Sponsor
Pete Sessions
Representative · R-TX
Representative · R-TX
The bill reduces duplicative penalties and simplifies penalty aggregation for firms—easing regulatory and financial burdens on businesses—but does so at the cost of weaker deterrence, smaller recoveries for harmed investors, and higher enforcement burdens on regulators.
Companies, investment advisers, and small businesses face fewer duplicative or overlapping penalties when related violations stem from the same root cause, reducing total fines and lowering the risk of ruinous sanctions for affected firms.
Clarifies how multiple related noncompliance acts are aggregated for penalty purposes, which can reduce litigation and enforcement complexity for regulators and firms.
Investors and harmed parties may recover smaller monetary penalties from wrongdoers, weakening deterrence and reducing restitution for those harmed by securities violations.
Firms could be incentivized to characterize separate improper acts as arising from a single cause to minimize penalties, making enforcement harder and potentially allowing more misconduct to go insufficiently punished.
Shifts a greater burden onto the SEC (or enforcers) to prove that violations are distinct, likely increasing enforcement costs and potentially delaying investor restitution.
Based on analysis of 2 sections of legislative text.
Standardizes counting of related securities noncompliance as a single violation for civil‑penalty calculations when tied to a common cause, the same misstatement/omission, or a continuing failure.
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
Creates a rule across major federal securities laws that counts multiple related compliance failures as a single violation for purposes of civil-penalty calculations when they arise from a common cause, the same misstatement or omission, or a continuing failure to comply. The change amends penalty calculation provisions in the 1933 and 1934 securities acts and the 1940 investment company and adviser statutes without creating new agencies, deadlines, or funding.