> 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.

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.

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.

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.

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.

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.

In Finland, traffic fines scale based on your income.

If the fine is less than the profit of committing the crime, then it is now de facto legal, taxed profit. There is no incentive not to continue committing the crime.

Perhaps $5mm is a valid fine on top of repaying the illegal profits. But on its own? It is an endorsement.

I don't know if they made additional profits from this. I think they hid their holdings to prevent bad press for the LDS church. Not to give them a market advantage. This appears to me to be a slap on the wrist saying "don't do that".

Fair enough, if they in fact didn't gain any money from their illegal actions then the fine is less problematic.

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

That meets an intuitive definition of fairness, but the realpolitik story there is you don't have a lot of power to make trouble for the municipality by tying them up in court for a half-decade arguing how your Bentley was actually operated legally because the definitions of "sticker" and "driving" and "expired" are very flexible (on account of them being not very flexible).

The probability a case heads towards settlement hinges on the ambiguity of the charges and the plaintiff's ability to prove said charges. Securities is way murkier than traffic operation.

Yeah, that didn't happen. The SEC brought this enforcement action in 2019.

Yeah, the SEC arranged a settlement so they wouldn't spend a decade in court.

Not in Sweden tho, traffic tickets are proportional to income.

If you keep getting tickets in the US, you'll eventually get your license suspended.

Many countries have it: https://en.wikipedia.org/wiki/Day-fine

For personal tax returns the typical penalty is 20% of the underpayment + interest.

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

Depends entirely on where you live. If you do the equivalent crime in Finland, you will be fined 6-14 "day fines". Each day fine is calculated to be (your_monthly_gross_income - 255€)/60, minimum of 6€ and unbound from above.

I believe that this system is much more just than flat fines. A fine is not payment for a service, it is a punishment. It should hurt as much whether you are poor or rich.

An expired sticker is not an SEC violation. SEC violations scale based on a number of factors.

https://corpgov.law.harvard.edu/2016/01/24/calculating-sec-c...

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

In the US, sure. The people advocating for a proportional fine in the LDS case presumably would argue for a proportional one in your example, too.

Switzerland actually DOES fine you more if you have the money and break the law. https://www.hotcars.com/heres-why-a-dude-in-sweden-received-...

Traffic fines are often considered regressive because a rich person can laugh at a few hundred dollars whereas a poor person suddenly can't afford rent.

So yeah, perhaps some fines should scale to ones means, otherwise it won't deter bad behavior.