CITE
15 USC Sec. 80a-41 01/05/2009
EXPCITE
TITLE 15 - COMMERCE AND TRADE
CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I - INVESTMENT COMPANIES
HEAD
Sec. 80a-41. Enforcement of subchapter
STATUTE
(a) Investigation
The Commission may make such investigations as it deems necessary
to determine whether any person has violated or is about to violate
any provision of this subchapter or of any rule, regulation, or
order hereunder, or to determine whether any action in any court or
any proceeding before the Commission shall be instituted under this
subchapter against a particular person or persons, or with respect
to a particular transaction or transactions. The Commission shall
permit any person to file with it a statement in writing, under
oath or otherwise as the Commission shall determine, as to all the
facts and circumstances concerning the matter to be investigated.
(b) Administration of oaths and affirmations, subpena of witnesses,
etc.
For the purpose of any investigation or any other proceeding
under this subchapter, any member of the Commission, or any officer
thereof designated by it, is empowered to administer oaths and
affirmations, subpena witnesses, compel their attendance, take
evidence, and require the production of any books, papers,
correspondence, memoranda, contracts, agreements, or other records
which are relevant or material to the inquiry. Such attendance of
witnesses and the production of any such records may be required
from any place in any State or in any Territory or other place
subject to the jurisdiction of the United States at any designated
place of hearing.
(c) Jurisdiction of courts of United States
In case of contumacy by, or refusal to obey a subpena issued to,
any person, the Commission may invoke the aid of any court of the
United States within the jurisdiction of which such investigation
or proceeding is carried on, or where such person resides or
carries on business, in requiring the attendance and testimony of
witnesses and the production of books, papers, correspondence,
memoranda, contracts, agreements, and other records. And such court
may issue an order requiring such person to appear before the
Commission or member or officer designated by the Commission, there
to produce records, if so ordered, or to give testimony touching
the matter under investigation or in question; any failure to obey
such order of the court may be punished by such court as a contempt
thereof. All process in any such case may be served in the judicial
district whereof such person is an inhabitant or wherever he may be
found. Any person who without just cause shall fail or refuse to
attend and testify or to answer any lawful inquiry or to produce
books, papers, correspondence, memoranda, contracts, agreements, or
other records, if in his or its power so to do, in obedience to the
subpena of the Commission, shall be guilty of a misdemeanor, and
upon conviction shall be subject to a fine of not more than $1,000
or to imprisonment for a term of not more than one year, or both.
(d) Action for injunction
Whenever it shall appear to the Commission that any person has
engaged or is about to engage in any act or practice constituting a
violation of any provision of this subchapter, or of any rule,
regulation, or order hereunder, it may in its discretion bring an
action in the proper district court of the United States, or the
proper United States court of any Territory or other place subject
to the jurisdiction of the United States, to enjoin such acts or
practices and to enforce compliance with this subchapter or any
rule, regulation, or order hereunder. Upon a showing that such
person has engaged or is about to engage in any such act or
practice, a permanent or temporary injunction or decree or
restraining order shall be granted without bond. In any proceeding
under this subsection to enforce compliance with section 80a-7 of
this title, the court as a court of equity may, to the extent it
deems necessary or appropriate, take exclusive jurisdiction and
possession of the investment company or companies involved and the
books, records, and assets thereof, wherever located; and the court
shall have jurisdiction to appoint a trustee, who with the approval
of the court shall have power to dispose of any or all of such
assets, subject to such terms and conditions as the court may
prescribe. The Commission may transmit such evidence as may be
available concerning any violation of the provisions of this
subchapter or of any rule, regulation, or order thereunder, to the
Attorney General, who, in his discretion, may institute the
appropriate criminal proceedings under this subchapter.
(e) Money penalties in civil actions
(1) Authority of Commission
Whenever it shall appear to the Commission that any person has
violated any provision of this subchapter, the rules or
regulations thereunder, or a cease-and-desist order entered by
the Commission pursuant to section 80a-9(f) of this title, the
Commission may bring an action in a United States district court
to seek, and the court shall have jurisdiction to impose, upon a
proper showing, a civil penalty to be paid by the person who
committed such violation.
(2) Amount of penalty
(A) First tier
The amount of the penalty shall be determined by the court in
light of the facts and circumstances. For each violation, the
amount of the penalty shall not exceed the greater of (i)
$5,000 for a natural person or $50,000 for any other person, or
(ii) the gross amount of pecuniary gain to such defendant as a
result of the violation.
(B) Second tier
Notwithstanding subparagraph (A), the amount of penalty for
each such violation shall not exceed the greater of (i) $50,000
for a natural person or $250,000 for any other person, or (ii)
the gross amount of pecuniary gain to such defendant as a
result of the violation, if the violation described in
paragraph (1) involved fraud, deceit, manipulation, or
deliberate or reckless disregard of a regulatory requirement.
(C) Third tier
Notwithstanding subparagraphs (A) and (B), the amount of
penalty for each such violation shall not exceed the greater of
(i) $100,000 for a natural person or $500,000 for any other
person, or (ii) the gross amount of pecuniary gain to such
defendant as a result of the violation, if -
(I) the violation described in paragraph (1) involved
fraud, deceit, manipulation, or deliberate or reckless
disregard of a regulatory requirement; and
(II) such violation directly or indirectly resulted in
substantial losses or created a significant risk of
substantial losses to other persons.
(3) Procedures for collection
(A) Payment of penalty to Treasury
A penalty imposed under this section shall be payable into
the Treasury of the United States, except as otherwise provided
in section 7246 of this title.
(B) Collection of penalties
If a person upon whom such a penalty is imposed shall fail to
pay such penalty within the time prescribed in the court's
order, the Commission may refer the matter to the Attorney
General who shall recover such penalty by action in the
appropriate United States district court.
(C) Remedy not exclusive
The actions authorized by this subsection may be brought in
addition to any other action that the Commission or the
Attorney General is entitled to bring.
(D) Jurisdiction and venue
For purposes of section 80a-43 of this title, actions under
this paragraph shall be actions to enforce a liability or a
duty created by this subchapter.
(4) Special provisions relating to a violation of a cease-and-
desist order
In an action to enforce a cease-and-desist order entered by the
Commission pursuant to section 80a-9(f) of this title, each
separate violation of such order shall be a separate offense,
except that in the case of a violation through a continuing
failure to comply with the order, each day of the failure to
comply shall be deemed a separate offense.
SOURCE
(Aug. 22, 1940, ch. 686, title I, Sec. 42, 54 Stat. 842; Pub. L. 91-
452, title II, Sec. 215, Oct. 15, 1970, 84 Stat. 929; Pub. L. 100-
181, title VI, Sec. 623, Dec. 4, 1987, 101 Stat. 1262; Pub. L. 101-
429, title III, Sec. 302, Oct. 15, 1990, 104 Stat. 945; Pub. L.
107-204, title III, Sec. 308(d)(4), July 30, 2002, 116 Stat. 785.)
AMENDMENTS
2002 - Subsec. (e)(3)(A). Pub. L. 107-204 inserted ", except as
otherwise provided in section 7246 of this title" before period at
end.
1990 - Subsec. (e). Pub. L. 101-429 added subsec. (e).
1987 - Subsecs. (d), (e). Pub. L. 100-181 redesignated subsec.
(e) as (d).
1970 - Subsec. (d). Pub. L. 91-452 struck out subsec. (d) which
related to immunity from prosecution of any individual compelled to
testify or produce evidence, documentary or otherwise, after
claiming his privilege against self-incrimination.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-429 effective Oct. 15, 1990, with
provisions relating to civil penalties and accounting and
disgorgement, see section 1(c)(1), (2) of Pub. L. 101-429, set out
in a note under section 77g of this title.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91-452 effective on sixtieth day following
Oct. 15, 1970, see section 260 of Pub. L. 91-452, set out as an
Effective Date; Savings Provision note under section 6001 of Title
18, Crimes and Criminal Procedure.
SAVINGS PROVISION
Amendment by Pub. L. 91-452 not to affect any immunity to which
any individual is entitled under this section by reason of any
testimony given before the sixtieth day following Oct. 15, 1970,
see section 260 of Pub. L. 91-452, set out as an Effective Date;
Savings Provision note under section 6001 of Title 18, Crimes and
Criminal Procedure.
TRANSFER OF FUNCTIONS
For transfer of functions of Securities and Exchange Commission,
with certain exceptions, to Chairman of such Commission, see Reorg.
Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
64 Stat. 1265, set out under section 78d of this title.