Sponsor
Pete Sessions
Representative · R-TX
Representative · R-TX
The bill reduces duplicate or stacked penalties and legal uncertainty for firms and small market participants, but trades off stronger monetary deterrence and recoveries for harmed investors and imposes greater burdens on enforcement authorities.
Companies and investment advisers (financial firms) will face fewer duplicated or stacked penalties when multiple violations arise from the same root cause, reducing total fines and compliance costs for those firms.
Small businesses and market participants are less likely to suffer disproportionately large civil penalties for technical, overlapping, or continuing compliance failures, lowering the risk of ruinous sanctions.
Regulators, firms, and state authorities may face clearer rules on how related noncompliance is aggregated for penalty purposes, which can reduce litigation and enforcement complexity and uncertainty.
Investors and harmed parties could receive smaller monetary recoveries and face weaker deterrence because penalties may be reduced when multiple violations are treated as a single underlying cause.
Firms may be incentivized to characterize separate improper acts as stemming from a single cause to minimize penalties, potentially enabling gamesmanship that weakens enforcement effectiveness.
The SEC (and ultimately taxpayers) could face higher burdens and costs to prove that violations are distinct, increasing enforcement effort, delaying restitution to harmed investors, and raising public enforcement costs.
Based on analysis of 2 sections of legislative text.
Standardizes penalty aggregation so related securities violations arising from the same cause, same misstatement, or continuing failure count as a single violation for civil penalty calculations across major securities laws.
Official title: To amend the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisors Act of 1940 with respect to the determination of violations.
Introduced January 7, 2025 by Pete Sessions · Last progress January 7, 2025
Limits how separate acts of noncompliance are counted for civil penalty purposes under major federal securities laws by treating multiple related misstatements, overlapping causes, or continuing failures as a single violation for penalty calculation. The change applies in parallel to the Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, and Investment Advisers Act of 1940.