Updated with correction
Bills giving the SEC more time to impose civil penalties and increasing the size of penalties were approved Tuesday by the House Financial Services Committee. Both bills were referred to the House of Representatives for further action.
H.R. 3701 would increase to 10 years the current five-year statute of limitations on when the Securities and Exchange Commission can impose civil penalties. The bill would overturn a 2013 U.S. Supreme Court ruling in Gabelli vs. SEC that the five-year clock begins when the violation occurs, rather than when the SEC discovered it.
H.R. 3641 calls for higher statutory limits on SEC civil monetary penalties and a link between the size of the penalty and the scope of harm and investor losses. Caps on fines for individuals would increase to $1 million per violation from $181,071, and those for entities would rise to $10 million per violation, from $905,353. Penalty caps for recidivists would triple. The SEC would also be able to assess the penalties through administrative actions as well as in federal court.
Related legislation in the Senate introduced by Senate Banking Committee members Mark R. Warner, D -Va., and John Kennedy, R-La., would give the SEC 10 years to pursue fraud claims, including five years for disgorgement, and increase the civil penalties as well as the amount of compensation available for harmed investors. The Senate bill has not been voted on.
A bill that would require public companies to annually disclose financial and operational risks associated with climate change was also approved by the House Financial Services Committee and referred for a full House vote.