With Judge Rakoff's strongly-worded rebuke still ringing in her ears, SEC Chairman Mary Schapiro dashed off a letter to Senate leaders saying the SEC needed authority to impose much greater financial penalties on individuals and Wall Street firms that commit fraud. The request was directed to Sens. Jack Reed (D., RI) and Mike Crapo (R., ID), who both had hosted a hearing this month on the issue of SEC structural overhauls.  Ms. Schapiro  said the Agency is constrained by statute from imposing financial penalties that match investor losses.  She added that, at current levels, the SEC can't adequately take into account the seriousness of misconduct nor its impact on victims. Three SEC Proposals. For civil cases such as the Citigroup matter, Ms. Schapiro would raise the penalty cap to 300% of the "pecuniary gain," or a firm's net profits, from a fraudulent transaction.  Currently, penalties are limited to 100% of a firm's net profits in such deals. Another proposed statutory change would allow the SEC to calculate penalties based on the amount of investor losses incurred as a result of the misconduct, for both civil cases and administrative proceedings. A third change, which would also be used in civil cases and administrative proceedings, would allow the SEC to impose penalties of up to $1 million per violation for individuals and $10 million for financial firms.  The current caps are $150,000 and $725,000, respectively.  That would translate into increases of 670% and 1380%. Working on Legislation. A spokesperson said Sen. Reed is working on legislation "to improve the SEC's ability to obtain meaningful monetary sanctions for serious securities fraud violations."   Such legislation also would seek to improve the SEC's ability to sanction companies and individuals with a pattern of repeated violations of the federal securities laws, another focus of Ms. Schapiro's letter.  Ms. Schapiro said current law "does not provide the commission with adequate tools to deter this category of violators."  [WSJournal, 11/29/11]