
[Federal Register Volume 82, Number 11 (Wednesday, January 18, 2017)]
[Rules and Regulations]
[Pages 5367-5373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[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.

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                                                                      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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Date of violation and corresponding penalty
                                                               -----------------------------------------------------------------------------------------
          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
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\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


