Page:United States Statutes at Large Volume 102 Part 5.djvu/672

 102 STAT. 4678

Courts, u s. •

PUBLIC LAW 100-704—NOV. 19, 1988 civil penally to be paid by the person who committed such violation; and "(B) may, subject to subsection (b)(D, bring an action in a United States district court to seek, and the court shall have jurisdiction to impose, a civil penalty to be paid by a person who, at the time of the violation, directly or indirectly controlled the person who committed such violation. "(2) AMOUNT OF PRNALTT FOR PERSON WHO COMMITTED VIOLA-

TION.—The amount of the penalty which may be imposed on the person who committed such violation shall be determined by the court in light of the facts and circumstances, but shall not exceed three tunes the profit gained or loss avoided as a result of such unlawfid purchase, sale, or communication. "(3) AMOUNT OF PENALTY FOR CONTROLLING PERSON.—The

amount of the penalty which may be imposed on any person who, at the time of the violation, directly or indirectly controlled the person who committed such violation, shall be determined by the court in light of the facts and circumstances, but shall not exceed the greater of $1,000,000, or three times the amount of the profit gained or loss avoided as a result of such controlled person's violation. If such controlled person's violation was a violation by communication, the profit gained or loss avoided as a result of the violation shall, for purposes of this paragraph only, be deemed to be limited to the profit gained or loss avoided by the person or persons to whom the controlled person directed such communication. "OS) LfliaTATIONS ON LlABILITY.— "(1) LIABILITY OF CONTROLLING PERSONS.—No controlling

person shall be subject to a penalty under subsection (a)(l)(B) unless the Commission establishes that— "(A) such controlling person knew or recklessly disr^arded the fact that such controlled person was likely to engage in the act or acts constituting the violation and failed to take appropriate steps to prevent such act or acts before they occurred; or "(B) such controlling person knowingly or recklessly failed to establish, maintain, or enforce any policy or procedure required under section 15(f) of this title or section 204A of the Investment Advisers Act of 1940 and such failure substantially contributed to or permitted the occurrence of the act or acts constituting the violation. "(2) ADDITIONAL RESTRICTIONS ON LIABILITY.—No person shall be subject to a penalty under subsection (a) solely by reason of employing another person who is subject to a penalty under such subsection, unless such employing person is liable as a controlling person under paragraph (1) of this subsection. Section 20(a) of this title shall not apply to actions under subsection (a) of this section. '(c) AUTHORITY OF COMMISSION.—The (Dommission, by such rules, regulations, and orders as it considers necessary or appropriate in the public interest or for the protection of investors, may exempt, in whole or in part, either unconditionally or upon specific terms and conditions, any person or transaction or class of persons or transactions from this section. "(d) PROCEDURES FOR CoLLEcnoN.—

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