Title: Securities Fraud Enforcement and Investor Compensation Act of 2019
Policy area: Finance and Financial Sector

Summary:
Securities Fraud Enforcement and Investor Compensation Act of 2019
This bill provides statutory authority for the Securities and Exchange Commission (SEC) to seek disgorgement (i.e., repayment) as a remedy for unjust enrichment that a person gained through a securities law violation. It also allows the SEC to seek restitution for an investor's loss as a result of a securities law violation by a person registered as or associated with a securities dealer, broker, or other specified financial advisor.
The bill establishes a 5-year statute of limitations for disgorgement and a 10-year statute of limitations for equitable remedies, including restitution.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 799 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                 S. 799

   To amend the Securities Exchange Act of 1934 to clarify that the 
     Securities and Exchange Commission may seek disgorgement and 
   restitution as a result of a violation of the securities laws, to 
  establish the statute of limitations for disgorgement and equitable 
       actions brought by the Commission, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 14, 2019

Mr. Warner (for himself and Mr. Kennedy) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To amend the Securities Exchange Act of 1934 to clarify that the 
     Securities and Exchange Commission may seek disgorgement and 
   restitution as a result of a violation of the securities laws, to 
  establish the statute of limitations for disgorgement and equitable 
       actions brought by the Commission, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Securities Fraud Enforcement and 
Investor Compensation Act of 2019''.

SEC. 2. INVESTIGATIONS AND PROSECUTION OF OFFENSES FOR VIOLATIONS OF 
              THE SECURITIES LAWS.

    (a) In General.--Section 21(d) of the Securities Exchange Act of 
1934 (15 U.S.C. 78u(d)) is amended--
            (1) in paragraph (3)--
                    (A) in the paragraph heading--
                            (i) by inserting ``Civil'' before ``Money 
                        penalties''; and
                            (ii) by striking ``in civil actions'' and 
                        inserting ``and authority to seek 
                        disgorgement'';
                    (B) in subparagraph (A), by striking ``jurisdiction 
                to impose'' and all that follows through the period at 
                the end and inserting the following: ``jurisdiction 
                to--
                    ``(i) impose, upon a proper showing, a civil 
                penalty to be paid by the person who committed such 
                violation; and
                    ``(ii) require disgorgement under paragraph (7) by 
                the person who received any unjust enrichment as a 
                result of such violation.''; and
                    (C) in subparagraph (B)--
                            (i) in clause (i), in the first sentence, 
                        by striking ``the penalty'' and inserting ``a 
                        civil penalty imposed under subparagraph 
                        (A)(i)'';
                            (ii) in clause (ii), by striking ``amount 
                        of penalty'' and inserting ``amount of a civil 
                        penalty imposed under subparagraph (A)(i)''; 
                        and
                            (iii) in clause (iii), in the matter 
                        preceding item (aa), by striking ``amount of 
                        penalty for each such violation'' and inserting 
                        ``amount of a civil penalty imposed under 
                        subparagraph (A)(i) for each violation 
                        described in that subparagraph'';
            (2) in paragraph (4), by inserting ``under paragraph (7)'' 
        after ``funds disgorged''; and
            (3) by adding at the end the following:
    ``(7) Disgorgement.--
            ``(A) In general.--In any action or proceeding brought by 
        the Commission under any provision of the securities laws, the 
        Commission may seek, and any Federal court may order, 
        disgorgement of any unjust enrichment that a person obtained as 
        a result of a violation of that provision.
            ``(B) Calculation.--Any disgorgement that is ordered with 
        respect to a person under subparagraph (A) shall be offset by 
        any amount of restitution that the person is ordered to pay 
        under paragraph (8).
    ``(8) Restitution.--In any proceeding brought or instituted by the 
Commission under any provision of the securities laws, the Commission 
may seek, and any Federal court, or, with respect to a proceeding 
instituted by the Commission, the Commission, may order restitution to 
an investor in the amount of the loss that the investor sustained as a 
result of a violation of that provision by a person that is--
            ``(A) registered as, or required to be registered as, a 
        broker, dealer, investment adviser, municipal securities 
        dealer, municipal advisor, or transfer agent; or
            ``(B) associated with or, as of the date on which the 
        violation occurs, seeking to become associated with, an entity 
        described in subparagraph (A).
    ``(9) Limitations Periods.--
            ``(A) Disgorgement.--The Commission may bring a claim for 
        disgorgement under paragraph (7) not later than 5 years after 
        the date on which the person against which the claim is brought 
        receives any unjust enrichment as a result of the violation 
        that gives rise to the action or proceeding in which the 
        Commission seeks the claim.
            ``(B) Equitable remedies.--The Commission may seek a claim 
        for any equitable remedy, including for restitution under 
        paragraph (8), an injunction, or a bar, suspension, or cease 
        and desist order, not later than 10 years after the latest date 
        on which a violation that gives rise to the claim occurs.
            ``(C) Calculation.--For the purposes of calculating any 
        limitations period under this paragraph with respect to an 
        action or claim, any time in which the person against which the 
        action or claim, as applicable, is brought is outside of the 
        United States shall not count towards the accrual of that 
        period.
    ``(10) Rule of Construction.--Nothing in paragraph (7) or (8) may 
be construed as altering any right that any private party may have to 
maintain a suit for a violation of this Act.''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply with respect to any action or proceeding that is commenced on or 
after the date of enactment of this Act.
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