final rule amounts by this multiplier, the Commission must
round all penalty amounts to the nearest dollar to determine the new
inflation-adjusted penalty amounts.
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\13\ 28 U.S.C. 2461 note Sec. 5.
\14\ Office of Management and Budget, Implementation of the 2017
Annual Adjustment Pursuant to the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (Dec. 16, 2016) (``2017 OMB
Guidance'') at 1, available at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2017/m-17-11_0.pdf.
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For example, the CMP for certain insider trading violations by
controlling persons under Exchange Act Section 21A(a)(3) \15\ was
readjusted for inflation on August 1, 2016, to $1,978,690. To determine
the new CMP under this provision, the Commission multiplies the current
CMP by the CPI-U Multiplier of 1.01636, and rounds to the nearest
dollar. Thus, the new CMP for Exchange Act Section 21A(a)(3) is
$2,011,061.
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\15\ 15 U.S.C. 78u-1(a)(3).
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Below is the Commission's calculation of the new penalty amounts
for the penalties it administers.

----------------------------------------------------------------------------------------------------------------
Penalty
amounts in New adjusted
U.S. code citation Civil monetary penalty June 2016 CPI-U penalty
description interim final multiplier amounts
rule
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15 U.S.C. 77h-1(g) (Securities Act For natural person......... $8,156 1.01636 $8,289
Sec. 8A(g)). For any other person....... 81,559 1.01636 82,893
For any other person/fraud. 407,794 1.01636 414,466
For natural person/fraud/ 163,118 1.01636 165,787
substantial losses or risk
of losses to others or
gains to self.
For any other person/fraud/ 788,401 1.01636 801,299
substantial losses or risk
of losses to others or
gain to self.
15 U.S.C. 77t(d) (Securities Act For natural person......... 8,908 1.01636 9,054
Sec. 20(d)). For any other person....... 89,078 1.01636 90,535
For natural person/fraud... 89,078 1.01636 90,535
For any other person/fraud. 445,390 1.01636 452,677

[[Page 5369]]

For natural person/fraud/ 178,156 1.01636 181,071
substantial losses or risk
of losses to others.
For any other person/fraud/ 890,780 1.01636 905,353
substantial losses or risk
of losses to others.
15 U.S.C. 78u(d)(3) (Exchange Act For natural person......... 8,908 1.01636 9,054
Sec. 21(d)(3)). For any other person....... 89,078 1.01636 90,535
For natural person/fraud... 89,078 1.01636 90,535
For any other person/fraud. 445,390 1.01636 452,677
For natural person/fraud/ 178,156 1.01636 181,071
substantial losses or risk
of losses to others or
gains to self.
For any other person/fraud/ 890,780 1.01636 905,353
substantial losses or risk
of losses to others or
gain to self.
15 U.S.C. 78u-1(a)(3) (Exchange Act Insider Trading-- 1,978,690 1.01636 2,011,061
Sec. 21A(a)(3)). controlling person.
15 U.S.C. 78u-2 (Exchange Act Sec. For natural person......... 8,908 1.01636 9,054
21B). For any other person....... 89,078 1.01636 90,535
For natural person/fraud... 89,078 1.01636 90,535
For any other person/fraud. 445,390 1.01636 452,677
For natural person/fraud/ 178,156 1.01636 181,071
substantial losses or risk
of losses to others.
For any other person/fraud/ 890,780 1.01636 905,353
substantial losses or risk
of losses to others.
15 U.S.C. 78ff(b) (Exchange Act Exchange Act/failure to 525 1.01636 534
Sec. 32(b)). file information
documents, reports.
15 U.S.C. 78ff(c)(1)(B) (Exchange Foreign Corrupt Practices-- 19,787 1.01636 20,111
Act Sec. 32(c)(1)(B)). any issuer.
15 U.S.C. 78ff(c)(2)(B) (Exchange Foreign Corrupt Practices-- 19,787 1.01636 20,111
Act Sec. 32(c)(2)(B)). any agent or stockholder
acting on behalf of issuer.
15 U.S.C. 80a-9(d) (Investment For natural person......... 8,908 1.01636 9,054
Company Act Sec. 9(d)). For any other person....... 89,078 1.01636 90,535
For natural person/fraud... 89,078 1.01636 90,535
For any other person/fraud. 445,390 1.01636 452,677
For natural person/fraud/ 178,156 1.01636 181,071
substantial losses or risk
of losses to others or
gains to self.
For any other person/fraud/ 890,780 1.01636 905,353
substantial losses or risk
of losses to others or
gain to self.
15 U.S.C. 80a-41(e) (Investment For natural person......... 8,908 1.01636 9,054
Company Act Sec. 42(e)). For any other person....... 89,078 1.01636 90,535
For natural person/fraud... 89,078 1.01636 90,535
For any other person/fraud. 445,390 1.01636 452,677
For natural person/fraud/ 178,156 1.01636 181,071
substantial losses or risk
of losses to others.
For any other person/fraud/ 890,780 1.01636 905,353
substantial losses or risk
of losses to others.
15 U.S.C. 80b-3(i) (Investment For natural person......... 8,908 1.01636 9,054
Advisers Act Sec. 203(i)). For any other person....... 89,078 1.01636 90,535
For natural person/fraud... 89,078 1.01636 90,535
For any other person/fraud. 445,390 1.01636 452,677
For natural person/fraud/ 178,156 1.01636 181,071
substantial losses or risk
of losses to others or
gains to self.
For any other person/fraud/ 890,780 1.01636 905,353
substantial losses or risk
of losses to others or
gain to self.
15 U.S.C. 80b-9(e) (Investment For natural person......... 8,908 1.01636 9,054
Advisers Act Sec. 209(e)). For any other person....... 89,078 1.01636 90,535
For natural person/fraud... 89,078 1.01636 90,535
For any other person/fraud. 445,390 1.01636 452,677
For natural person/fraud/ 178,156 1.01636 181,071
substantial losses or risk
of losses to others.
For any other person/fraud/ 890,780 1.01636 905,353
substantial losses or risk
of losses to others.
15 U.S.C. 7215(c)(4)(D)(i) For natural person......... 131,185 1.01636 133,331
(Sarbanes-Oxley Act Sec. For any other person....... 2,623,700 1.01636 2,666,624
105(c)(4)(D)(i)).
15 U.S.C. 7215(c)(4)(D)(ii) For natural person......... 983,888 1.01636 999,984
(Sarbanes-Oxley Act Sec. For any other person....... 19,677,750 1.01636 19,999,678
105(c)(4)(D)(ii)).
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Pursuant to the 2015 Act, the Commission has determined that the
adjusted penalty amounts in this final rule (and all penalty
adjustments performed pursuant to the 2015 Act) will apply to penalties
imposed after the effective date of the adjustment for violations that
occurred after November 2, 2015, the 2015 Act's enactment date.

[[Page 5370]]

Consistent with this determination, the Commission is reinstating the
penalty amounts contained in its prior penalty adjustments under the
DCIA for violations that occurred from December 10, 1996, through
November 2, 2015.\16\
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\16\ One commenter to the June 2016 interim final rule requested
that the Commission re-evaluate the application of the adjusted
penalty amounts included in that interim final rule to violations
that occurred before the enactment of the 2015 Act (see Ltr. from
Wilmer Cutler Pickering Hale and Dorr LLP, Aug. 15, 2016). Our
determination to apply the penalty amounts in this final rule to
violations that occurred after November 2, 2015, renders the
commenter's request moot. As explained below, the penalty amounts in
this final rule supersede the penalty amounts in the June 2016
interim final rule.
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The Commission's prior penalty adjustments under the DCIA were
previously included in the Code of Federal Regulations at 17 CFR
201.1001through 1005 and Tables I through V to Subpart E. In the June
2016 interim final rule, Section 201.1001 and Table I were replaced
with the new penalty amounts from the interim final rule, and Sections
201.1002 through 201.1005 and Tables II to V were removed. As part of
this final rule, the information in these tables will be added back
into the Code of Federal Regulations. However, for ease of reference,
the information in these tables will be consolidated and included in a
single section (17 CFR 201.1001(a)) and Table (Table I to Section
201.1001).
Further, each penalty adjustment performed pursuant to the 2015 Act
supersedes the prior adjustments under that Act. Thus, the penalty
amounts in this final rule supersede the amounts in the June 2016
interim final rule (except that for the first day this final rule is
effective, the prior year's penalty amounts shall apply, see 28 U.S.C.
2461 note Sec. 6). Because of this, the amounts in the June 2016
interim final rule will be removed from the Code of Federal
Regulations. The penalty amounts in this final rule, however, need only
be published in the Federal Register and will not be added to the Code
of Federal Regulations, in accordance with the 2015 Act and OMB
guidance.\17\ As a result, the Commission is amending 17 CFR 201.1001
to add subsection (b) to indicate that all penalty adjustments
performed under the 2015 Act will be published in the Federal Register
and will be made available on the Commission's Web site.\18\ This
framework will avoid the necessity of revising the Code of Federal
Regulations every year to include the new inflation-adjusted penalty
amounts. Section 201.1001(b) will also clarify that penalty adjustments
performed pursuant to the 2015 Act will only apply to violations that
occurred after November 2, 2015, the enactment date of the 2015 Act.
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\17\ 28 U.S.C. 2461 note Sec. 4(a)(2); 2017 OMB Guidance at 3.
\18\ The Web site will also list the penalty amounts for
violations that occurred on or before November 2, 2015.
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III. Procedural and Other Matters

The Commission is required by the 2015 Act to adjust the CMPs
within its jurisdiction for inflation using a statutorily prescribed
formula and the 2015 Act mandates that agencies perform this adjustment
annually by January 15th of each year.\19\ The 2015 Act further
provides that these annual adjustments shall be made ``notwithstanding
section 553 of title 5, United States Code.'' \20\ In light of this
Congressional mandate, the Commission is not required to provide for
public notice and comment pursuant to the notice and comment provisions
of the Administrative Procedure Act.\21\ Under the Regulatory
Flexibility Act, a regulatory flexibility analysis is required only
when an agency must publish a general notice of proposed
rulemaking.\22\ Because public notice and comment is not required for
this final rule, a regulatory flexibility analysis is not required.
Further, this rule does not contain any collection of information
requirements as defined by the Paperwork Reduction Act of 1995 as
amended.\23\
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\19\ 28 U.S.C. 2461 note Sec. 4(a).
\20\ 28 U.S.C. 2461 note Sec. 4(b)(2).
\21\ 5 U.S.C. 553(b)(3)(B). This finding also satisfies the
requirements of 5 U.S.C. 808(2), allowing the amendment to become
effective notwithstanding the requirement of 5 U.S.C. 801 (if a
federal agency finds that notice and public comment are impractical,
unnecessary or contrary to the public interest, a rule shall take
effect at such time as the federal agency promulgating the rule
determines).
\22\ 5 U.S.C. 603.
\23\ 44 U.S.C. 3501 et. seq.
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IV. Economic Analysis ^\24\
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\24\ The Commission did not receive any comments on the economic
analysis in the June 2016 interim final rule.
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The Commission is sensitive to the costs and benefits that result
from its rules. This regulation merely adjusts CMPs for inflation as
required by the 2015 Act. It has no impact on disclosure or compliance
costs. The Commission further notes that the CMPs ordered in SEC
proceedings and PCAOB disciplinary proceedings in fiscal year 2016
totaled approximately $1.28 billion. The inflationary adjustment
required by the 2015 Act results in the increase of the maximum amount
of the CMPs administered by the Commission of 1.636%. Assuming that the
Commission is successful in obtaining civil monetary penalties in
fiscal year 2017 in similar proportion to that obtained in fiscal year
2016, the inflationary adjustment pursuant to this final rule would
result in an increase in the CMPs ordered of approximately $21 million.
This potential increase, however, overstates the effect of the
rule. First, this figure represents the amount of penalties that could
be potentially ordered, whereas the amount of penalties collected in
any given year--the amount of penalties that would affect the economy--
can be lower than the ordered amount. Second, the adjusted penalty
amounts will not apply to all penalties ordered, but rather only to
those penalties whose associated violations occurred after November 2,
2015. Third, penalties imposed in insider trading cases brought in
district court are based on the profit gained or loss avoided as a
result of the violation rather than by reference to a statutory dollar
amount that is affected by this regulation.\25\ The average annual
amount of penalties obtained in insider trading cases from FY 2010
through FY 2016 is $95.7 million. Third, in many cases where the
Commission has obtained large civil monetary penalties, such penalties
were calculated on the basis of the defendant's gross pecuniary gain
rather than the maximum penalty dollar amount set by statute that will
be adjusted by the proposed rule.\26\ In addition, the intent of the
new regulation is merely to keep pace with changes in the economy, not
to impose new costs. Therefore, for the instances in which CMPs
affected by this rulemaking are imposed, the Commission does not
believe that adjusting civil monetary penalties pursuant to the 2015
Act will significantly affect the amount of penalties it obtains beyond
that necessary to keep pace with inflation.
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\25\ 15 U.S.C. 78u-1(a)(2).
\26\ For example, 15 U.S.C. 77t(d)(2)(A), after adjusting for
inflation as required by the 2015 Act, provides that the amount of
the penalty shall not exceed the greater of $9,054 for a natural
person or $90,535 for any other person, or the gross amount of
pecuniary gain to such defendant as a result of the violation.
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The benefit provided by the inflationary adjustment to the maximum
CMPs is that of maintaining the level of deterrence effectuated by the
CMPs, and not allowing such deterrent effect to be diminished by
inflation. The costs of implementing this rule should be negligible
because the only change from the current, baseline situation is
determining potential penalties using a new maximum dollar amount.

[[Page 5371]]

V. Statutory Basis

The Commission is adopting these revisions to 17 CFR part 201,
subpart E pursuant to the directives and authority of the Federal Civil
Penalties Inflation Adjustment Act of 1990, Public Law 101-410, 104
Stat. 890-892 (1990), codified at 28 U.S.C. 2461 note, as amended.

List of Subjects in 17 CFR Part 201

Administrative practice and procedure, Claims, Confidential
business information, Lawyers, Penalties, Securities.

Text of Amendment

For the reasons set forth in the preamble, part 201, title 17,
chapter II of the Code of Federal Regulations is amended as follows:

PART 201--RULES OF PRACTICE

Subpart E--Adjustment of Civil Monetary Penalties

0
1. The authority citation for Part 201, Subpart E continues to read as
follows:

Authority: 28 U.S.C. 2461 note.

0
2. Revise 201.1001 to read as follows:

Sec. 201.1001 Adjustment of civil monetary penalties.

(a) For violations from December 10, 1996, through November 2,
2015: As required by the Inflation Adjustment Act of 1990, as amended
by the Debt Collection Improvement Act of 1996, the Commission has
adjusted the maximum amounts of all civil monetary penalties it
administers under the Securities Act of 1933, the Securities Exchange
Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and certain penalties under the Sarbanes-Oxley
Act of 2002 for inflation in the releases and prior regulations listed
in the footnotes to Table I. The penalty amounts provided in Table I
apply to violations of these statutes that occurred from December 10,
1996, through November 2, 2015, with each column listing the penalty
amounts for violations that occurred in a particular time frame. To
determine the penalty amounts for violations that occurred prior to
December 10, 1996, please refer to the applicable statutory text. To
determine penalty amounts for violations after November 2, 2015, please
refer to paragraph (b) of this section.
(b) For violations after November 2, 2015: The Federal Civil
Penalties Inflation Adjustment Act, as amended by the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015 (28 U.S.C.
2461 note), requires that civil monetary penalties be adjusted on an
annual basis for inflation. Pursuant to this requirement, the maximum
amounts of all civil monetary penalties under the Securities Act of
1933, the Securities Exchange Act of 1934, the Investment Company Act
of 1940, and the Investment Advisers Act of 1940, and certain penalties
under the Sarbanes-Oxley Act of 2002 will be adjusted annually for
inflation. Notice of these adjusted penalty amounts will be published
by the Commission in the Federal Register on or before January 15 of
each calendar year and will be available, along with the Commission's
prior inflation adjustments, on the Commission's Web site at https://www.sec.gov/enforce/civil-penalties-inflation-adjustments.htm. The
adjusted penalty amounts will apply to all penalties imposed after the
effective date of the adjustment (for the first day the adjustment is
effective, the prior year's penalty amounts shall apply), for
violations that occurred after November 2, 2015. The adjusted penalty
amount each year will be the larger of:
(1) The maximum penalty amount for the previous calendar year; or
(2) An amount adjusted for inflation, calculated by multiplying the
maximum penalty amount for the previous calendar year by the percentage
by which the Consumer Price Index for all Urban Consumers (CPI-U) for
the month of October preceding the current calendar year exceeds the
CPI-U for the month of October of the calendar year two years prior to
the current calendar year, adding that amount to the amount for the
previous calendar year, and rounding the total to the nearest dollar.

Table I to 201.1001--Civil Monetary Penalty Inflation Adjustments for Violations From December 10, 1996, Through November 2, 2015
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Date of violation and corresponding penalty
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U.S. Code citation Civil monetary penalty Feb. 3, 2001- Feb. 15, 2005- Mar. 4, 2009-
description Dec. 10, 1996- Feb. 14, 2005 Mar. 3, 2009 Mar. 5, 2013 Mar. 6, 2013-
Feb. 2, 2001 \i\ \ii\ \iii\ \iv\ Nov. 2, 2015 \v\
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15 U.S.C. 77h-1(g) (Securities Act For natural person..... N/A N/A N/A \vi\ $7,500 $7,500
Sec. 8A(g)). For any other person... N/A N/A N/A \vi\ 75,000 80,000
For natural person/ N/A N/A N/A \vi\ 75,000 80,000
fraud.
For any other person/ N/A N/A N/A \vi\ 375,000 400,000
fraud.
For natural person/ N/A N/A N/A \vi\ 150,000 160,000
fraud/substantial
losses or risk of
losses to others or
gains to self.
For any other person/ N/A N/A N/A \vi\ 725,000 775,000
fraud/substantial
losses or risk of
losses to others or
gain to self.
15 U.S.C. 77t(d) (Securities Act Sec. For natural person..... $5,500 $6,500 $6,500 7,500 7,500
20(d)). For any other person... 55,000 60,000 65,000 75,000 80,000
For natural person/ 55,000 60,000 65,000 75,000 80,000
fraud.
For any other person/ 275,000 300,000 325,000 375,000 400,000
fraud.
For natural person/ 110,000 120,000 130,000 150,000 160,000
fraud/substantial
losses or risk of
losses to others.
For any other person/ 550,000 600,000 650,000 725,000 775,000
fraud/substantial
losses or risk of
losses to others.
15 U.S.C. 78u(d)(3) (Exchange Act For natural person..... 5,500 6,500 6,500 7,500 7,500
Sec. 21(d)(3)). For any other person... 55,000 60,000 65,000 75,000 80,000
For natural person/ 55,000 60,000 65,000 75,000 80,000
fraud.
For any other person/ 275,000 300,000 325,000 375,000 400,000
fraud.

[[Page 5372]]

For natural person/ 110,000 120,000 130,000 150,000 160,000
fraud/substantial
losses or risk of
losses to others or
gains to self.
For any other person/ 550,000 600,000 650,000 725,000 775,000
fraud/substantial
losses or risk of
losses to others or
gain to self.
15 U.S.C. 78u-1(a)(3) (Exchange Act Insider Trading-- 1,100,000 1,200,000 1,275,000 1,425,000 1,525,000
Sec. 21A(a)(3)). controlling person.
15 U.S.C. 78u-2 (Exchange Act Sec. For natural person..... 5,500 6,500 6,500 7,500 7,500
21B). For any other person... 55,000 60,000 65,000 75,000 80,000
For natural person/ 55,000 60,000 65,000 75,000 80,000
fraud.
For any other person/ 275,000 300,000 325,000 375,000 400,000
fraud.
For natural person/ 110,000 120,000 130,000 150,000 160,000
fraud/substantial
losses or risk of
losses to others.
For any other person/ 550,000 600,000 650,000 725,000 775,000
fraud/substantial
losses or risk of
losses to others.
15 U.S.C. 78ff(b) (Exchange Act Sec. Exchange Act/failure to 110 110 110 110 210
32(b)). file information
documents, reports.
15 U.S.C. 78ff(c)(1)(B) (Exchange Act Foreign Corrupt 11,000 11,000 11,000 16,000 16,000
Sec. 32(c)(1)(B)). Practices--any issuer.
15 U.S.C. 78ff(c)(2)(B) (Exchange Act Foreign Corrupt 11,000 11,000 11,000 16,000 16,000
Sec. 32(c)(2)(B)). Practices--any agent
or stockholder acting
on behalf of issuer.
15 U.S.C. 80a-9(d) (Investment For natural person..... 5,500 6,500 6,500 7,500 7,500
Company Act Sec. 9(d)). For any other person... 55,000 60,000 65,000 75,000 80,000
For natural person/ 55,000 60,000 65,000 75,000 80,000
fraud.
For any other person/ 275,000 300,000 325,000 375,000 400,000
fraud.
For natural person/ 110,000 120,000 130,000 150,000 160,000
fraud/substantial
losses or risk of
losses to others or
gains to self.
For any other person/ 550,000 600,000 650,000 725,000 775,000
fraud/substantial
losses or risk of
losses to others or
gain to self.
15 U.S.C. 80a-41(e) (Investment For natural person..... 5,500 6,500 6,500 7,500 7,500
Company Act Sec. 42(e)). For any other person... 55,000 60,000 65,000 75,000 80,000
For natural person/ 55,000 60,000 65,000 75,000 80,000
fraud.
For any other person/ 275,000 300,000 325,000 375,000 400,000
fraud.
For natural person/ 110,000 120,000 130,000 150,000 160,000
fraud/substantial
losses or risk of
losses to others.
For any other person/ 550,000 600,000 650,000 725,000 775,000
fraud/substantial
losses or risk of
losses to others.
15 U.S.C. 80b-3(i) (Investment For natural person..... 5,500 6,500 6,500 7,500 7,500
Advisers Act Sec. 203(i)). For any other person... 55,000 60,000 65,000 75,000 80,000
For natural person/ 55,000 60,000 65,000 75,000 80,000
fraud.
For any other person/ 275,000 300,000 325,000 375,000 400,000
fraud.
For natural person/ 110,000 120,000 130,000 150,000 160,000
fraud/substantial
losses or risk of
losses to others or
gains to self.
For any other person/ 550,000 600,000 650,000 725,000 775,000
fraud/substantial
losses or risk of
losses to others or
gain to self.
15 U.S.C. 80b-9(e) (Investment For natural person..... 5,500 6,500 6,500 7,500 7,500
Advisers Act Sec. 209(e)). For any other person... 55,000 60,000 65,000 75,000 80,000
For natural person/ 55,000 60,000 65,000 75,000 80,000
fraud.
For any other person/ 275,000 300,000 325,000 375,000 400,000
fraud.
For natural person/ 110,000 120,000 130,000 150,000 160,000
fraud/substantial
losses or risk of
losses to others.
For any other person/ 550,000 600,000 650,000 725,000 775,000
fraud/substantial
losses or risk of
losses to others.
15 U.S.C. 7215(c)(4)(D)(i) (Sarbanes- For natural person..... N/A \vii\ 100,000 110,000 120,000 130,000
Oxley Act Sec. 105(c)(4)(D)(i)). For any other person... N/A \vii\ 2,000,000 2,100,000 2,375,000 2,525,000

[[Page 5373]]

15 U.S.C. 7215(c)(4)(D)(ii) (Sarbanes- For natural person..... N/A \vii\ 750,000 800,000 900,000 950,000
Oxley Act Sec. 105(c)(4)(D)(ii)). For any other person... N/A \vii\ 15,000,000 15,825,000 17,800,000 18,925,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
\i\ Release Nos. 33-7361, 34-37912, IA-1596, IC-22310, dated November 1, 1996 (effective December 9, 1996), previously found at 17 CFR 201.1001 and
Table I to Subpart E of Part 201.
\ii\ Release Nos. 33-7946, 34-43897, IA-1921, IC-24846, dated January 31, 2001 (effective February 2, 2001), previously found at 17 CFR 201.1002 and
Table II to Subpart E of Part 201.
\iii\ Release Nos. 33-8530, 34-51136, IA-2348, IC-26748, dated February 9, 2005 (effective February 14, 2005), previously found at 17 CFR 201.1003 and
Table III to Subpart E of Part 201.
\iv\ Release Nos. 33-9009, 34-59449, IA-2845, IC-28635, dated February 25, 2009 (effective March 3, 2009), previously found at 17 CFR 201.1004 and Table
IV to Subpart E of Part 201.
\v\ Release Nos. 33-9387, 34-68994, IA-3557, IC-30408, dated February 27, 2013 (effective March 5, 2013), previously found at 17 CFR 201.1005 and Table
V to Subpart E of Part 201.
\vi\ Effective from July 21, 2010 (enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203), through March 5, 2013.
\vii\ Effective from July 30, 2002 (enactment of the Sarbanes-Oxley Act of 2002, Pub. L. 107-204), through February 14, 2005.

By the Commission.

January 6, 2017.
Brent J. Fields,
Secretary.
[FR Doc. 2017-00421 Filed 1-13-17; 8:45 am]
BILLING CODE 8011-01-P

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Final rule.
Dates		Effective Date: January 18, 2017.
Contact		James A. Cappoli, Assistant General Counsel, Office of the General Counsel, at (202) 551-7923, or Stephen M. Ng, Senior Counsel, Office of the General Counsel, at (202) 551- 7957.
FR Citation		82 FR 5367
CFR Associated		Administrative Practice and Procedure; Claims; Confidential Business Information; Lawyers; Penalties and Securities