---
kind: "section"
citation: "15 U.S.C. § 78u–2"
title: "15"
title_heading: "Commerce and Trade"
number: "78u–2"
heading: "Civil remedies in administrative proceedings"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/78u-2"
units:
  - "Chapter 2B — Securities Exchanges"
---

# §78u–2. Civil remedies in administrative proceedings

- (a) **Commission authority to assess money penalties—**
  - (1) **In general—** In any proceeding instituted pursuant to sections [78o(b)(4)](/usc/15/78o.md?p=b-4), [78o(b)(6)](/usc/15/78o.md?p=b-6), [78o–6](/usc/15/78o–6.md), [78o–4](/usc/15/78o–4.md), [78o–5](/usc/15/78o–5.md), [78o–7](/usc/15/78o–7.md), or [78q–1](/usc/15/78q–1.md) of this title against any [person](/usc/15/78c.md?p=a-9), the [Commission](/usc/15/78c.md?p=a-15) or the [appropriate regulatory agency](/usc/15/78c.md?p=a-34) may impose a civil penalty if it finds, on the record after notice and opportunity for hearing, that such penalty is in the public interest and that such [person](/usc/15/78c.md?p=a-9)—
    - (A) has willfully violated any provision of the Securities Act of 1933 [[15 U.S.C. 77a](/usc/15/77a.md) et seq.], the Investment Company Act of 1940 [[15 U.S.C. 80a–1](/usc/15/80a–1.md) et seq.], the Investment Advisers Act of 1940 [[15 U.S.C. 80b–1](/usc/15/80b–1.md) et seq.], or this chapter, or the rules or regulations thereunder, or the rules of the [Municipal Securities](/usc/15/78c.md?p=a-29) Rulemaking [Board](/usc/15/78c.md?p=a-73);
    - (B) has willfully aided, abetted, counseled, commanded, induced, or procured such a violation by any other [person](/usc/15/78c.md?p=a-9);
    - (C) has willfully made or caused to be made in any application for registration or report required to be filed with the [Commission](/usc/15/78c.md?p=a-15) or with any other [appropriate regulatory agency](/usc/15/78c.md?p=a-34) under this chapter, or in any proceeding before the [Commission](/usc/15/78c.md?p=a-15) with respect to registration, any statement which was, at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, or has omitted to [state](/usc/15/78c.md?p=a-16) in any such application or report any material fact which is required to be stated therein; or
    - (D) has failed reasonably to supervise, within the meaning of [section 78o(b)(4)(E)](/usc/15/78o.md?p=b-4-E) of this title, with a view to preventing violations of the provisions of such statutes, rules and regulations, another [person](/usc/15/78c.md?p=a-9) who commits such a violation, if such other [person](/usc/15/78c.md?p=a-9) is subject to his supervision;[^1]
  - (2) **Cease-and-desist proceedings—** In any proceeding instituted under [section 78u–3 of this title](/usc/15/78u–3.md) against any [person](/usc/15/78c.md?p=a-9), the [Commission](/usc/15/78c.md?p=a-15) may impose a civil penalty, if the [Commission](/usc/15/78c.md?p=a-15) finds, on the record after notice and opportunity for hearing, that such [person](/usc/15/78c.md?p=a-9)—
    - (A) is violating or has violated any provision of this chapter, or any rule or regulation issued under this chapter; or
    - (B) is or was a cause of the violation of any provision of this chapter, or any rule or regulation issued under this chapter.
- (b) **Maximum amount of penalty—**
  - (1) **First tier—** The maximum amount of penalty for each act or omission described in [subsection (a)](#a) shall be $5,000 for a natural [person](/usc/15/78c.md?p=a-9) or $50,000 for any other [person](/usc/15/78c.md?p=a-9).
  - (2) **Second tier—** Notwithstanding [paragraph (1)](#b-1), the maximum amount of penalty for each such act or omission shall be $50,000 for a natural [person](/usc/15/78c.md?p=a-9) or $250,000 for any other [person](/usc/15/78c.md?p=a-9) if the act or omission described in [subsection (a)](#a) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
  - (3) **Third tier—** Notwithstanding paragraphs [(1)](#b-1) and [(2)](#b-2), the maximum amount of penalty for each such act or omission shall be $100,000 for a natural [person](/usc/15/78c.md?p=a-9) or $500,000 for any other [person](/usc/15/78c.md?p=a-9) if—
    - (A) the act or omission described in [subsection (a)](#a) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and
    - (B) such act or omission directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other [persons](/usc/15/78c.md?p=a-9) or resulted in substantial pecuniary gain to the [person](/usc/15/78c.md?p=a-9) who committed the act or omission.
- (c) **Determination of public interest—** In considering under this section whether a penalty is in the public interest, the [Commission](/usc/15/78c.md?p=a-15) or the [appropriate regulatory agency](/usc/15/78c.md?p=a-34) may consider—
  - (1) whether the act or omission for which such penalty is assessed involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement;
  - (2) the harm to other [persons](/usc/15/78c.md?p=a-9) resulting either directly or indirectly from such act or omission;
  - (3) the extent to which any [person](/usc/15/78c.md?p=a-9) was unjustly enriched, taking into account any restitution made to [persons](/usc/15/78c.md?p=a-9) injured by such behavior;
  - (4) whether such [person](/usc/15/78c.md?p=a-9) previously has been found by the [Commission](/usc/15/78c.md?p=a-15), another [appropriate regulatory agency](/usc/15/78c.md?p=a-34), or a [self-regulatory organization](/usc/15/78c.md?p=a-26) to have violated the Federal [securities laws](/usc/15/78c.md?p=a-47), [State](/usc/15/78c.md?p=a-16) [securities laws](/usc/15/78c.md?p=a-47), or the [rules of a self-regulatory organization](/usc/15/78c.md?p=a-28), has been enjoined by a court of competent jurisdiction from violations of such laws or rules, or has been convicted by a court of competent jurisdiction of violations of such laws or of any felony or misdemeanor described in [section 78o(b)(4)(B)](/usc/15/78o.md?p=b-4-B) of this title;
  - (5) the need to deter such [person](/usc/15/78c.md?p=a-9) and other [persons](/usc/15/78c.md?p=a-9) from committing such acts or omissions; and
  - (6) such other matters as justice may require.
- (d) **Evidence concerning ability to pay—** In any proceeding in which the [Commission](/usc/15/78c.md?p=a-15) or the [appropriate regulatory agency](/usc/15/78c.md?p=a-34) may impose a penalty under this section, a respondent may present evidence of the respondent’s ability to pay such penalty. The [Commission](/usc/15/78c.md?p=a-15) or the [appropriate regulatory agency](/usc/15/78c.md?p=a-34) 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 such [person](/usc/15/78c.md?p=a-9)’s ability to continue in business and the collectability of a penalty, taking into account any other claims of the United States or third parties upon such [person](/usc/15/78c.md?p=a-9)’s assets and the amount of such [person](/usc/15/78c.md?p=a-9)’s assets.
- (e) **Authority to enter order requiring accounting and disgorgement—** In any proceeding in which the [Commission](/usc/15/78c.md?p=a-15) or the [appropriate regulatory agency](/usc/15/78c.md?p=a-34) may impose a penalty under this section, the [Commission](/usc/15/78c.md?p=a-15) or the [appropriate regulatory agency](/usc/15/78c.md?p=a-34) may enter an order requiring accounting and disgorgement, including reasonable interest. The [Commission](/usc/15/78c.md?p=a-15) 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) **Security-based swaps—**
  - (1) **Clearing agency—** Any [clearing agency](/usc/15/78c.md?p=a-23-A) that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of [section 78c–3 of this title](/usc/15/78c–3.md) shall be liable for a civil money penalty in twice the amount otherwise available for a violation of [section 78c–3 of this title](/usc/15/78c–3.md).
  - (2) **Security-based swap dealer or major security-based swap participant—** Any [security-based swap dealer](/usc/15/78c.md?p=a-71-A) or [major security-based swap participant](/usc/15/78c.md?p=a-67-A) that knowingly or recklessly evades or participates in or facilitates an evasion of the requirements of [section 78c–3 of this title](/usc/15/78c–3.md) shall be liable for a civil money penalty in twice the amount otherwise available for a violation of [section 78c–3 of this title](/usc/15/78c–3.md).

## Footnotes

[^1]: So in original. The semicolon probably should be a period.

## Source credit

(June 6, 1934, ch. 404, title I, § 21B, as added Pub. L. 101–429, title II, § 202(a), Oct. 15, 1990, 104 Stat. 937; amended Pub. L. 107–204, title V, § 501(b), July 30, 2002, 116 Stat. 793; Pub. L. 109–291, § 4(b)(1)(B), Sept. 29, 2006, 120 Stat. 1337; Pub. L. 111–203, title VII, § 773, title IX, § 929P(a)(2), July 21, 2010, 124 Stat. 1802, 1863.)

## Notes

### Editorial Notes

### References in Text

The Securities Act of 1933, referred to in subsec. (a)(1)(A), is act May 27, 1933, ch. 38, title I, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. For complete classification of this Act to the Code, see section 77a of this title and Tables.

The Investment Company Act of 1940, referred to in subsec. (a)(1)(A), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, which is classified generally to subchapter I (§ 80a–1 et seq.) of chapter 2D of this title. For complete classification of this Act to the Code, see section 80a–51 of this title and Tables.

The Investment Advisers Act of 1940, referred to in subsec. (a)(1)(A), is title II of act Aug. 22, 1940, ch. 686, 54 Stat. 847, which is classified generally to subchapter II (§ 80b–1 et seq.) of chapter 2D of this title. For complete classification of this Act to the Code, see section 80b–20 of this title and Tables.

This chapter, referred to in subsec. (a)(1)(A), (C), (2), was in the original “this title”. See References in Text note set out under section 78a of this title.

### Amendments

2010—Subsec. (a). Pub. L. 111–203, § 929P(a)(2), designated existing provisions as par. (1) and inserted heading, inserted “that such penalty is in the public interest and” before “that such person—” in introductory provisions, redesignated former pars. (1) to (4) as subpars. (A) to (D), respectively, of par. (1) and realigned margins, struck out concluding provisions which read “and that such penalty is in the public interest.”, and added par. (2).

Subsec. (f). Pub. L. 111–203, § 773, added subsec. (f).

2006—Subsec. (a). Pub. L. 109–291 inserted “78o–7,” after “78o–5,” in introductory provisions.

2002—Subsec. (a). Pub. L. 107–204 inserted “78o–6,” before “78o–4,” in introductory provisions.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2010 Amendment

Amendment by section 929P(a)(2) of 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.

Amendment by section 773 of Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provision of subtitle B (§§ 761–774) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle B, see section 774 of Pub. L. 111–203, set out as a note under section 77b of this title.

### Effective Date

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