SEC Increases Maximum Civil Penalties; Schapiro Lauds Proposed SEC Budget Increases

The SEC has raised by approximately 12% the maximum civil monetary penalty that it can impose in enforcement actions. The increase applies to actions under the Investment Company Act, the Investment Advisers Act, the Securities Act, the Securities Exchange Act, and certain provisions of Sarbanes-Oxley. The increase is required under a federal statute requiring inflation adjustment to penalty caps every 4 years. Separately, SEC Chairman Mary Schapiro commented on the proposed 13% increase in the SEC’s budget in President Obama’s budget plan, stating that the budget increase “would enable us to increase our staff and use new technology to pursue risk-based approaches that would better detect fraud and ensure stronger oversight of the nation’s securities markets.”

OUR TAKE: More resources, more penalties and, soon-to-come, more regulations. Despite the economic times, firms will have to increase resources allocated to regulatory compliance.

http://www.sec.gov/rules/final/2009/33-9009.pdf
http://www.sec.gov/news/press/2009/2009-37.htm