[Sebb767]

> If I get pulled over in a Bentley with an expired sticker, I pay the same price as someone in a Kia.

The fine should scale with the size of the infraction. If you sticker expires on your car, the infraction is the same severity, no matter the car [0]. ~Hiding a few million vs. hiding a few billion in taxes is a whole different level.~ EDIT: They just hid it for information purposes. Not to avoid tax. Therefore, this does not apply in this case.

Also, the fine is intended to discourage the behavior. If the money obtained by breaking the law minus the fee is still positive, there's no incentive to stop breaking the law. $5MM on a fund worth a few billion is very likely to be well within the still profitable area.

[0] I'm not sure about the US, but at least in Germany, an expired sticker actually is a larger infraction for commercial vehicles, especially if you transport people. So even there it's correctly scaling with severity.

[tptacek]

Right, I agree. But they didn't hide millions from taxes. They availed themselves of more privacy than the SEC allows for fund managers. If we can articulate the manner in which that inflicted more than 5MM in harm, I think we have a strong case for the fine being too low. But I have no intuition for how to work out the harm these bad filings caused. Do you?

As for deterrence: it appears as if the SEC successfully deterred Ensign Peak from doing this, right? They hadn't filed properly since 1997, but the enforcement action is just a couple years old.

[VLM]

Filing a 13F is essentially a tax upon all market participants, it provides zero benefit to the public. Filing has a financial cost. If the SEC settlement were less than the cost of filing over multiple years, then all rational actors would stop paying to file 13-Fs and simply pay off the SEC every couple years. The middlemen and the pretend regulators both benefit from busywork continuing, so the fee is slightly more than the cost of filing 13-Fs to encourage cooperation.

There's probably a joke in there somewhere about the 13-F process being "securities theater" as compared to the better known IT "security theater" phrase. 13-F is a classic example of "regulation can sometimes be wasteful and inconvenient" therefore anything wasteful or inconvenient can be hand waved away by appeals to "regulation" much like the classic analogy with computer security. See also security theater at airports, plenty of the governmental covid responses, etc.

[Sebb767]

You're right, I was missing that they were just hiding the funds for information purposes, not tax purposes. In that case the fine is probably more appropriate.

[fmajid]

In Finland, traffic fines scale based on your income.

[dsfyu404ed]

If the punishment changes based on who you are that kind of shits all over the concept of justice being blind.

>Also, the fine is intended to discourage the behavior. If the money obtained by breaking the law minus the fee is still positive

The money saved not renewing your registration on time is roughly the same regardless of what you're driving so that would seem to favor the fixed fine.