Estimate SEC civil penalties by tier. Calculate Tier I, II, and III penalties for securities violations including disgorgement and prejudgment interest amounts.
The SEC Penalty Estimator calculates potential civil penalties for securities law violations based on the Securities and Exchange Commission's three-tier penalty structure. Tier I applies to any violation, Tier II involves fraud, deceit, or manipulation, and Tier III covers violations causing substantial losses or risk of losses to others.
Beyond civil penalties, SEC enforcement actions typically include disgorgement (returning ill-gotten gains) plus prejudgment interest calculated from the date of the violation. The total financial impact of an SEC enforcement action can far exceed the civil penalty alone.
This calculator helps securities professionals, compliance officers, and legal counsel estimate total enforcement exposure by modeling penalties, disgorgement amounts, and interest across different violation scenarios.
Legal professionals, business owners, and individuals alike benefit from transparent sec penalty calculations when evaluating obligations, settlements, or compliance requirements. Bookmark this page and return whenever circumstances change so you always have current figures at your fingertips.
From contract negotiations to dispute resolution, having reliable sec penalty numbers at your disposal strengthens your position and streamlines decision-making. Adjust the inputs to reflect your unique circumstances and run the calculation as many times as needed to cover every plausible scenario.
From contract negotiations to dispute resolution, having reliable sec penalty numbers at your disposal strengthens your position and streamlines decision-making. Adjust the inputs to reflect your unique circumstances and run the calculation as many times as needed to cover every plausible scenario.
SEC enforcement actions resulted in over $5 billion in penalties and disgorgement in recent years. Understanding the three-tier penalty structure and disgorgement rules helps firms budget for potential enforcement actions and justify compliance investments. Instant recalculation as you change inputs lets you model multiple scenarios quickly, giving you the data foundation needed for well-informed legal and financial decisions.
Civil Penalty = Per-Violation Maximum × Number of Violations Disgorgement = Ill-Gotten Gains Prejudgment Interest = Disgorgement × IRS Underpayment Rate × Years Total = Civil Penalty + Disgorgement + Prejudgment Interest
Result: $6,566,265 total exposure
Tier III entity penalty: $1,066,484 per violation. Disgorgement: $5,000,000. Prejudgment interest at ~5% for 3 years: $750,000. Total: $1,066,484 + $5,000,000 + $750,000 = $6,816,484.
The SEC focuses enforcement on insider trading, accounting fraud, market manipulation, investment adviser misconduct, and cybersecurity disclosure failures. Recent years have seen increased attention to crypto asset securities, ESG disclosure, and AI-related misrepresentations.
The SEC provides meaningful credit to entities that self-report violations, cooperate fully with investigations, and implement remedial measures. In some cases, cooperation has resulted in no civil penalty despite significant violations.
Companies should budget for potential SEC enforcement costs including legal fees, document production, penalties, and operational disruption. Large investigations typically cost $5–50 million in legal fees alone before any penalties are assessed.
Tier I applies to any securities violation ($11,524 individual/$115,231 entity per violation). Tier II involves fraud, deceit, or willful misconduct ($115,231/$576,156). Tier III involves the same plus substantial losses or risk ($230,461/$1,153,156). These are 2025 maximums.
Disgorgement requires violators to return profits gained through illegal activity. The Supreme Court ruled it cannot exceed the violator's net profits and is subject to a 5-year statute of limitations in most cases.
The SEC typically uses the IRS underpayment rate to calculate prejudgment interest on disgorgement amounts. Interest accrues from the date of the violation until the date of the order, compounded quarterly.
Yes, the SEC can seek penalties up to the gross pecuniary gain from the violation if that amount exceeds the standard per-violation maximum. This alternative calculation often applies in cases involving large profits.
Mitigating factors include self-reporting, full cooperation, remediation, no prior violations, and the strength of the compliance program. The SEC's cooperation program provides formal credit for companies that assist investigations.
Generally no. The Tax Cuts and Jobs Act of 2017 explicitly disallowed deductions for fines and penalties paid to government agencies. However, some disgorgement amounts may have different tax treatment. Consult a tax professional.