I thought I had stumbled on to a Groundhog Day-type situation in June 2015 when the House Appropriations Committee froze the SEC's budget at a level that was $222 million less than the SEC requested -- exactly the same freeze and differential that occurred in FY 2012. Less than one month later, it is Groundhog Day again in Washington, D.C. with U.S. Senators Jack Reed (D-RI) and Chuck Grassley (R-IA) re-introducing their bill from July 2012 (The Stronger Enforcement of Civil Penalties Act (SEC Penalties Act)) -- accompanied by an amusingly similar press release.

You may recall that in July 2012, Sens. Reed and Grassley introduced the bipartisan SEC Penalties Act of 2012 to increase SEC penalties from a maximum of $150,000 per offense for individuals and $725,000 for institutions up to $1 million and $10 million, respectively.  I know I do because I wrote an entire column about it. Alas, the SEC Penalties Act of 2012 never even made it to a vote and died in Congress. 

Yesterday, however, I saw (via Think Advisor) that Sens. Reed and Grassley were dusting off the bill and giving it another shot as The Stronger Enforcement of Civil Penalties Act (SEC Penalties Act) of 2015. The new bill appears to be virtually identical to that which was introduced in 2012 -- as do Sen. Grassley's thoughts on it. 

In July 2012, Sen. Grassley issued a statement that

"If a fine is just decimal dust for a Wall Street firm, that’s not a deterrent,” Grassley said.  “It’s just the cost of doing business.  A penalty should mean something, and it should get the recidivists’ attention.  I especially like the increased penalties for repeat offenders in this bill.   That should help change the dynamic of business as usual.  If this legislation is enacted, as I hope it will be, I expect the SEC to use these new penalties.  The SEC doesn’t always use all of the penalties at its disposal, and it should."

Apparently Sen. Grassley still feels EXACTLY the same way three years later because yesterday he issued a statement that 

“If a fine is just decimal dust for a Wall Street firm, that’s not a deterrent,” Grassley said.  “It’s just the cost of doing business.  A penalty should mean something, and it should get the recidivists’ attention.  I especially like the increased penalties for repeat offenders in this bill.   That should help change the dynamic of business as usual.  If this legislation is enacted, as I hope it will be, I expect the SEC to use these new penalties.  The SEC doesn’t always use all of the penalties at its disposal, and it should.”

p.s. For any of you young whippersnappers who have not seen the movie Groundhog Day (1993), go rent it. The Enforcement Action blog gives it two thumbs up.

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