S. 2920: Stronger Enforcement of Civil Penalties Act of 2025

This bill, titled the "Stronger Enforcement of Civil Penalties Act of 2025," proposes to increase the monetary penalties imposed for violations of federal securities laws. It aims to address issues regarding enforcement by updating various penalty amounts associated with violations under several key acts, including the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940.

Provisions of the Bill

• Increased Penalties for Securities Act of 1933

  • Administrative actions:
    • The maximum penalty for first and second-tier violations will increase from $7,500 to $10,000 and from $75,000 to $100,000, respectively.
    • For third-tier violations, penalties can reach up to $1 million for individuals and $10 million for entities, or up to three times the financial gain obtained from the violation or the losses incurred by victims.
  • Civil actions:
    • First and second-tier penalties doubled, from $5,000 to $10,000 and from $50,000 to $100,000, respectively.
    • Similar third-tier penalties as mentioned above apply.

• Increased Penalties for Securities Exchange Act of 1934

  • Similar increases for civil penalties as outlined in the Securities Act of 1933.
  • Third-tier penalties would also follow the same structure reflecting potential monetary repercussions for fraud and other serious violations.

• Increased Penalties for Investment Company Act of 1940

  • Increased monetary penalties for both administrative actions and civil actions following similar patterns of escalation as in the prior acts.

• Increased Penalties for Investment Advisers Act of 1940

  • Administrative and civil penalties also receive increases, especially for severe violations categorized as third-tier.

Recidivism Penalties

The bill introduces a "fourth-tier" of penalties for individuals who have previously been convicted of securities fraud or have been involved in previous violations. In such cases, the penalties can triple compared to the standard set penalties for similar offenses occurring within a five-year period after the initial infraction.

Violations of Injunctions and Orders

Any violation of an injunction or order will be treated as a separate offense. Continuous non-compliance will also be treated as ongoing offenses, subject to daily penalties. This section emphasizes stricter enforcement against ongoing violations of legal orders against fraudulent practices.

Relevant Companies

• GS (Goldman Sachs Group Inc.) - Investment banking and securities risks may increase due to enhanced penalties for violations.
• JPM (JPMorgan Chase & Co.) - Potential impact on compliance and risk management costs associated with increased penalties.
• BLK (BlackRock Inc.) - Asset management firms may face increased scrutiny and penalty liabilities under enhanced regulations.