If the Commission finds, after notice and opportunity for hearing, that any
person is violating, has violated, or is about to violate any provision of
this title, or any rule or regulation thereunder, the Commission may publish
its findings and enter an order requiring such person, and any other person
that is, was, or would be a cause of the violation, due to an act or omission
the person knew or should have known would contribute to such violation, to
cease and desist from committing or causing such violation and any future
violation of the same provision, rule, or regulation. Such order may, in addition
to requiring a person to cease and desist from committing or causing a violation,
require such person to comply, or to take steps to effect compliance, with
such provision, rule, or regulation, upon such terms and conditions and within
such time as the Commission may specify in such order. Any such order may,
as the Commission deems appropriate, require future compliance or steps to
effect future compliance, either permanently or for such period of time as
the Commission may specify, with such provision, rule, or regulation with
respect to any security, any issuer, or any other person.
The notice instituting proceedings pursuant to subsection (a) of this section
shall fix a hearing date not earlier than 30 days nor later than 60 days after
service of the notice unless an earlier or a later date is set by the Commission
with the consent of any respondent so served.
Whenever the Commission determines that the alleged violation or threatened
violation specified in the notice instituting proceedings pursuant to
subsection (a) of this section, or the continuation thereof, is likely
to result in significant dissipation or conversion of assets, significant
harm to investors, or substantial harm to the public interest, including,
but not limited to, losses to the Securities Investor Protection Corporation,
prior to the completion of the proceedings, the Commission may enter a
temporary order requiring the respondent to cease and desist from the
violation or threatened violation and to take such action to prevent the
violation or threatened violation and to prevent dissipation or conversion
of assets, significant harm to investors, or substantial harm to the public
interest as the Commission deems appropriate pending completion of such
proceedings. Such an order shall be entered only after notice and opportunity
for a hearing, unless the Commission determines that notice and hearing
prior to entry would be impracticable or contrary to the public interest.
A temporary order shall become effective upon service upon the respondent
and, unless set aside, limited, or suspended by the Commission or a court
of competent jurisdiction, shall remain effective and enforceable pending
the completion of the proceedings.
Paragraph (1) subsection shall apply only to a respondent that acts, or,
at the time of the alleged misconduct acted, as a broker, dealer, investment
adviser, investment company, municipal securities dealer, government securities
broker, government securities dealer, registered public accounting firm
(as defined in section 2 of the Sarbanes-Oxley
Act of 2002), or transfer agent, or is, or was at the time of the alleged
misconduct, an associated person of, or a person seeking to become associated
with, any of the foregoing.
Issuance of temporary order
Whenever, during the course of a lawful investigation involving
possible violations of the Federal securities laws by an issuer
of publicly traded securities or any of its directors, officers,
partners, controlling persons, agents, or employees, it shall
appear to the Commission that it is likely that the issuer will
make extraordinary payments (whether compensation or otherwise)
to any of the foregoing persons, the Commission may petition a
Federal district court for a temporary order requiring the issuer
to escrow, subject to court supervision, those payments in an
interest-bearing account for 45 days.
A temporary order shall be entered under clause (i), only after
notice and opportunity for a hearing, unless the court determines
that notice and hearing prior to entry of the order would be impracticable
or contrary to the public interest.
A temporary order issued under clause (i) shall--
become effective immediately;
be served upon the parties subject
to it; and
unless set aside, limited or suspended
by a court of competent jurisdiction, shall remain effective
and enforceable for 45 days.
The effective period of an order under this subparagraph may be
extended by the court upon good cause shown for not longer than
45 additional days, provided that the combined period of the order
shall not exceed 90 days.
Process on Determination of violations
If the issuer or other person described in subparagraph (A) is
charged with any violation of the Federal securities laws before
the expiration of the effective period of a temporary order under
subparagraph (A) (including any applicable extension period),
the order shall remain in effect, subject to court approval, until
the conclusion of any legal proceedings related thereto, and the
affected issuer or other person, shall have the right to petition
the court for review of the order.
Violations not charged
If the issuer or other person described in subparagraph (A) is
not charged with any violation of the Federal securities laws
before the expiration of the effective period of a temporary order
under subparagraph (A) (including any applicable extension period),
the escrow shall terminate at the expiration of the 45-day effective
period (or the expiration of any extension period, as applicable),
and the disputed payments (with accrued interest) shall be returned
to the issuer or other affected person.
Review of temporary orders
At any time after the respondent has been served with a temporary cease
and- desist order pursuant to subsection (c) of this section, the respondent
may apply to the Commission to have the order set aside, limited, or suspended.
If the respondent has been served with a temporary cease-and-desist order
entered without a prior Commission hearing, the respondent may, within
10 days after the date on which the order was served, request a hearing
on such application and the Commission shall hold a hearing and render
a decision on such application at the earliest possible time.
10 days after the date the respondent was served
with a temporary cease- and-desist order entered with a prior Commission
10 days after the Commission renders a decision
on an application and hearing under paragraph (1), with respect to
any temporary cease-and desist order entered without a prior Commission
the respondent may apply to the United States district court for the district
in which the respondent resides or has its principal place of business,
or for the District of Columbia, for an order setting aside, limiting,
or suspending the effectiveness or enforcement of the order, and the court
shall have jurisdiction to enter such an order. A respondent served with
a temporary cease-and-desist order entered without a prior Commission
hearing may not apply to the court except after hearing and decision by
the Commission on the respondent's application under paragraph (1) of
No automatic stay of temporary order
The commencement of proceedings under paragraph (2) of this subsection
shall not, unless specifically ordered by the court, operate as a stay
of the Commission's order.
Section 25 shall not apply to a temporary order
entered pursuant to this section.
Authority to enter order requiring accounting and disgorgement
In any cease-and-desist proceeding under subsection (a),
the Commission may enter an order requiring accounting and disgorgement, including
reasonable interest. The Commission is authorized to adopt rules, regulations,
and orders concerning payments to investors, rates of interest, periods of
accrual, and such other matters as it deems appropriate to implement this
Authority of the Commission to prohibit persons from
serving as officers or directors
In any cease-and-desist proceeding under subsection (a), the Commission may
issue an order to prohibit, conditionally or unconditionally, and permanently
or for such period of time as it shall determine, any person who has violated
section 10(b) or the rules or regulations thereunder,
from acting as an officer or director of any issuer that has a class of securities
registered pursuant to section 12, or that is required
to file reports pursuant to section 15(d), if the
conduct of that person demonstrates unfitness to serve as an officer or director
of any such issuer.
June 6, 1934, c. 404, Title I, § 21C, as added Oct. 15, 1990, Pub.L. 101- 429,
Title II, § 203, 104 Stat. 939; and amended July 30, 2002, P.L. 107-204, § 3(b)(3),
Title XI, §§ 1103, 1105(a), 116 Stat. 749, 807, 809.
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