Adjustments to Civil Monetary Penalty Amounts

1P.L. 104–134, section 31001(s) (April 26, 1996) 2 28 U.S.C. 2461 (1990). 3 Id. at § 3(2). 4P.L. 104–134. SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 201 [Release Nos. 33–7361; 34–37912; IC– 22310; IA–1596] Adjustments to Civil Monetary Penalty Amounts AGENCY: Securities and Exchange Commission. ACTION: Final rule. SUMMARY: This rule implements the Debt Collection Improvement Act of 1996, which requires that the Commission adopt a regulation adjusting for inflation the maximum amount of 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. EFFECTIVE DATE: December 9, 1996. FOR FURTHER INFORMATION CONTACT:
Richard A. Levine, Senior Special
Counsel, or Laura Leedy Gansler, Senior
Counsel, Office of the General Counsel, at (202) 942–0900.
SUPPLEMENTARY INFORMATION: This regulation implements the Debt Collection Improvement Act of 1996 (‘‘DCIA’’).1 The DCIA amended the Federal Civil Penalties Inflation Adjustment Act (‘‘FCPIAA’’) 2 to require that the Commission adopt regulations no later than 180 days after the enactment of the statute and at least once every four years thereafter adjusting for inflation the maximum amount of the civil monetary penalties under the statutes administered by the Commission. A civil monetary penalty 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 federal court pursuant to federal law.3 This definition covers the monetary penalty provisions contained in the statutes administered by the Commission. The DCIA requires that the penalties be adjusted by the cost-of-living adjustment set forth in section 5 of the FCPIAA.4 The cost-of-living adjustment is defined as the percentage by which the U.S. Department of Labor’s Consumer Price Index (‘‘CPI’’) for the month of June of the year preceding the adjustment exceeds the CPI for the

57774 Federal Register / Vol. 61, No. 218 / Friday, November 8, 1996 / Rules and Regulations 5See 15 U.S.C. 78ff(b)). The CPI for June 1936 was
41.4. The CPI for June 1995 was 456.7. Therefore,
the cost-of-living adjustment factor for penalties set or last amended in 1936 is 11.031. 6See 15 U.S.C. 78ff(c)(1)(B), 78ffc(2)(C), 78u– 1(a)(3). The CPI for June 1988 was 353.5. The CPI for June 1995 was 456.7. Therefore, the cost-of￾living adjustment factor for penalties set or last amended in 1988 is 1.29. 7See 15 U.S.C. 77t(d); 15 U.S.C. 78u–2, 78u(d)(3); 15 USC 80a–9(d), 80a–41(e), 80b–3(i), 80b–9(e). The CPI for June 1990 was 389.1. The CPI for June 1995 was 456.7. Therefore, the cost-of-living adjustment factor for penalties set or last amended in 1990 is 1.17. 8 5 U.S.C. 553(b)(3)(B). 9See 5 U.S.C. 601–612. 10 44 U.S.C. 3501 et. seq. month of June for the year in which the amount of the penalty was last set or adjusted pursuant to law. The adjusted amounts are then rounded in accordance with the rounding formula set forth in section 5 of the FCPIAA. However, the DCIA imposes a 10% maximum increase for each penalty for the first adjustment pursuant thereto. The Commission administers four statutes which provide for civil monetary penalties: the Securities Act of 1933; the Securities Exchange Act of 1934; the Investment Company Act of 1940; and the Investment Advisers Act of 1940. The last years in which the penalties administered by the Commission were adjusted or set were 1936,5 1988,6 and 1990.7 For each of these years, the required CPI adjustment exceeds 10%. Therefore, for this first increase pursuant to the DCIA, the Commission is directed by the statute to increase the maximum amount of each penalty by 10%. Accordingly, the Commission is adopting an amendment to 17 CFR 201 to add a new Subpart E increasing by 10% the amount of each civil monetary penalty authorized by Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940. The adjustments set forth in the amendment apply to violations occurring after the effective date of the amendment. Because the Commission is required by statute to adjust the civil monetary penalties within its jurisdiction by 10%, the Commission finds that good cause exists to dispense with public notice and comment pursuant to the notice and comment provisions of the Administrative Procedure Act (‘‘APA’’).8 Specifically, the Commission finds that, because the adjustment is mandated by Congress and does not involve the exercise of Commission discretion or any policy judgments, public notice and comment is unnecessary. Therefore, the provisions of the Regulatory Flexibility Act, which apply only when notice and comments are required by the APA or other laws, are also not applicable.9 This rule does not contain any collection of information requirements as defined by the Paperwork Reduction Act of 1995 as amended.10 Therefore, Office of Management and Budget review is not required. List of Subjects in 17 CFR Part 201 Administrative practice and procedure, Claims, Confidential business information, Equal access to justice, Lawyers,
Securities. For the reasons set forth in the preamble, part 201, title 17, chapter II of the Code of Federal Regulations is amended to read as follows:
PART 201—RULES OF PRACTICE
Subpart E—Adjustment of Civil Monetary
Penalties
Sec.
201.1001 Adjustment of civil monetary
penalties.
Table I to Subpart E—Civil Monetary
Penalty Inflation Adjustments
Subpart E—Adjustment of Civil
Monetary Penalties
Authority: Pub. L. 104–134, 110 Stat. 1321.
§ 201.1001 Adjustment of civil monetary penalties.
As required by the Debt Collection
Improvement Act of 1996, 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 are adjusted for inflation in accordance with Table I to this subpart. The adjustments set forth in Table I apply to violations occurring after December 9, 1996.
TABLE 1 TO SUBPART E.—CIVIL MONETARY PENALTY INFLATION ADJUSTMENTS
U.S. code citation Civil monetary penalty description Year pen￾alty amount was last set by law Original statu￾tory maximum penalty amount Adjusted maxi￾mum penalty amount SECURITIES AND EX￾CHANGE COMMIS￾SION:
15 USC 77t(d) ...... FOR NATURAL PERSON ...................................................................... 1990 $5,000 $5,500 FOR ANY OTHER PERSON ................................................................. 1990 50,000 55,000 FOR NATURAL PERSON/FRAUD ........................................................ 1990 50,000 55,000 FOR ANY OTHER PERSON/FRAUD .................................................... 1990 250,000 275,000 FOR NATURAL PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 100,000 110,000 FOR ANY OTHER PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 500,000 550,000 15 USC 78ff(b) ..... EXCHANGE ACT/FAILURE TO FILE INFORMATION DOCUMENTS, REPORTS. 1936 100 110 15 USC 78ff(c)(1)(B). FOREIGN CORRUPT PRACTICES—ANY ISSUER ............................. 1988 10,000 11,000 15 USC 78ff(c)(2)(C). FOREIGN CORRUPT PRACTICES—ANY AGENT OR STOCK￾HOLDER ACTING ON BEHALF OF ISSUER. 1988 10,000 11,000 15 USC 78u– 1(a)(3). INSIDER TRADING—CONTROLLING PERSONS ............................... 1988 1,000,000 1,100,000 15 USC 78u–2 ..... FOR NATURAL PERSON ...................................................................... 1990 5,000 5,500 FOR ANY OTHER PERSON ................................................................. 1990 50,000 55,000 FOR NATURAL PERSON/FRAUD ........................................................ 1990 50,000 55,000

Federal Register / Vol. 61, No. 218 / Friday, November 8, 1996 / Rules and Regulations 57775
TABLE 1 TO SUBPART E.—CIVIL MONETARY PENALTY INFLATION ADJUSTMENTS—Continued
U.S. code citation Civil monetary penalty description Year pen￾alty amount was last set by law Original statu￾tory maximum penalty amount Adjusted maxi￾mum penalty amount FOR ANY OTHER PERSON/FRAUD .................................................... 1990 250,000 275,000 FOR NATURAL PERSON/SUBSTANTIAL LOSSES TO OTHERS/ GAINS TO SELF. 1990 100,000 110,000 FOR ANY OTHER PERSONS/SUBSTANTIAL LOSSES TO OTHERS/ GAIN TO SELF. 1990 500,000 550,000 15 USC 78u(d)(3) FOR NATURAL PERSON ...................................................................... 1990 5,000 5,000 FOR ANY OTHER PERSON ................................................................. 1990 50,000 55,000 FOR NATURAL PERSON/FRAUD ........................................................ 1990 50,000 55,000 FOR ANY OTHER PERSON/FRAUD .................................................... 1990 250,000 275,000 FOR NATURAL PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 100,000 110,000 FOR ANY OTHER PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 500,000 550,000 15 USC 80a–9(d) FOR NATURAL PERSON ...................................................................... 1990 5,000 5,500 FOR ANY OTHER PERSON ................................................................. 1990 50,000 55,000 FOR NATURAL PERSON/FRAUD ........................................................ 1990 50,000 55,000 FOR ANY OTHER PERSON/FRAUD .................................................... 1990 250,000 275,000 FOR NATURAL PERSON/SUBSTANTIAL LOSSES TO OTHERS/ GAINS TO SELF. 1990 100,000 110,000 FOR ANY OTHER PERSON/SUBSTANTIAL LOSSES TO OTHER/ GAINS TO SELF. 1990 500,000 550,000 15 USC 80a–41(e) FOR NATURAL PERSON ...................................................................... 1990 5,000 5,500 FOR ANY OTHER PERSON ................................................................. 1990 50,000 55,000 FOR NATURAL PERSON/FRAUD ........................................................ 1990 50,000 55,000 FOR ANY OTHER PERSON/FRAUD .................................................... 1990 250,000 275,000 FOR NATURAL PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 100,000 110,000 FOR ANY OTHER PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 500,000 550,000 15 USC 80b–3(i) FOR NATURAL PERSON ...................................................................... 1990 5,000 5,500 FOR ANY OTHER PERSON ................................................................. 1990 50,000 55,000 FOR NATURAL PERSON/FRAUD ........................................................ 1990 50,000 55,000 FOR ANY OTHER PERSON/FRAUD .................................................... 1990 250,000 275,000 FOR NATURAL PERSON/SUBSTANTIAL LOSSES TO OTHERS/ GAIN TO SELF. 1990 100,000 110,000 FOR ANY OTHER PERSON/SUBSTANTIAL LOSSES TO OTHERS/ GAIN TO SELF. 1990 500,000 550,000 15 USC 80b–9(e) FOR NATURAL PERSON ...................................................................... 1990 5,000 5,500 FOR ANY
OTHER PERSON ................................................................. 1990 50,000 55,000 FOR NATURAL PERSON/FRAUD ........................................................ 1990 50,000 55,000 FOR ANY OTHER PERSON/FRAUD .................................................... 1990 250,000 275,000 FOR NATURAL PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 100,000 110,000 FOR ANY OTHER PERSON/SUBSTANTIAL LOSSES OR RISK OF LOSSES TO OTHERS. 1990 500,000 550,000 Dated: November 1, 1996. By the Commission. Margaret H. McFarland, Deputy Secretary. [FR Doc. 96–28596 Filed 11–7–96; 8:45 am] BILLING CODE 8010–01–M