Securities — SEC May Not Seek Monetary Penalties for Aiding and Abetting Violations of the Investment Advisers Act - Joseph Hage Aaronson

Commercial Litigation and Arbitration

Commercial Litigation and Arbitration

Securities — SEC May Not Seek Monetary Penalties for Aiding and Abetting Violations of the Investment Advisers Act

In SEC v. Bolla, 2008 U.S. Dist. LEXIS 36401 (D.D.C. May 6, 2008), United States District Judge Colleen Kollar-Kotelly held that Section 209(e) of the Advisers Act, 15 U.S.C. § 80b-9(e), does not authorize the SEC to seek, and does not confer jurisdiction on the Court to impose, monetary penalties for aiding and abetting violations of the Advisers Act. Her analysis is, in part, almost an expressio unius take on Sarbanes Oxley:

Moreover, Defendant Radano is correct that in 1995--in response to the Supreme Court's holding in Central Bank--Congress enacted Section 104 of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). See Radano Mot. at 3-4. PSLRA Section 104 (codified at 15 U.S.C. § 78t(e)) amended the Exchange Act to specifically authorize monetary penalties against aiders and abetters in civil enforcement actions by the SEC under that Act, providing that "any person that knowingly provides substantial assistance to another person in violation of a provision of [the Exchange Act], or of any rule or regulation issued under [the Exchange Act], shall be deemed to be in violation of such provision to the same extent as the person to whom such assistance is provided." 15 U.S.C. § 78t(e). Congress did not, however, amend the Advisers Act in a similar manner.

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