Title 15, Commerce and TradeRelease 119-110
§77t Injunctions and Prosecution of Offenses
Title 15 › CHAPTER 2A — SECURITIES AND TRUST INDENTURES › SUBCHAPTER I — DOMESTIC SECURITIES › § 77t
Summary
The Commission can look into suspected or possible breaks of the rules. It can ask people to give written statements, sometimes under oath, and can investigate the facts. If the Commission thinks someone is breaking the rules or about to, it can go to a federal court to stop those acts. The court can order temporary or permanent bans or restraints without requiring a bond. The Commission can send evidence to the Attorney General, who may choose to bring criminal charges. A court can also order people to follow the law or Commission orders. The Commission can ask a court to make someone pay civil money penalties for violations (except where another law already sets a penalty). For each violation the court can set a fine up to the greater of the stated dollar amount or the wrongdoer’s gross financial gain: first tier—$5,000 for an individual or $50,000 for others; second tier (if fraud, deceit, manipulation, or deliberate/reckless disregard) — $50,000 for an individual or $250,000 for others; third tier (if those problems also caused or risked big losses) — $100,000 for an individual or $500,000 for others. Penalties go to the U.S. Treasury unless another rule says otherwise. If someone won’t pay, the Commission can ask the Attorney General to sue to collect. These penalties can be used along with other actions. Breaking a Commission cease-and-desist order counts as a separate offense each time, and each day of ongoing noncompliance counts as a separate offense. A court can bar people who show they are unfit from being officers or directors of companies that have registered securities or must file reports. Money the Commission wins and has to give back (“disgorged” funds) normally can’t be used to pay private lawyers’ fees unless a court or the Commission allows it. The court may also bar people involved in penny-stock offerings from taking part in such offerings; “participating” covers those working with brokers, dealers, or issuers to issue, trade, or try to induce buys or sells, and the Commission can expand or limit that definition by rule.
Full Legal Text
Title 15, §77t
Commerce and Trade, Source: USLM XML via OLRC
(a)Investigation of violations
Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, have been or are about to be violated, it may, in its discretion, either require or permit such person to file with it a statement in writing, under oath, or otherwise, as to all the facts and circumstances concerning the subject matter which it believes to be in the public interest to investigate, and may investigate such facts.
(b)Action for injunction or criminal prosecution in district court
Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, the Commission may, in its discretion, bring an action in any district court of the United States, or United States court of any Territory, to enjoin such acts or practices, and upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General who may, in his discretion, institute the necessary criminal proceedings under this subchapter. Any such criminal proceeding may be brought either in the district wherein the transmittal of the prospectus or security complained of begins, or in the district wherein such prospectus or security is received.
(c)Writ of mandamus
Upon application of the Commission, the district courts of the United States and the United States courts of any Territory shall have jurisdiction to issue writs of mandamus commanding any person to comply with the provisions of this subchapter or any order of the Commission made in pursuance thereof.
(d)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 77h–1 of this title, other than by committing a violation subject to a penalty pursuant to section 78u–1 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 and section 78u–6 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 77v of this title, actions under this section 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 77h–1 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 such an order, each day of the failure to comply with the order shall be deemed a separate offense.
(e)Authority of court to prohibit persons from serving as officers and directors
In any proceeding under subsection (b), the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 77q(a)(1) of this title from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 78l of this title or that is required to file reports pursuant to section 78o(d) of this title if the person’s conduct demonstrates unfitness to serve as an officer or director of any such issuer.
(f)Prohibition of attorneys’ fees paid from Commission disgorgement funds
Except as otherwise ordered by the court upon motion by the Commission, or, in the case of an administrative action, as otherwise ordered by the Commission, funds disgorged as the result of an action brought by the Commission in Federal court, or as a result of any Commission administrative action, shall not be distributed as payment for attorneys’ fees or expenses incurred by private parties seeking distribution of the disgorged funds.
(g)Authority of a court to prohibit persons from participating in an offering of penny stock
(1)In general
In any proceeding under subsection (a) against any person participating in, or, at the time of the alleged misconduct, who was participating in, an offering of penny stock, the court may prohibit that person from participating in an offering of penny stock, conditionally or unconditionally, and permanently or for such period of time as the court shall determine.
(2)Definition
For purposes of this subsection, the term “person participating in an offering of penny stock” includes any person engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of, any penny stock. The Commission may, by rule or regulation, define such term to include other activities, and may, by rule, regulation, or order, exempt any person or class of persons, in whole or in part, conditionally or unconditionally, from inclusion in such term.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2010—Subsec. (d)(3)(A). Pub. L. 111–203 inserted “and section 78u–6 of this title” after “section 7246 of this title”. 2002—Subsec. (d)(3)(A). Pub. L. 107–204, § 308(d)(3), inserted “, except as otherwise provided in section 7246 of this title” before period at end. Subsec. (e). Pub. L. 107–204, § 305(a)(2), substituted “unfitness” for “substantial unfitness”. Subsec. (g). Pub. L. 107–204, § 603(b), added subsec. (g). 1995—Subsec. (f). Pub. L. 104–67 added subsec. (f). 1990—Subsecs. (d), (e). Pub. L. 101–429 added subsecs. (d) and (e). 1987—Subsec. (b). Pub. L. 100–181, § 208(a), inserted first sentence and struck out former first sentence containing similar provisions. Subsec. (c). Pub. L. 100–181, § 208(b), amended subsec. (c) generally.
Statutory Notes and Related Subsidiaries
Effective Date
of 2010 AmendmentAmendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an
Effective Date
note under section 5301 of Title 12, Banks and Banking.
Effective Date
of 1995 AmendmentAmendment by Pub. L. 104–67 not to affect or apply to any private action arising under this subchapter or title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), commenced before and pending on Dec. 22, 1995, see section 108 of Pub. L. 104–67, set out as a note under section 77l of this title.
Effective Date
of 1990 AmendmentAmendment by Pub. L. 101–429 effective Oct. 15, 1990, with provisions relating to civil penalties and accounting and disgorgement, see section 1(c)(1) and (2) of Pub. L. 101–429, set out in a note under section 77g of this title.
Construction
of 1995 AmendmentNothing in amendment by Pub. L. 104–67 to be deemed to create or ratify any implied right of action, or to prevent Commission, by rule or regulation, from restricting or otherwise regulating private actions under Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), see section 203 of Pub. L. 104–67, set out as a
Construction
note under section 78j–1 of this title.
Executive Documents
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, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.
Reference
Citations & Metadata
Citation
15 U.S.C. § 77t
Title 15, Commerce and Trade
Last Updated
Sep 22, 2026
Release point: 119-110