WASHINGTON - Two senators have introduced a bipartisan bill that would give the Securities and Exchange Commission the ability to levy higher civil monetary penalties against firms and individuals for securities law violations.
Sens. Jack Reed, D-R.I., and Chuck Grassley, R-Iowa, said in a joint statement Thursday their new bill, the Stronger Enforcement of Civil Penalties Act of 2015, is "an effort to protect investors and strengthen oversight and accountability of Wall Street."
Elaine Greenberg, a partner with Orrick, Herrington & Sutcliffe, said the bill would impact the SEC's enforcement actions against municipal entities and individuals for alleged fraud if it becomes law.
"Part of the remedies [the SEC] would seek as part of the enforcement action would be civil penalties," Greenberg said. "So this legislation, if it went through, would impact the SEC's ability to seek more severe and significant monetary penalties against municipal entities and persons associated with those entities."
The legislation is virtually identical to a measure both senators sponsored in 2012 that failed to gain traction.
The new bill would allow the SEC to penalize individuals up to $1 million for each serious offense if the penalty is not already tied to the amount of illegal money the individual received, up from the current maximum of $160,000.
The measure would also allow civil penalties of up to $10 million per violation for entities instead of the current $775,000. If the SEC finds individuals or entities that are repeat offenders within a five year period, it would be able to charge them triple the penalty cap and do so in-house as opposed to only in federal court.
"This bipartisan bill gives the SEC the firepower it needs to crack down on Wall Street fraud and punish repeat offenders," said Reed, a senior member of the Senate Banking Committee. "Investors deserve real protection, and the law needs to change to ensure the punishment fits the crime."
Grassley called the current fines the SEC can leverage "decimal dust" and said they are not deterrents but "just the cost of doing business."
"A penalty should mean something, and it should get the recidivists' attention," Grassley said.
The SEC was not immediately available for comment.
