---
kind: "section"
citation: "15 U.S.C. § 77h–1"
title: "15"
title_heading: "Commerce and Trade"
number: "77h–1"
heading: "Cease-and-desist proceedings"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/77h-1"
units:
  - "Chapter 2A — Securities and Trust Indentures"
  - "Subchapter I — Domestic Securities"
---

# §77h–1. Cease-and-desist proceedings

- (a) **Authority of Commission—** If the [Commission](/usc/15/77b.md?p=a-5) finds, after notice and opportunity for hearing, that any [person](/usc/15/77b.md?p=a-2) is violating, has violated, or is about to violate any provision of this subchapter, or any rule or regulation thereunder, the [Commission](/usc/15/77b.md?p=a-5) may publish its findings and enter an order requiring such [person](/usc/15/77b.md?p=a-2), and any other [person](/usc/15/77b.md?p=a-2) that is, was, or would be a cause of the violation, due to an act or omission the [person](/usc/15/77b.md?p=a-2) knew or should have known would contribute to such violation, to cease and desist from committing or causing such violation and any future violation of the same provision, rule, or regulation. Such order may, in addition to requiring a [person](/usc/15/77b.md?p=a-2) to cease and desist from committing or causing a violation, require such [person](/usc/15/77b.md?p=a-2) to comply, or to take steps to effect compliance, with such provision, rule, or regulation, upon such terms and conditions and within such time as the [Commission](/usc/15/77b.md?p=a-5) may specify in such order. Any such order may, as the [Commission](/usc/15/77b.md?p=a-5) deems appropriate, require future compliance or steps to effect future compliance, either permanently or for such period of time as the [Commission](/usc/15/77b.md?p=a-5) may specify, with such provision, rule, or regulation with respect to any [security](/usc/15/77b.md?p=a-1), any [issuer](/usc/15/77b.md?p=a-4), or any other [person](/usc/15/77b.md?p=a-2).
- (b) **Hearing—** The notice instituting proceedings pursuant to [subsection (a)](#a) shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or a later date is set by the [Commission](/usc/15/77b.md?p=a-5) with the consent of any respondent so served.
- (c) **Temporary order—**
  - (1) **In general—** Whenever the [Commission](/usc/15/77b.md?p=a-5) determines that the alleged violation or threatened violation specified in the notice instituting proceedings pursuant to [subsection (a)](#a), or the continuation thereof, is likely to result in significant dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest, including, but not limited to, losses to the [Securities](/usc/15/77b.md?p=a-1) Investor Protection Corporation, prior to the completion of the proceedings, the [Commission](/usc/15/77b.md?p=a-5) may enter a temporary order requiring the respondent to cease and desist from the violation or threatened violation and to take such action to prevent the violation or threatened violation and to prevent dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest as the [Commission](/usc/15/77b.md?p=a-5) deems appropriate pending completion of such proceeding. Such an order shall be entered only after notice and opportunity for a hearing, unless the [Commission](/usc/15/77b.md?p=a-5) determines that notice and hearing prior to entry would be impracticable or contrary to the public interest. A temporary order shall become effective upon service upon the respondent and, unless set aside, limited, or suspended by the [Commission](/usc/15/77b.md?p=a-5) or a court of competent jurisdiction, shall remain effective and enforceable pending the completion of the proceedings.
  - (2) **Applicability—** This subsection shall apply only to a respondent that acts, or, at the time of the alleged misconduct acted, as a broker, [dealer](/usc/15/77b.md?p=a-12), investment adviser, investment company, municipal [securities](/usc/15/77b.md?p=a-1) [dealer](/usc/15/77b.md?p=a-12), government [securities](/usc/15/77b.md?p=a-1) broker, government [securities](/usc/15/77b.md?p=a-1) [dealer](/usc/15/77b.md?p=a-12), or transfer agent, or is, or was at the time of the alleged misconduct, an associated [person](/usc/15/77b.md?p=a-2) of, or a [person](/usc/15/77b.md?p=a-2) seeking to become associated with, any of the foregoing.
- (d) **Review of temporary orders—**
  - (1) **Commission review—** At any time after the respondent has been served with a temporary cease-and-desist order pursuant to [subsection (c)](#c), the respondent may apply to the [Commission](/usc/15/77b.md?p=a-5) to have the order set aside, limited, or suspended. If the respondent has been served with a temporary cease-and-desist order entered without a prior [Commission](/usc/15/77b.md?p=a-5) hearing, the respondent may, within 10 days after the date on which the order was served, request a hearing on such application and the [Commission](/usc/15/77b.md?p=a-5) shall hold a hearing and render a decision on such application at the earliest possible time.
  - (2) **Judicial review—** Within—
    - (A) 10 days after the date the respondent was served with a temporary cease-and-desist order entered with a prior [Commission](/usc/15/77b.md?p=a-5) hearing, or
    - (B) 10 days after the [Commission](/usc/15/77b.md?p=a-5) renders a decision on an application and hearing under [paragraph (1)](#d-1), with respect to any temporary cease-and-desist order entered without a prior [Commission](/usc/15/77b.md?p=a-5) hearing,

    the respondent may apply to the United States district court for the district in which the respondent resides or has its principal place of business, or for the District of Columbia, for an order setting aside, limiting, or suspending the effectiveness or enforcement of the order, and the court shall have jurisdiction to enter such an order. A respondent served with a temporary cease-and-desist order entered without a prior [Commission](/usc/15/77b.md?p=a-5) hearing may not apply to the court except after hearing and decision by the [Commission](/usc/15/77b.md?p=a-5) on the respondent’s application under paragraph (1) of this subsection.

  - (3) **No automatic stay of temporary order—** The commencement of proceedings under paragraph (2) of this subsection shall not, unless specifically ordered by the court, operate as a stay of the [Commission](/usc/15/77b.md?p=a-5)’s order.
  - (4) **Exclusive review—** [Section 77i(a) of this title](/usc/15/77i.md?p=a) shall not apply to a temporary order entered pursuant to this section.
- (e) **Authority to enter order requiring accounting and disgorgement—** In any cease-and-desist proceeding under [subsection (a)](#a), the [Commission](/usc/15/77b.md?p=a-5) may enter an order requiring accounting and disgorgement, including reasonable interest. The [Commission](/usc/15/77b.md?p=a-5) is authorized to adopt rules, regulations, and orders concerning payments to investors, rates of interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.
- (f) **Authority of the Commission to prohibit persons from serving as officers or directors—** In any cease-and-desist proceeding under [subsection (a)](#a), the [Commission](/usc/15/77b.md?p=a-5) may issue an order to prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any [person](/usc/15/77b.md?p=a-2) who has violated [section 77q(a)(1) of this title](/usc/15/77q.md?p=a-1) or the rules or regulations thereunder, from acting as an officer or director of any [issuer](/usc/15/77b.md?p=a-4) that has a class of [securities](/usc/15/77b.md?p=a-1) registered pursuant to [section 78l](/usc/15/78l.md) of this title, or that is required to file reports pursuant to [section 78o(d)](/usc/15/78o.md?p=d) of this title, if the conduct of that [person](/usc/15/77b.md?p=a-2) demonstrates unfitness to serve as an officer or director of any such [issuer](/usc/15/77b.md?p=a-4).
- (g) **Authority to impose money penalties—**
  - (1) **Grounds—** In any cease-and-desist proceeding under [subsection (a)](#a), the [Commission](/usc/15/77b.md?p=a-5) may impose a civil penalty on a [person](/usc/15/77b.md?p=a-2) if the [Commission](/usc/15/77b.md?p=a-5) finds, on the record, after notice and opportunity for hearing, that—
    - (A) such [person](/usc/15/77b.md?p=a-2)—
      - (i) is violating or has violated any provision of this subchapter, or any rule or regulation issued under this subchapter; or
      - (ii) is or was a cause of the violation of any provision of this subchapter, or any rule or regulation thereunder; and
    - (B) such 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)](#g-1) shall be $7,500 for a natural [person](/usc/15/77b.md?p=a-2) or $75,000 for any other [person](/usc/15/77b.md?p=a-2).
    - (B) **Second tier—** Notwithstanding [subparagraph (A)](#g-2-A), the maximum amount of penalty for each such act or omission shall be $75,000 for a natural [person](/usc/15/77b.md?p=a-2) or $375,000 for any other [person](/usc/15/77b.md?p=a-2), if the act or omission described in [paragraph (1)](#g-1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
    - (C) **Third tier—** Notwithstanding subparagraphs [(A)](#g-2-A) and [(B)](#g-2-B), the maximum amount of penalty for each such act or omission shall be $150,000 for a natural [person](/usc/15/77b.md?p=a-2) or $725,000 for any other [person](/usc/15/77b.md?p=a-2), if—
      - (i) the act or omission described in [paragraph (1)](#g-1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and
      - (ii) such act or omission directly or indirectly resulted in—
        - (I) substantial losses or created a significant risk of substantial losses to other [persons](/usc/15/77b.md?p=a-2); or
        - (II) substantial pecuniary gain to the [person](/usc/15/77b.md?p=a-2) who committed the act or omission.
  - (3) **Evidence concerning ability to pay—** In any proceeding in which the [Commission](/usc/15/77b.md?p=a-5) may impose a penalty under this section, a respondent may present evidence of the ability of the respondent to pay such penalty. The [Commission](/usc/15/77b.md?p=a-5) 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.

## Source credit

(May 27, 1933, ch. 38, title I, § 8A, as added Pub. L. 101–429, title I, § 102, Oct. 15, 1990, 104 Stat. 933; amended Pub. L. 107–204, title XI, § 1105(b), July 30, 2002, 116 Stat. 809; Pub. L. 111–203, title IX, § 929P(a)(1), July 21, 2010, 124 Stat. 1862.)

## Notes

### Editorial Notes

### Amendments

2010—Subsec. (g). Pub. L. 111–203 added subsec. (g).

2002—Subsec. (f). Pub. L. 107–204 added subsec. (f).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2010 Amendment

Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking.

### Effective Date

Section effective Oct. 15, 1990, with provisions relating to civil penalties and accounting and disgorgement, see section 1(c)(1) and (2) of Pub. L. 101–429, set out in an Effective Date of 1990 Amendment note under section 77g of this title.