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8000 - Miscellaneous Statutes and Regulations


INJUNCTIONS AND PROSECUTION OF OFFENSES

SEC. 20.  (a)  Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this title, or of any rule or regulation prescribed under authority thereof, have been or are about to be violated, it may, in its discretion, either require or permit such person to file with it a statement in writing, under oath, or otherwise, as to all the facts and circumstances concerning the subject matter which it believes to be in the public interest to investigate, and may investigate such facts.

(b)  Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this title, or of any rule or regulation prescribed under authority thereof, the Commission may, in its discretion, bring an action in any district court of the United States, or United States court of any Territory, to enjoin such acts or practices, and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General who may, in his discretion, institute the necessary criminal proceedings under this title. Any such criminal proceeding may be brought either in the district wherein the transmittal of the prospectus or security complained of begins, or in the district wherein such prospectus or security is received.

(c)  Upon application of the Commission, the district courts of the United States and the United States courts of any Territory shall have jurisdiction to issue writs of mandamus commanding any person to comply with the provisions of this title or any order of the Commission made in pursuance thereof.

(d)  MONEY PENALTIES IN CIVIL ACTIONS.--

(1)  AUTHORITY OF COMMISSION.--Whenever it shall appear to the Commission that any person has violated any provision of this title, the rules or regulations thereunder, or a cease-and-desist order entered by the Commission pursuant to section 8A of this title, other than by committing a violation subject to a penalty pursuant to section 21A of the Securities Exchange Act of 1934, the Commission may bring an action in a United States district court to seek, and the court shall have jurisdiction to impose, upon a proper showing, a civil penalty to be paid by the person who committed such violation.

(2)  AMOUNT OF PENALTY.--

(A)  FIRST TIER.--The amount of the penalty shall be determined by the court in light of the facts and circumstances. For each violation, the amount of the penalty shall not exceed the greater of (i) $5,000 for a natural person or $50,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation.

(B)  SECOND TIER.--Notwithstanding subparagraph (A), the amount of penalty for each such violation shall not exceed the greater of (i) $50,000 for a natural person or $250,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation, if the violation described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.

(C)  THIRD TIER.--Notwithstanding subparagraphs (A) and (B), the amount of penalty for each such violation shall not exceed the greater of (i) $100,000 for a natural person or $500,000 for any other person, or (ii) the gross amount of pecuniary gain to such defendant as a result of the violation, if--

(I)  the violation described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement; and

(II)  such violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.

(3)  PROCEDURES FOR COLLECTION.--

(A)  PAYMENT OF PENALTY TO TREASURY.--A penalty imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in section 308 of the Sarbanes-Oxley Act of 2002 and section 21F of the Securities Exchange Act of 1934.

(B)  COLLECTION OF PENALTIES.--If a person upon whom such a penalty is imposed shall fail to pay such penalty within the time prescribed in the court's order, the Commission may refer the matter to the Attorney General who shall recover such penalty by action in the appropriate United States district court.

(C)  REMEDY NOT EXCLUSIVE.--The actions authorized by this subsection may be brought in addition to any other action that the Commission or the Attorney General is entitled to bring.

(D)  JURISDICTION AND VENUE.--For purposes of section 22 of this title, actions under this section shall be actions to enforce a liability or a duty created by this title.

(4)  SPECIAL PROVISIONS RELATING TO A VIOLATION OF A CEASE-AND-DESIST ORDER.--In an action to enforce a cease-and-desist order entered by the Commission pursuant to section 8A, each separate violation of such order shall be a separate offense, except that in the case of a violation through a continuing failure to comply with such an order, each day of the failure to comply with the order shall be deemed a separate offense.

(e)  AUTHORITY OF A COURT TO PROHIBIT PERSONS FROM SERVING AS OFFICERS AND DIRECTORS.--In any proceeding under subsection (b), the court may prohibit, conditionally or unconditionally, and permanently or for such period of time as it shall determine, any person who violated section 17(a)(1) of this title from acting as an officer or director of any issuer that has a class of securities registered pursuant to section 12 of the Securities Exchange Act of 1934 or that is required to file reports pursuant to section 15(d) of such Act if the person's conduct demonstrates unfitness to serve as an officer or director of any such issuer.

(f)  PROHIBITION OF ATTORNEYS' FEES PAID FROM COMMISSION DISGORGEMENT FUNDS.--Except as otherwise ordered by the court upon motion by the Commission, or, in the case of an administrative action, as otherwise ordered by the Commission, funds disgorged as the result of an action brought by the Commission in Federal court, or as a result of any Commission administrative action, shall not be distributed as payment for attorneys' fees or expenses incurred by private parties seeking distribution of the disgorged funds.

(g)  AUTHORITY OF A COURT TO PROHIBIT PERSONS FROM PARTICIPATING IN AN OFFERING OF PENNY STOCK.--

(1)  IN GENERAL.--In any proceeding under subsection (a) against any person participating in, or, at the time of the alleged misconduct, who was participating in, an offering of penny stock, the court may prohibit that person from participating in an offering of penny stock, conditionally or unconditionally, and permanently or for such period of time as the court shall determine.

(2)  DEFINITION--For purposes of this subsection, the term "person participating in an offering of penny stock" includes any person engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of, any penny stock. The Commission may, by rule or regulation, define such term to include other activities, and may, by rule, regulation, or order, exempt any person or class of persons, in whole or in part, conditionally or unconditionally, from inclusion in such term.

[Codified to 15 U.S.C. 77t]

[Source:  Section 20 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 86), effective May 27, 1933, as amended by the Act of June 25, 1936 (Pub. L. No. 796; 49 Stat. 1921), effective June 25, 1936; section 32(b) of the Act of June 25, 1948 (Pub. L. No. 773; 62 Stat. 991), effective September 1, 1948; section 127 of the Act of May 24, 1949 (Pub. L. No. 72; 63 Stat. 107), effective September 1, 1948; section 208 of title II of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1253), effective December 4, 1987; section 101 of title I of the Act of October 15, 1990 (Pub. L. No. 101--429; 104 Stat. 932), Miscellaneous Statutes and Regulations>effective October 15, 1990; section 103(b)(1) of title I of the Act of December 22, 1995 (Pub. L. No. 104--67; 109 Stat. 756, effective December 22, 1995; sections 305(a)(2) and 308(d)(3) of title III and section 603(b) of title VI of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 779, 785, and 795, respectively), effective July 30, 2002; section 923(a)(1) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1849), effective July 21, 2010]

HEARINGS BY COMMISSION

SEC. 21.  All hearings shall be public and may be held before the Commission or an officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.

[Codified to 15 U.S.C. 77u]

[Source:  Section 21 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 86), effective May 27, 1933]

JURISDICTION OF OFFENSES AND SUITS

SEC. 22.  (a)  The district courts of the United States, and United States courts of any Territory, shall have jurisdiction of offenses and violations under this title and under the rules and regulations promulgated by the Commission in respect thereto, and, concurrent with State and Territorial courts, except as provided in section 16 with respect to covered class actions, of all suits in equity and actions at law bought to enforce any liability or duty created by this title. Any such suit or action may be brought in the district wherein the defendant is found or is an inhabitant or transacts business, or in the district where the offer or sale took place, if the defendant participated therein, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. In any action or proceeding instituted by the Commission under this title in a United States district court for any judicial district, a subpoena issued to compel the attendance of a witness or the production of documents or tangible things (or both) at a hearing or trial may be served at any place within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not apply to a subpoena issued under the preceding sentence. Judgments and decrees so rendered shall be subject to review as provided in sections 1254, 1291, 1292, and 1294 of title 28, United States Code. Except as provided in section 16(c), no case arising under this title and brought in any State court of competent jurisdiction shall be removed to any court of the United States. No costs shall be assessed for or against the Commission in any proceeding under this title brought by or against it in the Supreme Court or such other courts.

(b)  In case of contumacy or refusal to obey a subpoena issued to any person, any of the said United States courts, within the jurisdiction of which said person guilty of contumacy or refusal to obey is found or resides, upon application by the Commission may issue to such person an order requiring such person to appear before the Commission, or one of its examiners designated by it, there to produce documentary evidence if so ordered, or there to give evidence touching the matter in question; and any failure to obey such order of the court may be punished by said court as a contempt thereof.

(c)  EXTRATERRITORIAL JURISDICTION.--The district courts of the United States and the United States courts of any Territory shall have jurisdiction of an action or proceeding brought or instituted by the Commission or the United States alleging a violation of section 17(a) involving--

(1)  conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors; or

(2)  conduct occurring outside the United States that has a foreseeable substantial effect within the United States.

[Codified to 15 U.S.C. 77v]

[Source:  Section 22 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 86), effective May 27, 1933, as amended by the Act of June 25, 1936 (Pub. L. No. 796; 49 Stat. 1921), effective June 25, 1936; section 32(b) of the Act of June 25, 1948 (Pub. L. No. 773; Miscellaneous Statutes and Regulations>62 Stat. 991), effective September 1, 1948; section 127 of the Act of May 24, 1949 (Pub. L. No. 72; 63 Stat. 107), effective September 1, 1948; section 11 of title I of the Act of August 10, 1954 (Pub. L. No. 577; 68 Stat. 686), effective October 8, 1954; section 213 of title II of the Act of October 15, 1970 (Pub. L. No. 91--452; 84 Stat. 929), effective December 13, 1970; and section 209 of title II of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1253), effective December 4, 1987; section 101(a)(3) of title I of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3230), effective November 3, 1998; sections 929E(a) and 929P(b)(1) of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1853 and 1864), effective July 21, 2010]

UNLAWFUL REPRESENTATIONS

SEC. 23.  Neither the fact that the registration statement for a security has been filed or is in effect nor the fact that a stop order is not in effect with respect thereto shall be deemed a finding by the Commission that the registration statement is true and accurate on its face or that it does not contain an untrue statement of fact or omit to state a material fact, or be held to mean that the Commission has in any way passed upon the merits of, or given approval to, such security. It shall be unlawful to make, or cause to be made, to any prospective purchaser any representation contrary to the foregoing provisions of this section.

[Codified to 15 U.S.C. 77w]

[Source:  Section 23 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 87), effective May 27, 1933]

PENALTIES

SEC. 24.  Any person who willfully violates any of the provisions of this title, or the rules and regulations promulgated by the Commission under authority thereof, or any person who willfully, in a registration statement filed under this title, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, shall upon conviction be fined not more than $10,000 or imprisoned not more than five years, or both.

[Codified to 15 U.S.C. 77x]

[Source:  Section 24 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 87), effective May 27, 1933, as amended by section 27(a) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 163), effective June 4, 1975]

JURISDICTION OF OTHER GOVERNMENT AGENCIES OVER SECURITIES

SEC. 25.  Nothing in this title shall relieve any person from submitting to the respective supervisory units of the Government of the United States information, reports, or other documents that are now or may hereafter be required by any provision of law.

[Codified to 15 U.S.C. 77y]

[Source:  Section 25 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 87), effective May 27, 1933]

SEPARABILITY OF PROVISIONS

SEC. 26.  If any provision of this Act, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Act, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

[Codified to 15 U.S.C. 77z]

[Source:  Section 26 of title I of the Act of May 27, 1933 (Pub. L. No. 22; 48 Stat. 88), effective May 27, 1933]

Miscellaneous Statutes and Regulations>

PRIVATE SECURITIES LITIGATION.

SEC. 27. (a)  PRIVATE CLASS ACTIONS.--

(1)  IN GENERAL.--The provisions of this subsection shall apply to each private action arising under this title that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure.

(2)  CERTIFICATION FILED WITH COMPLAINT.--

(A)  IN GENERAL.--Each plaintiff seeking to serve as a representative party on behalf of a class shall provide a sworn certification, which shall be personally signed by such plaintiff and filed with the complaint, that--

(i)  states that the plaintiff has reviewed the complaint and authorized its filing;

(ii)  states that the plaintiff did not purchase the security that is the subject of the complaint at the direction of plaintiff's counsel or in order to participate in any private action arising under this title;

(iii)  states that the plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at deposition and trial, if necessary;

(iv)  sets forth all of the transactions of the plaintiff in the security that is the subject of the complaint during the class period specified in the complaint;

(v)  identifies any other action under this title, filed during the 3-year period preceding the date on which the certification is signed by the plaintiff, in which the plaintiff has sought to serve, or served, as a representative party on behalf of a class; and

(vi)  states that the plaintiff will not accept any payment for serving as a representative party on behalf of a class beyond the plaintiff's pro rata share of any recovery, except as ordered or approved by the court in accordance with paragraph (4).

(B)  NONWAIVER OF ATTORNEY-CLIENT PRIVILEGE.--The certification filed pursuant to subparagraph (A) shall not be construed to be a waiver of the attorney-client privilege.

(3)  APPOINTMENT OF LEAD PLAINTIFF.--

(A)  EARLY NOTICE TO CLASS MEMBERS.--

(i)  IN GENERAL.--Not later than 20 days after the date on which the complaint is filed, the plaintiff or plaintiffs shall cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class--

(I)  of the pendency of the action, the claims asserted therein, and the purported class period; and

(II)  that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class.

(ii)  MULTIPLE ACTIONS.--If more than one action on behalf of a class asserting substantially the same claim or claims arising under this title is filed, only the plaintiff or plaintiffs in the first filed action shall be required to cause notice to be published in accordance with clause (i).

(iii)  ADDITIONAL NOTICES MAY BE REQUIRED UNDER FEDERAL RULES.--Notice required under clause (i) shall be in addition to any notice required pursuant to the Federal Rules of Civil Procedure.

(B)  APPOINTMENT OF LEAD PLAINTIFF.--

(i)  IN GENERAL.--Not later than 90 days after the date on which a notice is published under subparagraph (A)(i), the court shall consider any motion made by a purported class member in response to the notice, including any motion by a class member who is not individually named as a plaintiff in the complaint or complaints, and shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members (hereafter in this paragraph referred to as the "most adequate plaintiff") in accordance with this subparagraph.

(ii)  CONSOLIDATED ACTIONS.--If more than one action on behalf of a class asserting substantially the same claim or claims arising under this title has been filed, and any party has sought to consolidate those actions for pretrial purposes or for trial, the court shall not make the determination required by clause (i) until after the decision on the motion to consolidate is rendered. As soon as practicable after such decision is rendered, the court shall appoint the most adequate plaintiff as lead plaintiff for the consolidated actions in accordance with this subparagraph.

(iii)  REBUTTABLE PRESUMPTION.--

(I)  IN GENERAL.--Subject to subclause (II), for purposes of clause (i), the court shall adopt a presumption that the most adequate plaintiff in any private action arising under this title is the person or group of persons that--

(aa)  has either filed the complaint or made a motion in response to a notice under subparagraph (A)(i);

(bb)  in the determination of the court, has the largest financial interest in the relief sought by the class; and

(cc)  otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.

(II)  REBUTTAL EVIDENCE.--The presumption described in subclause (I) may be rebutted only upon proof by a member of the purported plaintiff class that the presumptively most adequate plaintiff--

(aa)  will not fairly and adequately protect the interests of the class; or

(bb)  is subject to unique defenses that render such plaintiff incapable of adequately representing the class.

(iv)  DISCOVERY.--For purposes of this subparagraph, discovery relating to whether a member or members of the purported plaintiff class is the most adequate plaintiff may be conducted by a plaintiff only if the plaintiff first demonstrates a reasonable basis for a finding that the presumptively most adequate plaintiff is incapable of adequately representing the class.

(v)  SELECTION OF LEAD COUNSEL.--The most adequate plaintiff shall, subject to the approval of the court, select and retain counsel to represent the class.

(vi)  RESTRICTIONS ON PROFESSIONAL PLAINTIFFS.-- Except as the court may otherwise permit, consistent with the purposes of this section, a person may be a lead plaintiff, or an officer, director, or fiduciary of a lead plaintiff, in no more than 5 securities class actions brought as plaintiff class actions pursuant to the Federal Rules of Civil Procedure during any 3-year period.

(4)  RECOVERY BY PLAINTIFFS.--The share of any final judgment or of any settlement that is awarded to a representative party serving on behalf of a class shall be equal, on a per share basis, to the portion of the final judgment or settlement awarded to all other members of the class. Nothing in this paragraph shall be construed to limit the award of reasonable costs and expenses (including lost wages) directly relating to the representation of the class to any representative party serving on behalf of the class.

(5)  RESTRICTIONS ON SETTLEMENTS UNDER SEAL.--The terms and provisions of any settlement agreement of a class action shall not be filed under seal, except that on motion of any party to the settlement, the court may order filing under seal for those portions of a settlement agreement as to which good cause is shown for such filing under seal. For purposes of this paragraph, good cause shall exist only if publication of a term or provision of a settlement agreement would cause direct and substantial harm to any party.

(6)  RESTRICTIONS ON PAYMENT OF ATTORNEYS' FEES AND EXPENSES.--Total attorneys' fees and expenses awarded by the court to counsel for the plaintiff class shall not exceed a reasonable percentage of the amount of any damages and prejudgment interest actually paid to the class.

(7)  DISCLOSURE OF SETTLEMENT TERMS TO CLASS MEMBERS.--Any proposed or final settlement agreement that is published or otherwise disseminated to the class shall include each of the following statements, along with a cover page summarizing the information contained in such statements:

(A)  STATEMENT OF PLAINTIFF RECOVERY.--The amount of the settlement proposed to be distributed to the parties to the action, determined in the aggregate and on an average per share basis.

(B)  STATEMENT OF POTENTIAL OUTCOME OF CASE.--

(i)  AGREEMENT ON AMOUNT OF DAMAGES.--If the settling parties agree on the average amount of damages per share that would be recoverable if the plaintiff prevailed on each claim alleged under this title, a statement concerning the average amount of such potential damages per share.

(ii)  DISAGREEMENT ON AMOUNT OF DAMAGES.--If the parties do not agree on the average amount of damages per share that would be recoverable if the plaintiff prevailed on each claim alleged under this title, a statement from each settling party concerning the issue or issues on which the parties disagree.

(iii)  INADMISSIBILITY FOR CERTAIN PURPOSES.--A statement made in accordance with clause (i) or (ii) concerning the amount of damages shall not be admissible in any Federal or State judicial action or administrative proceeding, other than an action or proceeding arising out of such statement.

(C)  STATEMENT OF ATTORNEYS' FEES OR COSTS SOUGHT.--If any of the settling parties or their counsel intend to apply to the court for an award of attorneys' fees or costs from any fund established as part of the settlement, a statement indicating which parties or counsel intend to make such an application, the amount of fees and costs that will be sought (including the amount of such fees and costs determined on an average per share basis), and a brief explanation supporting the fees and costs sought.

(D)  IDENTIFICATION OF LAWYERS' REPRESENTATIVES.--The name, telephone number, and address of one or more representatives of counsel for the plaintiff class who will be reasonably available to answer questions from class members concerning any matter contained in any notice of settlement published or otherwise disseminated to the class.

(E)  REASONS FOR SETTLEMENT.--A brief statement explaining the reasons why the parties are proposing the settlement.

(F)  OTHER INFORMATION.--Such other information as may be required by the court.

(8)  ATTORNEY CONFLICT OF INTEREST.--If a plaintiff class is represented by an attorney who directly owns or otherwise has a beneficial interest in the securities that are the subject of the litigation, the court shall make a determination of whether such ownership or other interest constitutes a conflict of interest sufficient to disqualify the attorney from representing the plaintiff class.

(b)  STAY OF DISCOVERY; PRESERVATION OF EVIDENCE.--

(1)  IN GENERAL.--In any private action arising under this title, all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss, unless the court finds, upon the motion of any party, that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party.

(2)  PRESERVATION OF EVIDENCE.--During the pendency of any stay of discovery pursuant to this subsection, unless otherwise ordered by the court, any party to the action with actual notice of the allegations contained in the complaint shall treat all documents, data compilations (including electronically recorded or stored data), and tangible objects that are in the custody or control of such person and that are relevant to the allegations, as if they were the subject of a continuing request for production of documents from an opposing party under the Federal Rules of Civil Procedure.

(3)  SANCTION FOR WILLFUL VIOLATION.--A party aggrieved by the willful failure of an opposing party to comply with paragraph (2) may apply to the court for an order awarding appropriate sanctions.

(4)  CIRCUMVENTION OF STAY OF DISCOVERY.--Upon a proper showing, a court may stay discovery proceedings in any private action in a State court as necessary in aid of its jurisdiction, or to protect or effectuate its judgments, in an action subject to a stay of discovery pursuant to this subsection.

(c)  SANCTIONS FOR ABUSIVE LITIGATION.--

(1)  MANDATORY REVIEW BY COURT.--In any private action arising under this title, upon final adjudication of the action, the court shall include in the record specific findings regarding compliance by each party and each attorney representing any party with each requirement of Rule 11(b) of the Federal Rules of Civil Procedure as to any complaint, responsive pleading, or dispositive motion.

(2)  MANDATORY SANCTIONS.--If the court makes a finding under paragraph (1) that a party or attorney violated any requirement of Rule 11(b) of the Federal Rules of Civil Procedure as to any complaint, responsive pleading, or dispositive motion, the court shall impose sanctions on such party or attorney in accordance with Rule 11 of the Federal Rules of Civil Procedure. Prior to making a finding that any party or attorney has violated Rule 11 of the Federal Rules of Civil Procedure, the court shall give such party or attorney notice and an opportunity to respond.

(3)  PRESUMPTION IN FAVOR OF ATTORNEYS' FEES AND COSTS.--

(A)  IN GENERAL.--Subject to subparagraphs (B) and (C), for purposes of paragraph (2), the court shall adopt a presumption that the appropriate sanction--

(i)  for failure of any responsive pleading or dispositive motion to comply with any requirement of Rule 11(b) of the Federal Rules of Civil Procedure is an award to the opposing party of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation; and

(ii)  for substantial failure of any complaint to comply with any requirement of Rule 11(b) of the Federal Rules of Civil Procedure is an award to the opposing party of the reasonable attorneys' fees and other expenses incurred in the action.

(B)  REBUTTAL EVIDENCE.--The presumption described in subparagraph (A) may be rebutted only upon proof by the party or attorney against whom sanctions are to be imposed that--

(i)  the award of attorneys' fees and other expenses will impose an unreasonable burden on that party or attorney and would be unjust, and the failure to make such an award would not impose a greater burden on the party in whose favor sanctions are to be imposed; or

(ii)  the violation of Rule 11(b) of the Federal Rules of Civil Procedure was de minimis.

(C)  SANCTIONS.--If the party or attorney against whom sanctions are to be imposed meets its burden under subparagraph (B), the court shall award the sanctions that the court deems appropriate pursuant to Rule 11 of the Federal Rules of Civil Procedure.

(d)  DEFENDANT'S RIGHT TO WRITTEN INTERROGATORIES.--In any private action arising under this title in which the plaintiff may recover money damages only on proof that a defendant acted with a particular state of mind, the court shall, when requested by a defendant, submit to the jury a written interrogatory on the issue of each such defendant's state of mind at the time the alleged violation occurred.

[Codified to 15 U.S.C. 77z--1]

[Source:  Section 101(a) of title I of the Act of December 22, 1995 (Pub. L. No. 104--67; 109 Stat. 737), effective December 22, 1995; as amended by section 101(a)(2) of title I of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3230 and 3235), effective November 3, 1998]


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Last updated September 16, 2013 regs@fdic.gov