# Penalty-Reduction Policy for Small Entities

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URL: https://www.frixlaw.com/law-library/documents/fr%3A97-8360

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** April 4, 1997
- **Citation:** 62 FR 16076

## Text

SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 202

[Release Nos. 33-7408, 34-38447, 35-26696, 39-2350, IC-22588, and IA-
1625; File No. S7-14-97]

Penalty-Reduction Policy for Small Entities

AGENCY: Securities and Exchange Commission.

ACTION: Policy statement; request for comments.

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SUMMARY: The Securities and Exchange Commission is issuing a statement
of its penalty-reduction policy for small entities as required by the
Small Business Regulatory Enforcement Fairness Act, Pub. L. No. 104-
121, 110 Stat. 857 (1996). The Commission also requests comments on the
policy. After the comment period has closed and the Commission has
gained experience in applying the policy, the Commission intends to re-
evaluate the policy in light of its experience and the comments of
interested persons.

DATES: Effective March 29, 1997. Interested persons may submit comments
on the policy on or before December 31, 1997.

ADDRESSES: Interested persons should submit three copies of their
written data, views, and opinions to Jonathan G. Katz, Secretary,
Securities and Exchange Commission, 450 Fifth St. N.W., Washington,
D.C. 20549. Comment letters also may be submitted electronically to the
following electronic mail address: [email protected]. All comment
letters should refer to File No. S7-14-97; this file number should be
included on the subject line if E:mail is used. All comment letters
will be made available for public inspection and copying at the
Commission's Public Reference Room, Room 1024, 450 Fifth St., N.W.,
Washington, D.C. 20549. Electronically submitted comment letters will
be posted on the Commission's Internet Web site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT: Joan McKown (202-942-4530) or Susan
Mathews (202-942-4737), Office of the Chief Counsel, Division of
Enforcement, or Amy Kroll (202-942-0927) or Anne Sullivan (202-942-
0954), Office of the General Counsel.

SUPPLEMENTARY INFORMATION: The Small Business Regulatory Fairness Act
(``SBREFA'' or ``the Act'') was enacted on March 29, 1996.1 SBREFA
seeks to improve the regulatory climate for small entities 2 by,
among other things:
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\1\ Pub. L. No. 104-121, 110 Stat. 857 (codified in scattered
sections of 5 U.S.C., 15 U.S.C. and as a note to 5 U.S.C. Sec. 601)
(1996).
\2\ The definition of ``small entity'' under SBREFA is the same
as the definition of ``small entity'' under the Regulatory
Flexibility Act, 5 U.S.C. Sec. 601 et seq. (``Reg. Flex. Act'').
SBREFA Sec. 221(1). The Reg. Flex. Act defines ``small entity'' to
include ``small business.'' Pursuant to the Reg. Flex. Act, 5 U.S.C.
Sec. 601(3), the Commission has adopted appropriate definitions of
``small business'' for purposes of the Reg. Flex. Act. See infra
n.10.
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Expanding the extent to which the rule making process must
include evaluation of the impact of proposed rules (and rule changes)
on small entities; 3
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\3\ 5 U.S.C. Secs. 603(a), 604, and 605(b), codifying SBREFA
Secs. 241 and 243.

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[[Page 16077]]

Expanding the rights of action for small businesses to
seek judicial review of rules impacting small entities; 4
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\4\ 5 U.S.C. Sec. 611, codifying SBREFA Sec. 242.
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Requiring agencies to establish small entity penalty
reduction or waiver policies; 5 and
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\5\ SBREFA Sec. 223.
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Directing agencies to expand their efforts to provide
formal and informal guidance to small entities.6
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\6\ SBREFA Secs. 212, 213, 214 (codified at 15 U.S.C.
Sec. 648(c)(3)), and 215. In a companion release, the Commission is
adopting an informal guidance program as required by SBREFA.
Informal Guidance Program for Small Entities, Securities Act Rel.
No. 33-7407 (Mar. 27, 1997). The Commission previously, on January
28, 1997, adopted small entity compliance guides as required by
SBREFA. Securities Act Rel. No. 7342, 62 FR 4104 ( Jan. 28, 1997)
(codified at 17 CFR 202.8).
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In this release, the Commission announces a small entity penalty-
reduction policy (``Penalty-Reduction Policy'' or ``Policy'') as
mandated by SBREFA and solicits comment on the Policy.
SBREFA provides a general standard for penalty-reduction policies:

Each agency regulating the activities of small entities shall
establish a policy or program within 1 year of enactment of this
section to provide for the reduction, and, under appropriate
circumstances for the waiver, of civil penalties for violations of a
statutory or regulatory requirement by a small entity. Under
appropriate circumstances, an agency may consider ability to pay in
determining penalty assessments on small entities.7

\7\ SBREFA Sec. 223(a). SBREFA also establishes that ``[i]n any
civil or administrative action against a small entity, guidance
given by an agency applying the law to facts provided by the small
entity may be considered as evidence of the reasonableness or
appropriateness of any proposed fines, penalties or damages sought
against such small entity.'' Id. Sec. 213(a).
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A statement entered into the Congressional Record after enactment
of SBREFA explains that agencies have ``flexibility to tailor their
specific programs to their missions and charters'' and instructs
agencies ``to develop the boundaries of their program and the specific
circumstances for providing for a waiver or reduction of penalties.''
8 To that end, SBREFA specifies that a penalty-reduction policy
adopted by an agency may be subject to the requirements or limitations
of other applicable statutes. SBREFA also lists six possible exclusions
or conditions that an agency may incorporate in its policy.9
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\8\ ``Small Business Regulatory Enforcement Fairness Act--Joint
Managers Statement of Legislative History and Congressional
Intent,'' 142 Cong. Rec. S3244 (daily ed. Mar. 29, 1996).
\9\ SBREFA Sec. 223(b).
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The Commission has reviewed the current requirements of the federal
securities laws, its current practice in assessing penalties on small
entities, and the appropriate conditions and exclusions for a penalty-
reduction policy for small entities that violate the federal securities
laws. On the basis of that review, the Commission announces its
Penalty-Reduction Policy for small entities. Although the Commission's
informal practice has been to consider some or all of the factors
contained in the policy in its penalty analysis for all entities, in
accord with the mandates of SBREFA, the Commission sets forth in this
release a formal policy specifically for small entities that embodies
these factors. The Commission also invites comments on this Policy.

I. Penalty-Reduction Policy

A. Text of Policy

The text of the policy follows:

The Commission's policy with respect to whether to reduce or
assess civil money penalties against a small entity is:
(a) The Commission will consider on a case-by-case basis whether
to reduce or not assess civil money penalties against a small
entity. In determining whether to reduce or not assess penalties
against a specific small entity, the following considerations will
apply:
(1) Except as provided in paragraph (a)(3) below, penalty
reduction will not be available for any small entity if:
(i) The small entity was subject previously to an enforcement
action;
(ii) Any of the small entity's violations involved willful or
criminal conduct; or
(iii) The small entity did not make a good faith effort to
comply with the law.
(2) In considering whether the Commission will reduce or refrain
from assessing a civil money penalty, the Commission may consider:
(i) The egregiousness of the violations;
(ii) The isolated or repeated nature of the violations;
(iii) The violator's state of mind when committing the
violations;
(iv) The violator's history (if any) of legal or regulatory
violations;
(v) The extent to which the violator cooperated during the
investigation;
(vi) Whether the violator has engaged in subsequent remedial
efforts to mitigate the effects of the violation and to prevent
future violations;
(vii) The degree to which a penalty will deter the violator or
others from committing future violations; and
(viii) Any other relevant fact.
(3) The Commission also may consider whether to reduce or not
assess a civil money penalty against a small entity, including a
small entity otherwise excluded from this policy under paragraphs
(a)(1)(i)-(iii) above, if the small entity can demonstrate to the
Commission's satisfaction that it is financially unable to pay the
penalty, immediately or over a reasonable period of time, in whole
or in part.
(4) For purposes of this policy, an entity qualifies as
``small'' if it is a small business or small organization as defined
by Commission rules adopted for the purpose of compliance with the
Regulatory Flexibility Act.10 An entity not included in these
definitions will be considered ``small'' for purposes of this policy
if it meets the total asset amount that applies to issuers as set
forth in Rule 157(a) of the Securities Act of 1933.11
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\10\ Pursuant to the Reg. Flex. Act, 5 U.S.C. Sec. 601(3), the
Commission has adopted appropriate definitions of ``small business''
for purposes of the Reg. Flex. Act. Based on an analysis of the
language and legislative history of the Reg. Flex. Act, Congress
does not appear to have intended that Act to apply to natural
persons (as opposed to individual proprietorships) or to foreign
entities. The Commission understands that staff at the Small
Business Administration (SBA) have taken the same position.
Telephone conversation with Gregory J. Dean, Jr., Assistant Chief
Counsel for Finance and Programs, SBA Office of Advocacy (Mar. 13,
1997). See 17 CFR 270.0-10, 275.0-7, 240.0-10, 230.157, 250.110, and
260.0-7. The Commission recently proposed amendments to certain of
these definitions. Definitions of ``Small Business'' or ``Small
Organization'' Under the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Securities Exchange Act of
1934, and the Securities Act of 1933, Securities Act Rel. No. 7383,
62 FR 4106 (Jan. 28, 1997). The Commission extended the comment
period for the proposed amendments to April 30, 1997, 62 FR 13356
(Mar. 20, 1997).
\11\ At present, this threshold is $5 million. Thus, non-
regulated entities, such as general partnerships, privately held
corporations or professional service organizations, with assets of
$5 million or less may qualify for penalty-reduction.
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(b) The foregoing policy does not create a right or remedy for
any person. This policy shall not apply to any remedy that may be
sought by the Commission other than civil money penalties, whether
or not such other remedy may be characterized as penal or remedial.

B. Penalties Eligible for Reduction

The Policy will apply only to civil money penalties. It will not
apply to any remedy that the Commission may seek other than civil money
penalties, whether or not such other remedy may be characterized as
penal or remedial.12 SBREFA provides that an agency may consider
an entity's ``ability to pay,'' and requires agencies to report to
Congress on the ``total amount of penalty reductions.'' The Commission
interprets these statements to refer to civil money penalties.
Committee statements that were included in the Congressional Record
after enactment of SBREFA also support limiting penalty reduction
policies to civil money penalties.13 Moreover, an Environmental
Protection Agency (``EPA'') policy cited

[[Page 16078]]

in the statements as an example of an appropriate policy is limited to
civil money penalties.14
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\12\ See Johnson v. SEC, 87 F.3d 484 (D.C. Cir. 1996) (six-month
suspension from supervisory positions at broker-dealers constitutes
a penalty for the purposes of 28 U.S.C. Sec. 2462).
\13\ ``Small Business Regulatory Enforcement Fairness Act: Views
of the House Committees of Jurisdiction on the Congressional Intent
Regarding the `Small Business Regulatory Enforcement Fairness Act of
1996,' '' 142 Cong. Rec. E572 (daily ed. Apr. 19, 1996); 142 Cong.
Rec. at S3244.
\14\ See EPA, Policy on Compliance Incentives for Small
Business, 61 FR 27984 (June 3, 1996).
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C. Other Relevant Statutes

The Policy is consistent with the statutory provisions in the
Securities Enforcement Remedies and Penny Stock Act of 1990,15 the
Insider Trading Sanctions Act of 1984,16 and other statutes
17 that grant the Commission the authority to impose civil money
penalties for a broad range of violations of the federal securities
laws.18 These Acts give the Commission flexibility to tailor
sanctions and recommend factors that guide the Commission's discretion
in imposing money penalties. Although each decision is based on fact-
specific circumstances, with respect to each violator the Commission
presently may consider: (1) the violator's financial ability to pay a
penalty; (2) whether the violator is a repeat offender; (3) cooperation
provided during the investigation; (4) subsequent remedial efforts; (5)
whether the violation was willful; (6) the degree to which a penalty
will deter future violations; and (7) any other relevant fact.19
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\15\ Pub. L. 101-429, 104 Stat. 931 (1990) (codified in
scattered sections of 15 U.S.C.) (``Remedies Act'').
\16\ Pub. L. No. 98-376, 98 Stat. 1264 (1984) (codified in
scattered sections of 15 U.S.C.) (``Insider Trading Act'').
\17\ See, e.g., Insider Trading and Securities Fraud Enforcement
Act of 1988, Pub. L. No. 100-704, 102 Stat. 4677 (1988) (codified in
scattered sections of 15 U.S.C.).
\18\ See section 20(d)(2) of the Securities Act of 1933 (civil
actions) (15 U.S.C. 77t(d)(2)); sections 21(d)(3) (civil actions),
21A (insider trading actions), and 21B (administrative proceedings)
of the Securities Exchange Act of 1934 (``Exchange Act'') (15 U.S.C.
Secs. 78u(d)(3), 78u-1, and 78u-2); sections 203(i)(2)
(administrative proceedings) and 209(e) (civil actions) of the
Investment Advisers Act of 1940 (15 U.S.C. Secs. 80b-3(i)(2) and
80b-9(e)); and sections 9(d) (administrative proceedings) and 42(e)
(civil actions) of the Investment Company Act of 1940 (15 U.S.C.
Secs. 80a-9(d) and 80a-41(e)).
\19\ See, e.g., section 21B(c)(1)-(6) of the Exchange Act (15
U.S.C. Sec. 78u-2(c)(1)-(6)); see also SEC v. Brumfield et al., SEC
Lit. Rel. No. 14,956 (June 20, 1996) (penalty not imposed in light
of respondent's cooperation).
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D. Exclusions From and Conditions to the Penalty-Reduction Policy

Section 223(b) of SBREFA lists six possible exclusions or
conditions that agencies may incorporate in their penalty-reduction
policies, some of which are similar to those factors the Commission may
consider when fashioning a penalty under the statutes described above.
For the reasons discussed below, the Commission incorporates in the
Policy three of the suggested exclusions, which are contained in
paragraph (a)(1) of the Policy, but does not incorporate the other
three.
1. Multiple Enforcement Actions
SBREFA permits an agency to exclude from its policy small entities
that have been subject to multiple enforcement actions. The Commission
historically has made a similar determination under Section 21B(c) of
the Exchange Act when considering whether a penalty is in the public
interest.20 The Commission believes it is appropriate to deny
access to the Penalty-Reduction Policy to small entities against which
the Commission previously has filed an action. Therefore, the Policy
contains this exclusion.
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\20\ Under this section, the Commission will consider whether
the entity previously violated the federal or state securities laws
or rules.
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2. Willful or Criminal Conduct
SBREFA permits an agency to exclude from its policy a small entity
whose violation involves willful or criminal conduct. Thomas J. Bliley,
Jr., Chairman of the House Commerce Committee, explained in a statement
entered into the Congressional Record after enactment of SBREFA that:

We will not tolerate, and this bill does not create, any free
pass for financial fraud. Specifically, Section 323(b)(4) of the
bill expressly excludes ``violations involving willful or criminal
conduct'' from the small business enforcement variance. In the
context of the federal securities laws, I understand ``willful'' to
have the longstanding judicial construction as expressed in, for
example, Tager v. Securities and Exchange Commission, 344 F.2d 5, 7
(2d. Cir. 1965).21

\21\ ``Contract with America Advancement Act of 1996,'' Speech
of Hon. Thomas J. Bliley, Jr., 142 Cong. Rec. E591-92 (daily ed.
Apr. 19, 1996).
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Consistent with Chairman Bliley's statement, the Policy is not
available to small entities if their violations involve willful or
criminal conduct.
3. Good Faith Compliance
SBREFA permits an agency to require that a small entity has made a
good faith effort to comply with the law in order for the small entity
to avail itself of the penalty reduction policy. The Policy contains
this exclusion. Under the Policy, a small entity may qualify for
penalty reduction only if the Commission has not alleged that its
actions were undertaken in bad faith and if the entity proffers
evidence satisfactory to the Commission that it made a ``good faith''
effort to comply with the securities laws.
4. Reasonable Correction Period
SBREFA permits an agency to condition the availability of penalty
reduction on a small entity's correction of a violation within a
reasonable time period. If a small entity violates the securities laws,
the violation cannot be ``undone.'' Rather, the Commission's
enforcement program focuses on stopping current violative conduct or
preventing future conduct through the use of injunctions and temporary
restraining orders, and by recovering ill-gotten gains in the form of
disgorgement or by requiring undertakings to improve compliance
procedures at firms. The Office of Compliance Inspections and
Examinations (``OCIE'') issues deficiency letters to regulated entities
found to have weaknesses in their compliance systems and or to have
violated applicable rules and regulations. Depending on the nature of
violations found, however, even if an entity corrects the violations,
OCIE may make an enforcement referral in an effort to deter future
violations by the entity. Because enforcement action is initiated when
a violation is particularly egregious, or when an entity has failed to
correct adequately its violations, penalty reduction for correcting a
violation that is the basis of an enforcement action would send the
wrong message to regulated entities. Consequently, the Commission is
not including this condition in the Policy.
5. Compliance Assistance Program
SBREFA also permits an agency to apply penalty reduction to
violations discovered through an entity's participation in a compliance
assistance or audit program operated or supported by the agency or a
state.22 Specifically, some agencies, for example the Occupational
Safety and Health Administration and EPA, have offices that will audit,
and pass judgment on, a regulated entity's compliance program. SBREFA
suggests that agencies could consider applying their penalty reduction
policies to small entity violations found in the course of such a
compliance audit. Although various divisions within the Commission
provide regulatory guidance, the Commission does not operate a formal
``compliance assistance or audit program.'' 23 Rather than specify
how every regulated entity should structure its compliance program, the
Commission sets standards and then relies on the ability of each
regulated entity, and when applicable its self-regulatory organization,
to determine how best to implement its compliance

[[Page 16079]]

program, based on the nature of its business. Because the Commission
does not have a compliance program of the type described in SBREFA,
this condition is not in the Policy. Notably, however, as a general
matter, the Commission does take into consideration compliance efforts
and gives appropriate weight to the existence of effective compliance
procedures both in making prosecutorial decisions regarding bringing
charges and in determining sanctions or penalties.
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\22\ SBREFA Sec. 223(b)(2).
\23\ Inspections and examinations by OCIE do not constitute
formal compliance assistance or audit programs.
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6. Health, Safety or Environmental Threats
Finally, SBREFA mentions excluding from a penalty reduction policy
those violations ``that pose serious health, safety or environmental
threats.'' The Commission does not regulate health, safety or
environmental entities. Therefore, this exclusion is not in the Policy.

E. Elements the Commission May Consider When Assessing Whether to
Reduce or Not Assess Penalties

Consistent with the Commission's practice and the statutes which
enable the Commission to assess money penalties, paragraph (a)(2) of
the Policy identifies eight elements the Commission may consider when
determining whether to reduce or not assess a civil money penalty
against a small entity. Although derived from considerations the
Commission already applies when determining whether, and the level at
which, to apply penalties,24 the Policy gives the Commission
discretion to consider any or all of these in any case where the Policy
may apply.
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\24\ See supra n.19 and accompanying text.
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F. Ability to Pay

SBREFA permits an agency to consider ability to pay in determining
penalty assessments on small entities.25 Since passage of the
Remedies Act in 1990, the Commission has complied with the spirit of
SBREFA, considering an entity's ability to pay before setting a penalty
amount. Generally, the Commission seeks money penalties in an amount
that, after careful examination of financial information provided by
the violator, the Commission determines the violator is able to pay.
When analyzing appropriate sanctions in a particular case, the
Commission typically will direct its staff to examine an entity's
ability to pay disgorgement first; if the entity has the ability to pay
a penalty after paying disgorgement, the Commission will demand an
appropriate penalty amount based on the entity's ability to pay.26
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\25\ See SBREFA Sec. 223(a).
\26\ In accordance with section 21B(d) of the Exchange Act, for
example, the staff considers an entity's ``ability to continue in
business and the collectability of a penalty, taking into account
any other claims of the United States or third parties upon such
person's assets and the amount of such person's assets.''
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Consistent with this practice, paragraph (a)(3) of the Policy makes
penalty-reduction available to small entities that may otherwise be
excluded under paragraph (a)(1). A small entity must demonstrate to the
Commission's satisfaction that it is unable financially to pay a
penalty before the Commission will consider whether penalty-reduction
is warranted. The Policy establishes that the Commission, in its sole
discretion, may consider the eight factors in paragraph (a)(2) of the
Policy as well as reviewing evidence presented by the small entity
requesting penalty-reduction, such as sworn financial statements, to
determine whether reduction is warranted in a particular case. The
small entity must demonstrate to the Commission's satisfaction that it
presently is unable financially to pay the penalty, in whole or in
part, and that it will be unable to pay the penalty, in whole or in
part, over a reasonable period of time.

II. Regulatory Requirements

The Commission is announcing a Penalty Reduction Policy as required
by SBREFA. As a general statement of policy, the Administrative
Procedure Act (``APA'') does not require that the Commission publish
the Policy for notice and comment.27 The Commission wishes,
however, to provide interested parties, particularly small entities, an
opportunity to comment on the Policy. The Commission intends to revisit
the Policy when a reasonable period has passed after the end of the
comment period. In its re-evaluation, the Commission will consider its
experience administering the Policy and comments the Commission
receives.
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\27\ 5 U.S.C. Sec. 553(a)(3)(A).
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List of Subjects in 17 CFR Part 202

Administrative practice and procedure.

Text of Amendment

In accordance with the foregoing, 17 CFR, Chapter II, is amended as
follows:

PART 202--INFORMAL AND OTHER PROCEDURES

1. The authority citation for Part 202 is amended by adding the
following citation to read as follows:

Authority: 15 U.S.C. 77s, 77t, 78d-1, 78u, 78w, 78ll(d), 79r,
79t, 77sss, 77uuu, 80a-37, 80a-41, 80b-9, and 80b-11, unless
otherwise noted.
* * * * *
Section 202.9 is also issued under section 223, 110 Stat. 859 (Mar.
29, 1996).
2. Section 202.9 is added to read as follows:

Sec. 202.9 Small entity enforcement penalty reduction policy.

The Commission's policy with respect to whether to reduce or assess
civil money penalties against a small entity is:
(a) The Commission will consider on a case-by-case basis whether to
reduce or not assess civil money penalties against a small entity. In
determining whether to reduce or not assess penalties against a
specific small entity, the following considerations will apply:
(1) Except as provided in paragraph (a)(3) of this section, penalty
reduction will not be available for any small entity if:
(i) The small entity was subject previously to an enforcement
action;
(ii) Any of the small entity's violations involved willful or
criminal conduct; or
(iii) The small entity did not make a good faith effort to comply
with the law.
(2) In considering whether the Commission will reduce or refrain
from assessing a civil money penalty, the Commission may consider:
(i) The egregiousness of the violations;
(ii) The isolated or repeated nature of the violations;
(iii) The violator's state of mind when committing the violations;
(iv) The violator's history (if any) of legal or regulatory
violations;
(v) The extent to which the violator cooperated during the
investigation;
(vi) Whether the violator has engaged in subsequent remedial
efforts to mitigate the effects of the violation and to prevent future
violations;
(vii) The degree to which a penalty will deter the violator or
others from committing future violations; and
(viii) Any other relevant fact.
(3) The Commission also may consider whether to reduce or not
assess a civil money penalty against a small entity, including a small
entity otherwise excluded from this policy under paragraphs (a)(1) (i)-
(iii) of this section, if the small entity can demonstrate to the
Commission's satisfaction that it is financially unable to pay the
penalty, immediately or over a reasonable period of time, in whole or
in part.
(4) For purposes of this policy, an entity qualifies as ``small''
if it is a small

[[Page 16080]]

business or small organization as defined by Commission rules adopted
for the purpose of compliance with the Regulatory Flexibility
Act.1 An entity not included in these definitions will be
considered ``small'' for purposes of this policy if it meets the total
asset amount that applies to issuers as set forth in Sec. 230.157a of
this chapter.2
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\1\ Pursuant to the Reg. Flex. Act, 5 U.S.C. Sec. 601(3), the
Commission has adopted appropriate definitions of ``small business''
for purposes of the Reg. Flex. Act. See 17 CFR 270.0-10, 275.0-7,
240.0-10, 230.157, 250.110, and 260.0-7. The Commission recently
proposed amendments to certain of these definitions. Definitions of
``Small Business'' or ``Small Organization'' Under the Investment
Company Act of 1940, the Investment Advisers Act of 1940, the
Securities Exchange Act of 1934, and the Securities Act of 1933,
Securities Act Rel. No. 7383, 62 FR 4106 (Jan. 28, 1997). The
Commission extended the comment period for the proposed amendments
to April 30, 1997, 62 FR 13356 (Mar. 20, 1997). Based on an analysis
of the language and legislative history of the Reg. Flex. Act,
Congress does not appear to have intended that Act to apply to
natural persons (as opposed to individual proprietorships) or to
foreign entities. The Commission understands that staff at the Small
Business Administration have taken the same position.
\2\ At present, this threshold is $5 million. Thus, non-
regulated entities, such as general partnerships, privately held
corporations or professional service organizations, with assets of
$5 million or less may qualify for penalty-reduction.
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(b) This policy does not create a right or remedy for any person.
This policy shall not apply to any remedy that may be sought by the
Commission other than civil money penalties, whether or not such other
remedy may be characterized as penal or remedial.

Dated: March 27, 1997.

By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-8360 Filed 4-3-97; 8:45 am]
BILLING CODE 8010-01-M

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-8360. Public record. Not legal advice.