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Home > Blog > Bill Seeks Tougher Punishment for Wall Street Fraud

Bill Seeks Tougher Punishment for Wall Street Fraud

Recently introduced legislation could allow the Securities and Exchange Commission (SEC) to impose fines on individuals of up to $1 million per securities violation and up to $10 million per violation for financial firms.

As reported July 23 by Investment News, the bill would enable the SEC to impose the fines or charge three times the amount of ill-gotten gains or investor losses, whichever is greater. In addition, the SEC could triple the penalty for violators who had been convicted of fraud or received an SEC administrative sanction within the previous five years.

Under current law, SEC civil penalties are capped at $150,000 per offense for individuals and $725,000 per offense for firms.

“If a fine is just decimal dust for a Wall Street firm, that’s not a deterrent,” said the bill’s co-sponsor Iowa Republican Chuck Grassley in a statement. “A penalty should mean something.

In a recent SEC settlement cited by Grassley and the bill’s other co-sponsor, Rhode Island Democrat Jack Reed, former Bear Stears hedge fund managers were forced to pay civil penalties totaling about $1 million, following their indictment of defrauding investors out of $1.6 billion.


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