Section 929P of the Dodd-Frank Act amended, among other things, Section 21B(a) of the Securities Exchange Act to permit the SEC to impose civil monetary penalties in administrative cease-and-desist proceedings before an administrative law judge. The provision eliminates the need for the SEC to seek a court order imposing civil penalties following the entry of a cease-and-desist order.
The SEC recently brought a high profile administrative action against Rajat K. Gupta, alleging Mr. Gupta on a number of occasions disclosed material non-public information that he obtained in the course of his duties as a member of the Boards of Directors of Goldman Sachs and Procter & Gamble. In the order commencing the action, the SEC requests a determination of whether Mr. Gupta should be ordered to pay disgorgement pursuant to 21C(e) of the Exchange Act and penalties pursuant to Section 21B(a)(2) of the Exchange Act. Since the SEC is seeking civil penalties in this cease-and-desist administrative action, it appears to be a high profile use of this new tool in the SEC’s enforcement arsenal.
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