The Wall Street Journal reported that the SEC and the CFTC are owed approximately $4.5 billion in fines and disgorgement. These figures date back as far as 2005.
Interestingly, the SEC and CFTC have let this debt continue for so long, and it causes one to wonder why the fines were imposed initially. That is, to impose fines and disgorgement on entities and persons, who are unable to pay such sums, makes no sense. Instead, the SEC and CFTC should consider the practical aspects of its regulatory authority, and assess the ability to pay such fines and disgorgement before imposition.
Customarily, the SEC and CFTC impose fines and disgorgement on parties regardless of their financial ability to pay. This results in these large debts accruing, and , periodically, the SEC and CFTC are taken to task for not collecting. However, collections from “a stone” are not realistic.
Further, the SEC and CFTC have repeatedly been unwilling to consider waivers of disgorgement or penalties. Typically, although there are no formal standards, the SEC and CFTC have refused to consider waivers if parties are notorious violators or there is SEC policy involved with the particular violation.
As such, it is time for the SEC and CFTC to consider alternative forms of relief as opposed to the continuous imposition of debt that will never be paid.