[Federal Register Volume 88, Number 7 (Wednesday, January 11, 2023)]
[Notices]
[Pages 1614-1616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00370]


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SECURITIES AND EXCHANGE COMMISSION

[Release Nos. 33-11143; 34-96605; IA-6212; IC-34797]


Adjustments to Civil Monetary Penalty Amounts

AGENCY: Securities and Exchange Commission.

ACTION: Notice of annual inflation adjustment of civil monetary 
penalties.

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SUMMARY: The Securities and Exchange Commission (the ``Commission'') is 
publishing this notice (the ``Notice'') pursuant to the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015 (the ``2015 
Act''). This Act requires all agencies to annually adjust for inflation 
the civil monetary penalties that can be imposed under the statutes 
administered by the agency and publish the adjusted amounts in the 
Federal Register. This Notice sets forth the annual inflation 
adjustment of the maximum amount of civil monetary penalties (``CMPs'') 
administered by the Commission under the Securities Act of 1933, the 
Securities Exchange Act of 1934 (the ``Exchange Act''), the Investment 
Company Act of 1940, the Investment Advisers Act of 1940, and certain 
penalties under the Sarbanes-Oxley Act of 2002. These amounts are 
effective beginning on January 15, 2023, and will apply to all 
penalties imposed after that date for violations of the aforementioned 
statutes that occurred after November 2, 2015.

FOR FURTHER INFORMATION CONTACT: Stephen M. Ng, Senior Special Counsel, 
Office of the General Counsel, at (202) 551-7957, or Hannah W. Riedel, 
Senior Counsel, Office of the General Counsel, at (202) 551-7918.

SUPPLEMENTARY INFORMATION:

I. Background

    This Notice is being published pursuant to the 2015 Act,\1\ which 
amended the Federal Civil Penalties Inflation Adjustment Act of 1990 
(the ``Inflation Adjustment Act'').\2\ The Inflation Adjustment Act 
previously had been amended by the Debt Collection Improvement Act of 
1996 (the ``DCIA'') \3\ to require that each federal agency adopt 
regulations at least once every four years that adjust for inflation 
the CMPs that can be imposed under the statutes administered by the 
agency. Pursuant to this requirement, 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, section 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 (61 FR 57773 (Nov. 8, 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 (66 FR 8761 (Feb. 2, 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 (70 FR 7606 (Feb. 14, 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 (74 FR 9159 (Mar. 
3, 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 (78 FR 
14179 (Mar. 5, 2013)) (effective March 5, 2013), previously found at 
17 CFR 201.1005 and table V to subpart E of part 201. The penalty 
amounts contained in these releases have now been consolidated into 
table I to 17 CFR 201.1001.
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    The 2015 Act replaces the inflation adjustment formula prescribed 
in the DCIA with a new formula for calculating the inflation-adjusted 
amount of CMPs. The 2015 Act requires that agencies use this new 
formula to re-calculate the inflation-adjusted amounts of the penalties 
they administer on an annual basis and publish these new amounts in the 
Federal Register by January 15 of each year.\5\ The Commission 
previously published the first annual adjustment required by the 2015 
Act on January 6, 2017 (the ``2017 Adjustment'').\6\ As part of the 
2017 Adjustment, the Commission promulgated 17 CFR 201.1001(a) and 
table I to 17 CFR 201.1001, which lists the penalty amounts for all 
violations that occurred on or before November 2, 2015. For violations 
occurring after November 2, 2015, Sec.  201.1001(b) provides that the 
applicable penalty amounts will be adjusted annually based on the 
formula set forth in the 2015 Act. Section 201.1001(b) further provides 
that these adjusted amounts will be published in the Federal Register 
and on the Commission's website. The Commission published the two most 
recent annual adjustments on January 8, 2021 (``2021 Adjustment'') \7\ 
and January 6, 2022 (``2022 Adjustment'').\8\
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    \5\ 28 U.S.C. 2461 note sec. 4.
    \6\ Release Nos. 33-10276; 34-79749; IA-4599; IC-32414 (82 FR 
5367 (Jan. 18, 2017)) (effective Jan. 18, 2017).
    \7\ Release Nos. 33-10918; 34-90874; IA-5664; IC-34166 (86 FR 
2716 (Jan. 13, 2021)) (effective Jan. 15, 2021).
    \8\ Release Nos. 33-11021; 34-93925; IA-5938; IC-34466 (87 FR 
1808 (Jan. 12, 2022)) (effective Jan. 15, 2022).
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    A CMP is defined in relevant part as any penalty, fine, or other 
sanction that:

[[Page 1615]]

(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, the Exchange Act, the Investment Company Act, and the 
Investment Advisers Act. In addition, the Sarbanes-Oxley Act 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 Exchange Act. 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 Notice sets forth the annual inflation adjustment required by 
the 2015 Act for all CMPs under the Securities Act, the Exchange Act, 
the Investment Company Act, and the Investment Advisers Act, and 
certain civil monetary penalties under the Sarbanes-Oxley Act.
    Pursuant to the 2015 Act, the penalty amounts in the 2023 
Adjustment are adjusted for inflation by increasing them by the 
percentage change between the Consumer Price Index for all Urban 
Consumers (``CPI-U'') for October 2021 and the October 2022 CPI-U.\12\ 
The Office of Management and Budget (``OMB'') has provided its 
calculation of this multiplier (the ``CPI-U Multiplier'') to 
agencies.\13\ The new penalty amounts are determined by multiplying the 
amounts in the 2022 Adjustment by the CPI-U Multiplier and then 
rounding to the nearest dollar.
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    \12\ 28 U.S.C. 2461 note Sec. 5.
    \13\ Office of Management and Budget, Implementation of Penalty 
Inflation Adjustments for 2023, Pursuant to the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015 
(December 15, 2022), available at https://www.whitehouse.gov/wp-content/uploads/2022/12/M-23-05-CMP-CMP-Guidance.pdf. This 
multiplier represents the percentage increase between the October 
2021 CPI-U and the October 2022 CPI-U, plus 1.
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    For example, the CMP for certain insider trading violations by 
controlling persons under Exchange Act Section 21A(a)(3) \14\ was 
readjusted for inflation as part of the 2022 Adjustment to $2,301,065. 
To determine the new CMP under this provision, the Commission 
multiplies this amount by the CPI-U Multiplier of 1.07745, and rounds 
to the nearest dollar. Thus, the new CMP for Exchange Act section 
21A(a)(3) is $2,479,282.
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    \14\ 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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                                                                               2022                      2023
                                                Civil monetary penalty      Adjustment      CPI-U      Adjusted
            U.S. Code citation                       description              penalty    multiplier    penalty
                                                                              amounts                  amounts
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15 U.S.C. 77h-1(g) (Securities Act sec.     For natural person...........        $9,484     1.07745      $10,219
 8A(g)).                                    For any other person.........        94,847     1.07745      102,193
                                            For natural person/fraud.....        94,847     1.07745      102,193
                                            For any other person/fraud...       474,233     1.07745      510,962
                                            For natural person/fraud/           189,693     1.07745      204,385
                                             substantial losses or risk
                                             of losses to others or gains
                                             to self.
                                            For any other person/fraud/         916,850     1.07745      987,860
                                             substantial losses or risk
                                             of losses to others or gain
                                             to self.
15 U.S.C. 77t(d) (Securities Act sec.       For natural person...........        10,360     1.07745       11,162
 20(d)).                                    For any other person.........       103,591     1.07745      111,614
                                            For natural person/fraud.....       103,591     1.07745      111,614
                                            For any other person/fraud...       517,955     1.07745      558,071
                                            For natural person/fraud/           207,183     1.07745      223,229
                                             substantial losses or risk
                                             of losses to others.
                                            For any other person/fraud/       1,035,909     1.07745    1,116,140
                                             substantial losses or risk
                                             of losses to others.
15 U.S.C. 78u(d)(3) (Exchange Act sec.      For natural person...........        10,360     1.07745       11,162
 21(d)(3)).                                 For any other person.........       103,591     1.07745      111,614
                                            For natural person/fraud.....       103,591     1.07745      111,614
                                            For any other person/fraud...       517,955     1.07745      558,071
                                            For natural person/fraud/           207,183     1.07745      223,229
                                             substantial losses or risk
                                             of losses to others or gains
                                             to self.
                                            For any other person/fraud/       1,035,909     1.07745    1,116,140
                                             substantial losses or risk
                                             of losses to others or gain
                                             to self.
15 U.S.C. 78u-1(a)(3) (Exchange Act sec.    Insider Trading--controlling      2,301,065     1.07745    2,479,282
 21A(a)(3)).                                 person.
15 U.S.C. 78u-2 (Exchange Act sec. 21B)...  For natural person...........        10,360     1.07745       11,162
                                            For any other person.........       103,591     1.07745      111,614
                                            For natural person/fraud.....       103,591     1.07745      111,614
                                            For any other person/fraud...       517,955     1.07745      558,071
                                            For natural person/fraud/           207,183     1.07745      223,229
                                             substantial losses or risk
                                             of losses to others.
                                            For any other person/fraud/       1,035,909     1.07745    1,116,140
                                             substantial losses or risk
                                             of losses to others.
15 U.S.C. 78ff(b) (Exchange Act sec.        Exchange Act/failure to file            612     1.07745          659
 32(b)).                                     information documents,
                                             reports.

[[Page 1616]]

 
15 U.S.C. 78ff(c)(1)(B) (Exchange Act sec.  Foreign Corrupt Practices--          23,011     1.07745       24,793
 32(c)(1)(B)).                               any issuer.
15 U.S.C. 78ff(c)(2)(B) (Exchange Act sec.  Foreign Corrupt Practices--          23,011     1.07745       24,793
 32(c)(2)(B)).                               any agent or stockholder
                                             acting on behalf of issuer.
15 U.S.C. 80a-9(d) (Investment Company Act  For natural person...........        10,360     1.07745       11,162
 sec. 9(d)).                                For any other person.........       103,591     1.07745      111,614
                                            For natural person/fraud.....       103,591     1.07745      111,614
                                            For any other person/fraud...       517,955     1.07745      558,071
                                            For natural person/fraud/           207,183     1.07745      223,229
                                             substantial losses or risk
                                             of losses to others or gains
                                             to self.
                                            For any other person/fraud/       1,035,909     1.07745    1,116,140
                                             substantial losses or risk
                                             of losses to others or gain
                                             to self.
15 U.S.C. 80a-41(e) (Investment Company     For natural person...........        10,360     1.07745       11,162
 Act sec. 42(e)).                           For any other person.........       103,591     1.07745      111,614
                                            For natural person/fraud.....       103,591     1.07745      111,614
                                            For any other person/fraud...       517,955     1.07745      558,071
                                            For natural person/fraud/           207,183     1.07745      223,229
                                             substantial losses or risk
                                             of losses to others.
                                            For any other person/fraud/       1,035,909     1.07745    1,116,140
                                             substantial losses or risk
                                             of losses to others.
15 U.S.C. 80b-3(i) (Investment Advisers     For natural person...........        10,360     1.07745       11,162
 Act sec. 203(i)).                          For any other person.........       103,591     1.07745      111,614
                                            For natural person/fraud.....       103,591     1.07745      111,614
                                            For any other person/fraud...       517,955     1.07745      558,071
                                            For natural person/fraud/           207,183     1.07745      223,229
                                             substantial losses or risk
                                             of losses to others or gains
                                             to self.
                                            For any other person/fraud/       1,035,909     1.07745    1,116,140
                                             substantial losses or risk
                                             of losses to others or gain
                                             to self.
15 U.S.C. 80b-9(e) (Investment Advisers     For natural person...........        10,360     1.07745       11,162
 Act sec. 209(e)).                          For any other person.........       103,591     1.07745      111,614
                                            For natural person/fraud.....       103,591     1.07745      111,614
                                            For any other person/fraud...       517,955     1.07745      558,071
                                            For natural person/fraud/           207,183     1.07745      223,229
                                             substantial losses or risk
                                             of losses to others.
                                            For any other person/fraud/       1,035,909     1.07745    1,116,140
                                             substantial losses or risk
                                             of losses to others.
15 U.S.C. 7215(c)(4)(D)(i) (Sarbanes-Oxley  For natural person...........       152,557     1.07745      164,373
 Act sec. 105(c)(4)(D)(i)).                 For any other person.........     3,051,164     1.07745    3,287,477
15 U.S.C. 7215(c)(4)(D)(ii) (Sarbanes-      For natural person...........     1,144,186     1.07745    1,232,803
 Oxley Act sec. 105(c)(4)(D)(ii)).          For any other person.........    22,883,723     1.07745   24,656,067
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    Pursuant to the 2015 Act and 17 CFR 201.1001, the adjusted penalty 
amounts in this Notice (and all penalty adjustments performed pursuant 
to the 2015 Act) apply to penalties imposed after the date the 
adjustment is effective for violations that occurred after November 2, 
2015, the 2015 Act's enactment date. These penalty amounts supersede 
the amounts in the 2022 Adjustment.\15\ For violations that occurred on 
or before November 2, 2015, the penalty amounts in table I to 17 CFR 
201.1001 continue to apply.\16\
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    \15\ The penalty amounts in this Notice are being published in 
the Federal Register and will not be added to the Code of Federal 
Regulations in accordance with the 2015 Act and 17 CFR 201.1001(b). 
See 28 U.S.C. 2461 note sec. 4(a)(2); 17 CFR 201.1001(b). In 
addition to being published in the Federal Register, the penalty 
amounts in this Notice will be made available on the Commission's 
website at https://www.sec.gov/enforce/civil-penalties-inflation-adjustments.htm, as detailed in 17 CFR 201.1001(b). This website 
also lists the penalty amounts for violations that occurred on or 
before November 2, 2015.
    \16\ 17 CFR 201.1001(a).
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III. Small Business Regulatory Enforcement Fairness Act Status

    OMB has concurred in our recommendation that this Notice is not a 
``major rule'' as defined by section 251 of the Small Business 
Regulatory Enforcement Fairness Act (``SBREFA''), 5 U.S.C. 804(2), 
because (1) it will not have an annual effect of $100 million dollars 
or more on the economy, (2) it does not present a major increase in 
prices for consumers or individual industries, and (3) it does not have 
significant adverse effects on competition, investment, or 
innovation.\17\
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    \17\ See generally SBREFA, Public Law 104-121 (1996).

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    By the Commission.

    Dated: January 6, 2023.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2023-00370 Filed 1-10-23; 8:45 am]
BILLING CODE 8011-01-P


