Stronger Enforcement of Civil Penalties Act of 2025
This bill, formally titled the "Stronger Enforcement of Civil Penalties Act of 2025," significantly increases financial penalties for violations of federal securities laws and strengthens enforcement mechanisms. Its primary purpose is to modernize penalty structures that have not kept pace with inflation or the scale of modern financial misconduct, thereby enhancing the Securities and Exchange Commission’s (SEC) ability to deter fraud and misconduct. The legislation achieves this by raising baseline penalty amounts across all major securities statutes, introducing a new high-severity penalty tier tied to illicit gains or victim losses, imposing tripled penalties for repeat offenders, and treating each day of noncompliance with court orders as a separate violation. If enacted, this would substantially increase financial risks for individuals and entities violating securities rules, potentially leading to larger settlements, stronger compliance incentives, and more robust victim restitution.
Key Points
- 1Increased baseline penalties**: Raises first- and second-tier civil penalties by 50–100% across all covered laws (e.g., maximums for individuals jump from $5,000 to $10,000 for minor violations and $50,000 to $100,000 for moderate violations per offense).
- 2New third-tier penalties: Creates a high-severity penalty tier where violators face the *greater* of: $1 million for individuals/$10 million for entities, 3 times their illicit profits, or full reimbursement of victim losses**—applying to fraud, reckless misconduct, or actions causing significant financial harm.
- 3Tripled penalties for repeat offenders: Imposes penalties three times higher** for violations occurring within 5 years of a prior securities fraud conviction or SEC enforcement action (e.g., a $100,000 penalty becomes $300,000).
- 4Daily violation rule for injunctions: Treats each day of noncompliance** with court injunctions, SEC bars, or cease-and-desist orders as a separate offense, enabling massive cumulative penalties for ongoing violations.
- 5Uniform application**: Applies these changes consistently across all major securities laws, including the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Company/Advisers Acts of 1940.