116 S799 IS: Securities Fraud Enforcement and Investor Compensation Act of 2019 U.S. Senate 2019-03-14 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

II 116th CONGRESS1st Session S. 799 IN THE SENATE OF THE UNITED STATES March 14, 2019 Mr. Warner (for himself and Mr. Kennedy) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Securities Exchange Act of 1934 to clarify that the Securities and Exchange Commission may seek disgorgement and restitution as a result of a violation of the securities laws, to establish the statute of limitations for disgorgement and equitable actions brought by the Commission, and for other purposes.

1.

Short title

This Act may be cited as the Securities Fraud Enforcement and Investor Compensation Act of 2019.

2.

Investigations and prosecution of offenses for violations of the securities laws

(a)

In general

Section 21(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(d)) is amended— (1)in paragraph (3)— (A)in the paragraph heading— (i)by inserting Civil before Money penalties; and (ii)by striking in civil actions and inserting and authority to seek disgorgement; (B)in subparagraph (A), by striking jurisdiction to impose and all that follows through the period at the end and inserting the following: “jurisdiction to— (i)impose, upon a proper showing, a civil penalty to be paid by the person who committed such violation; and (ii)require disgorgement under paragraph (7) by the person who received any unjust enrichment as a result of such violation.; and (C)in subparagraph (B)— (i)in clause (i), in the first sentence, by striking the penalty and inserting a civil penalty imposed under subparagraph (A)(i); (ii)in clause (ii), by striking amount of penalty and inserting amount of a civil penalty imposed under subparagraph (A)(i); and (iii)in clause (iii), in the matter preceding item (aa), by striking amount of penalty for each such violation and inserting amount of a civil penalty imposed under subparagraph (A)(i) for each violation described in that subparagraph; (2)in paragraph (4), by inserting under paragraph (7) after funds disgorged; and (3)by adding at the end the following: (7)

Disgorgement

(A)

In general

In any action or proceeding brought by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may order, dis­gorge­ment of any unjust enrichment that a person obtained as a result of a violation of that provision. (B)

Calculation

Any disgorgement that is ordered with respect to a person under subparagraph (A) shall be offset by any amount of restitution that the person is ordered to pay under paragraph (8). (8)

Restitution

In any proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court, or, with respect to a proceeding instituted by the Commission, the Commission, may order restitution to an investor in the amount of the loss that the investor sustained as a result of a violation of that provision by a person that is— (A)registered as, or required to be registered as, a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, or transfer agent; or (B)associated with or, as of the date on which the violation occurs, seeking to become associated with, an entity described in subparagraph (A). (9)

Limitations periods

(A)

Disgorgement

The Commission may bring a claim for disgorgement under paragraph (7) not later than 5 years after the date on which the person against which the claim is brought receives any unjust enrichment as a result of the violation that gives rise to the action or proceeding in which the Commission seeks the claim. (B)

Equitable remedies

The Commission may seek a claim for any equitable remedy, including for restitution under paragraph (8), an injunction, or a bar, suspension, or cease and desist order, not later than 10 years after the latest date on which a violation that gives rise to the claim occurs. (C)

Calculation

For the purposes of calculating any limitations period under this paragraph with respect to an action or claim, any time in which the person against which the action or claim, as applicable, is brought is outside of the United States shall not count towards the accrual of that period. (10)

Rule of construction

Nothing in paragraph (7) or (8) may be construed as altering any right that any private party may have to maintain a suit for a violation of this Act. . (b)

Applicability

The amendments made by subsection (a) shall apply with respect to any action or proceeding that is commenced on or after the date of enactment of this Act.