Legal Definitions - penal action

A penal action is a formal legal proceeding initiated by the government or a regulatory authority to impose a penalty or punishment on an individual or entity for violating a law, regulation, or rule. The primary objective of a penal action is to punish the wrongdoer, deter future misconduct, and uphold public order, rather than to compensate a victim for damages. Penalties can include fines, imprisonment, forfeiture of property, or the loss of licenses and privileges.

• Example 1: A state prosecutor files criminal charges against an individual accused of committing grand theft auto.

  Explanation: This is a penal action because the state, representing the public, is initiating legal proceedings to punish the individual for breaking a criminal law. The goal is to impose penalties such as imprisonment, fines, or probation, not to compensate the car owner for the loss (which would typically be handled in a separate civil lawsuit).

• Example 2: The Securities and Exchange Commission (SEC) launches an enforcement action against a financial firm for engaging in insider trading.

  Explanation: This constitutes a penal action because a government regulatory body (the SEC) is seeking to impose significant fines, disgorgement of ill-gotten gains, and other sanctions on the firm for violating securities laws. The purpose is to punish the firm for its illegal conduct and deter others from similar violations, rather than to directly compensate individual investors for their losses.

• Example 3: A state bar association initiates disciplinary proceedings to suspend a lawyer's license after discovering they misappropriated client funds.

  Explanation: This is a penal action because the bar association, acting as a regulatory body for the legal profession, is taking formal steps to impose a severe penalty—the suspension of a professional license—on the lawyer for violating ethical rules and professional conduct standards. The aim is to punish the lawyer for misconduct and protect the public, not to provide financial compensation to the affected clients (who might pursue a separate civil claim).