S.Amdt. 4145

SA 4145. Mr. CORNYN submitted an amendment intended to be proposed to
amendment SA 3776 proposed by Mr. Specter (for himself, Mr. Reed, Mr.
Kaufman, Mr. Durbin, Mr. Harkin, Mr. Leahy, Mr. Levin, Mr. Menendez,
Mr. Whitehouse, Mr. Franken, Mr. Feingold, and Mr. Merkley) to the
amendment SA 3739 proposed by Mr. Reid (for Mr. Dodd (for himself and
Mrs. Lincoln)) to the bill S. 3217, to promote the financial stability
of the United States by improving accountability and transparency in
the financial system, to end ``too big to fail'', to protect the
American taxpayer by ending bailouts, to protect consumers from abusive
financial services practices, and for other purposes; which was ordered
to lie on the table; as follows:

In lieu of the matter proposed to be inserted, insert the
following:

SEC. 929D. AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE-AND-
DESIST PROCEEDINGS.

(a) Under the Securities Act of 1933.--Section 8A of the
Securities Act of 1933 (15 U.S.C. 77h-1) is amended by adding
at the end the following:
``(g) Authority to Impose Money Penalties.--
``(1) Grounds.--In any cease-and-desist proceeding under
subsection (a), the Commission may impose a civil penalty on
a person, if the Commission finds, on the record, after
notice and opportunity for hearing, that--
``(A) the person--
``(i) is violating or has violated any provision of this
title, or any rule or regulation issued under this title; or
``(ii) is or was a cause of the violation of any provision
of this title, or any rule or regulation thereunder; and
``(B) the imposition of the penalty is in the public
interest.
``(2) Maximum amount of penalty.--
``(A) First tier.--The maximum amount of a penalty for each
act or omission described in paragraph (1) shall be $7,500
for a natural person or $75,000 for any other person.
``(B) Second tier.--Notwithstanding subparagraph (A), if
the act or omission described in paragraph (1) involved
fraud, deceit, manipulation, or deliberate or reckless

[[Page S4014]]

disregard of a regulatory requirement, the maximum amount of
penalty for each act or omission shall be $75,000 for a
natural person or $375,000 for any other person.
``(C) Third tier.--Notwithstanding subparagraphs (A) and
(B), the maximum amount of penalty for each act or omission
described in paragraph (1) shall be $150,000 for a natural
person or $725,000 for any other person, if--
``(i) the act or omission involved fraud, deceit,
manipulation, or deliberate or reckless disregard of a
regulatory requirement; and
``(ii) the act or omission directly or indirectly resulted
in--

``(I) substantial losses or created a significant risk of
substantial losses to other persons; or
``(II) substantial pecuniary gain to the person who
committed the act or omission.

``(3) Evidence concerning ability to pay.--In any
proceeding in which the Commission may impose a penalty under
this section, a respondent may present evidence of the
ability of the respondent to pay such penalty. The Commission
may, in its discretion, consider such evidence in determining
whether such penalty is in the public interest. Such evidence
may relate to the extent of the ability of the respondent to
continue in business and the collectability of a penalty,
taking into account any other claims of the United States or
third parties upon the assets of the respondent and the
amount of the assets of the respondent.''.
(b) Under the Securities Exchange Act of 1934.--Section
21B(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78u-
2(a)) is amended--
(1) by striking the undesignated matter immediately
following paragraph (4);
(2) in the matter preceding paragraph (1), by inserting
after ``opportunity for hearing,'' the following: ``that such
penalty is in the public interest and'';
(3) by redesignating paragraphs (1) through (4) as
subparagraphs (A) through (D), respectively, and adjusting
the subparagraph margins accordingly;
(4) by striking ``In any proceeding'' and inserting the
following:
``(1) In general.--In any proceeding''; and
(5) by adding at the end the following:
``(2) Cease-and-desist proceedings.--In any proceeding
instituted under section 21C against any person, the
Commission may impose a civil penalty, if the Commission
finds, on the record after notice and opportunity for
hearing, that such person--
``(A) is violating or has violated any provision of this
title, or any rule or regulation issued under this title; or
``(B) is or was a cause of the violation of any provision
of this title, or any rule or regulation issued under this
title.''.
(c) Under the Investment Company Act of 1940.--Section
9(d)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a-
9(d)(1)) is amended--
(1) by striking the matter immediately following
subparagraph (C);
(2) in the matter preceding subparagraph (A), by inserting
after ``opportunity for hearing,'' the following: ``that such
penalty is in the public interest, and'';
(3) by redesignating subparagraphs (A) through (C) as
clauses (i) through (iii), respectively, and adjusting the
clause margins accordingly;
(4) by striking ``In any proceeding'' and inserting the
following:
``(A) In general.--In any proceeding''; and
(5) by adding at the end the following:
``(B) Cease-and-desist proceedings.--In any proceeding
instituted pursuant to subsection (f) against any person, the
Commission may impose a civil penalty if the Commission
finds, on the record, after notice and opportunity for
hearing, that such person--
``(i) is violating or has violated any provision of this
title, or any rule or regulation issued under this title; or
``(ii) is or was a cause of the violation of any provision
of this title, or any rule or regulation issued under this
title.''.
(d) Under the Investment Advisers Act of 1940.--Section
203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-3(i)(1)) is amended--
(1) by striking the undesignated matter immediately
following subparagraph (D);
(2) in the matter preceding subparagraph (A), by inserting
after ``opportunity for hearing,'' the following: ``that such
penalty is in the public interest and'';
(3) by redesignating subparagraphs (A) through (D) as
clauses (i) through (iv), respectively, and adjusting the
clause margins accordingly;
(4) by striking ``In any proceeding'' and inserting the
following:
``(A) In general.--In any proceeding''; and
(5) by adding at the end the following:
``(B) Cease-and-desist proceedings.--In any proceeding
instituted pursuant to subsection (k) against any person, the
Commission may impose a civil penalty if the Commission
finds, on the record, after notice and opportunity for
hearing, that such person--
``(i) is violating or has violated any provision of this
title, or any rule or regulation issued under this title; or
``(ii) is or was a cause of the violation of any provision
of this title, or any rule or regulation issued under this
title.''.
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