A bipartisan bill making its way through Congress would allow the Securities and Exchange Commission (SEC) to jack up fines on securities law violators.
The bill would allow the SEC to levy fines of up to $1 million per securities violation on individuals and up to $10 million per violation on financial firms. Currently SEC fines are capped at $150,000 for individuals and $750,000 for firms. The legislation aims to address concerns that the current penalty caps are too weak to deter fraud.
The bill was introduced by Senator Jack Reed (D-RI), who is chairman of the Senate Banking Subcommittee on Securities, Insurance and Investment, and Senator Charles Grassley (R-Iowa), ranking member of the Senate Judiciary Committee.
Reed said in a statement that his bill is designed to make securities law violations more than just a cost of doing business for financial institutions.
“If they look at the bottom line and see they can break the law, get caught, pay a nominal fine and still profit, the cycle of misconduct will continue. The law needs to change to ensure the punishment fits the crime,” he added.
The bill's future remains unclear as Congress approaches its December break. The upcoming presidential election may also delay decision making. If the bill is not signed into law this year it would need to be reintroduced in January – the next congressional session.
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