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Back in January, when the CBO presented its latest long-term debt forecast, we – and Albert Edwards – said that this was nothing short of a “ticking timebomb“, one which convinced Albert Edwards shortly after that helicopter money was on its way. Just over a month later, this prediction came true when the Fed unleashed unlimited QE with the explicit intention of monetizing all near-term Treasury issuance in collaboration with the Treasury. The reason: the US economy was about to incur $3 trillion in debt to fund the biggest fiscal stimulus in US history, and much more to come after now that Magic Money Tree has been unleashed on the US with wide segments of the population now expecting Universal Basic Income for the foreseeable future.

Unfortunately, this also meant that the CBO’s already catastrophic long-term debt forecast had become woefully outdated, which is why we were looking forward to today’s latest Long-Term Budget Outlook report from the CBO.

It did not disappoint: as the CBO openly admits, now that the US has fully embraced helicopter money, “deficits grow from an average of 4.8 percent of GDP from 2010 to 2019 to an average of 10.9 percent from 2041 to 2050, driving up debt. Net spending for interest rises rapidly and accounts for much of the growth in total deficits in the last two decades of the projection period.”

Another way of visualizing this: growth in outlays vastly outpaces growth in revenues, “resulting in larger budget deficits over the long run.”

The biggest source of government spending: interest on Federal debt, which surpasses mandatory spending in total terms around 2030, then surpasses both total Discretionary Spending and Social Security around 2040-2045, and then around 2050 becomes the second biggest US federal outlay only after healthcare programs. At that pace, however, it surpasses healthcare spending around 2055 at which point the US is officially a Minsky Moment republic, where the biggest outlay for the government is interest on the US mountain of debt.

Of course, since the bond market won’t just sit there and wait for the US to become one giant interest expense ponzy scheme, expect interest rates to soar much faster than the CBO currently projects, which means the D-Day when interest spending become the primary government outlay will come much sooner.

Which brings us to the punchline: the amount of debt itself as projected by the CBO. As the budget agency explains “federal debt held by the public surpasses its historical high of 106 percent of GDP in 2023 and continues to climb in most years thereafter. In 2050, debt as a percentage of GDP is nearly 2.5 times what it was at the end of last year.… Relative to the size of the economy, federal debt is higher in this year’s projections than it was in last year’s projections. The economic disruption caused by the 2020 coronavirus pandemic and the federal government’s response to it contribute significantly to that difference”

The CBO also provided the following color to explain why debt exploded even before the Covid pandemic.

Federal debt held by the public has increased significantly in recent years. At the end of 2007, federal debt was 35 percent of GDP. Deficits arising from the 2007–2009 recession and from policies implemented to counter the effects of the downturn caused debt to grow in relation to the economy over the next five years. By the end of 2012, debt as a share of GDP had doubled, reaching 70 percent, and it has climbed since then, reaching 79 percent by 2019.

Next the CBO gives a terse discussion on why debt is projected to continue to grow even more:

Debt as a percentage of GDP is projected to increase in most years as the government incurs budget deficits that are large relative to the growth of the economy. If current laws generally remained unchanged, federal budget deficits would be substantially larger over the next 30 years than they were over the past 50 years. In CBO’s projections, deficits rise after 2030 as mandatory spending—in particular, outlays for the major health care programs—and interest payments on federal debt grow faster than revenues.  That growth in deficits causes projected debt to rise as a percentage of GDP over the 2030–2050 period.

Finally, here is the most terrifying chart in the latest CBO forecast – and of all CBO forecasts released yet – which as hinted in the title, is the one which projects US debt for the next 30 years, and shows that over the next three decades nothing short of hyperinflation, or war, can save the US.

Questioning the righteousnness of ESG investing is almost as heretical as questioning lockdowns, mask-wearing, and Elon Musk’s genius; which is why we have felt somewhat lonely out here on our branch of ESG skeptics.

While flows continue to dominate, and virtue is signaled, performance ex-post just hasn’t lived up to the hype and now, none other than the professor of valuations – NYU Stern’s Aswath Damodaran – has been brave enough to write a paper (with Brad Cornell) daring to question the “value” of ESG investing.

In the last decade, companies have come under pressure to be socially conscious and environmentally responsible, with the pressure coming sometimes from politicians, regulators and interest groups, and sometimes from investors. The argument that corporate managers should replace their singular focus on shareholders with a broader vision, where they also serve other stakeholders, including customers, employees and society, has found a receptive audience with corporate CEOs and institutional investors. The pitch that companies should focus on “doing good” is sweetened with the promise that it will also be good for their bottom line and for shareholders. In this paper, we build a framework for value that will allow us to examine how being socially responsible can manifest in the tangible ingredients of value and look at the evidence for whether being socially responsible is creating value for companies and for investors.

Damodaran wrote the following to address this on his “Musings On Markets” blog:

In my time in corporate finance and valuation, I have seen many “new and revolutionary” ideas emerge, each one marketed as the solution to all of the problems that businesses face. Most of the time, these ideas start by repackaging an existing concept or measure and adding a couple of proprietary tweaks that are less improvement and more noise, then get acronyms, before being sold relentlessly. With each one, the magic fades once the limitations come to the surface, as they inevitably do, but not before consultants and bankers have been enriched.

So, forgive me for being a cynic when it comes to the latest entrant in this game, where ESG (Environmental, Social and Governance), a measure of the environment and social impact of companies, has become one of the fastest growing movements in business and investing, and this time, the sales pitch is wider and deeper.

Companies that improve their social goodness standing will not only become more profitable and valuable over time, we are told, but they will also advance society’s best interests, thus resolving one of the fundamental conflicts of private enterprise, while also enriching investors. This week, the ESG debate has come back to take main stage, for three reasons.

• It is the fiftieth anniversary of one of the most influential opinion pieces in media history, where Milton Friedman argued that the focus of a company should be profitability, not social good. There have been many retrospectives published in the last week, with the primary intent of showing how far the business world has moved away from Friedman’s views. 

• There were multiple news stories about how “good” companies, with goodness measured on the social scale, have done better during the COVID crisis, and how much money was flowing into ESG funds, with some suggesting that the crisis could be a tipping point for companies and investors, who were on the fence about the added benefits of being socially conscious. 

• In a more long standing story line, the establishment seems to have bought into ESG consciousness, with business leaders in the Conference Board signing on to a “stakeholder interest” statement last year and institutional investors shifting more money into ESG funds.

In the interests of openness, I took issue with the Conference Board last year on stakeholder interests, and I start from a position of skepticism, when presented with “new” ways of business thinking. If the debate about ESG had been about facts, data and common sense, and ESG had won, I would gladly incorporate that thinking into my views on corporate finance, investing and valuation. But that has not been the case, at least so far, simply because ESG has been posited by its advocates as good, and any dissent from the party line on ESG (that it is good for companies, investors and society) is viewed as a sign of moral deficiency. At the risk of sounding being labeled a troglodyte (I kind of like that label), I will argue that many fundamental questions about ESG have remained unanswered or have been answered sloppily, and that it is in its proponents’ best interests to stop overplaying the morality card, and to have an honest discussion about whether ESG is a net good for companies, investors and society.

…

Even if you overlook disagreements on ESG as growing pains, there is one more component that adds noise to the mix and that is the direction of causality: Do companies perform better because they are socially conscious (good) companies, or do companies that are doing well find it easier to do good?

 Put simply, if ESG metrics are based upon actions/measures that companies that are doing better, either operationally and/or in markets, can perform/deliver more easily than companies that are doing badly, researchers will find that ESG and performance move together, but it is not ESG that is causing good performance, but good performance which is allowing companies to be socially good.

Read more here…

Damodaran dares to conclude… it’s over-hyped!

In many circles, ESG is being marketed as not only good for society, but good for companies and for investors. In my view,  the hype regarding ESG has vastly outrun the reality of both what it is, and what it can deliver, and the buzzwords are not helpful. That is the reason I have tried to under use words like sustainability and resilience, two standouts in the ESG advocates lexicon, in writing this post. I believe that the potential to make money on ESG for consultants, bankers and investment managers has made at least some of them cheerleaders for the concept, with claims of the payoffs based on research that is ambiguous and inconclusive, if not outright inconsistent. The evidence as I see it is nuanced, and can be summarized as follows:

• There is a weak link between ESG and operating performance (growth and profitability), and while some firms benefit from being good, many do not. Telling firms that being socially responsible will deliver higher growth, profits and value is false advertising. The evidence is stronger that bad firms get punished, either with higher funding costs or with a greater incidence of disasters and shocks. ESG advocates are on much stronger ground telling companies not to be bad, than telling companies to be good. In short, expensive gestures by publicly traded companies to make themselves look “good” are futile, both in terms of improving performance and delivering returns.

• The evidence that investors can generate positive excess returns with ESG-focused investing is weak, and there is no evidence that active ESG investing does any better than passive ESG investing, echoing a finding in much of active investing literature. Even the most favorable evidence on ESG investing fails to solve the causation problem. Based on the evidence, it appears to me that just as likely that successful firms adopt the ESG mantle, as it is that adopting the ESG mantle makes firms successful.

• If there is a hopeful note for ESG investing, it is in the payoff to being early to the ESG game. Investors who are ahead of markets in assessing how corporate behavior, good or bad, will play out in performance or priced, will be able to earn excess returns, and if they can affect the change, by being activist, can benefit even more.

Much of the ESG literature starts with an almost perfunctory dismissal of Milton Friedman’s thesis that companies should focus on delivering profits and value to their shareholders, rather than play the role of social policy makers. The more that I examine the arguments that advocates for ESG make for why companies should expand mission statements, and the evidence that they offer for the proposition, the more I am inclined to side with Friedman. After all, if ESG proponents are right, and being good makes companies more profitable and valuable, they are on the same page as Friedman. If, on the other hand, adopting ESG practices makes companies less valuable, the onus is on ESG’s proponents to show that societal benefits exceed that lost value.

The ESG bandwagon may be gathering speed and getting companies and investors on board, but when all is said and done, a lot of money will have been spent, a few people (consultants, ESG experts, ESG measurers) will have benefitted, but companies will not be any more socially responsible than they were before ESG entered the business lexicon.

What is needed is an open, frank, and detailed dialogue concerning ESG-related corporate policies, with an acceptance that being good can add value at some companies and may destroy value at others, and that in the long term, investing in good companies can pay off during transition periods but will often translate into lower returns in the long term, rather than higher returns.

Read the full blog post here…

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Full Paper below:

In what looks to be the first major test of the new post-RBG iteration of the Supreme Court, which could soon have a 6-3 conservative majority, the GOP is planning to ask SCOTUS to review a major PA state court decision that extended the due date for mail-in ballots in a critical battleground state.

The news was first reported by the Hill, but the party’s intentions were actually revealed in a set of court documents published overnight. The PA Supreme Court decision was handed down last week. Under the ruling, PA must accept ballots postmarked by Election Day, so long as they arrive within three days.

Ginsburg’s death leaves SCOTUS with a 5-3 conservative majority: However, both Chief Justice John Roberts and Associate Justice Neil Gorsuch have, in the past, broken with their fellow conservatives on decisions ranging from health-care to immigration. As Dems cry about the court moving to curtail voting rights, it’s important to remember nobody knows how a justice will rule on any given issue until a case has been heard. Their past rulings are merely a guide.

With the expectation being that Ginsburg’s replacement will be installed and sworn in before the court hears this ruling (Republicans are shooting to wrap up the confirmation votes next week after Trump announces his final decision on Saturday), it will be a test more broadly of where the conservative-dominated court stands on voting rights and access – issues that Democrats are trying to elevate.

20200921 133 MM 2020 – Application for Partial Stay of September 17 2020 Judgment (1) by Zerohedge on Scribd

PA Republicans argued the state court’s decision “creates a serious likelihood that Pennsylvania’s imminent general election “will be tainted by votes that were illegally cast or mailed after Election Day.”

In the petition, the state GOP says it has a “substantial case on the merits” that this presumption is preempted by federal law and violates the US Constitution. After all, SCOTUS earlier this year stayed a judgment extending Wisconsin’s implied postmark deadline for absentee ballots because the decision “extended the date by which ballots may be cast”.

Now that hedge funds have finally started piling into the “Big Short 3.0″ trade, which as we first explained back in June is basically shifting the CMBS short from malls to hotels, every incremental development in the sector is closely scrutinized.

And judging by the continued decline in the fulcrum BBB- tranche of the CMBX Series 9 index which has the highest exposure to hotels, developments continue to be adverse with little sign of recovery on the horizon.

The latest tailwind blast for the CMBX 9 shorts came from a report from NorthStar according to which, without aid 74% percent of US hotels said they expect to lay off more employees, with a whopping two thirds of properties warning they won’t be able to last another six months at the current projected revenue and occupancy levels.

Needless to say, should two-thirds of the US hotel industry fold, shorting the CMBX S9 BBB- could well be the most profitable (institutionally sized) short in recent history when the Fed has effectively made shorting impossible.

Here are some more details from the report:

Seven months after the Covid-19 pandemic struck the United States, the hospitality industry is still reeling and the need for federal relief is growing dire. New research from the American Hotel and Lodging Association shows 68 percent of hotels have less than half of their normal staff working full time. In addition, more than two-thirds of hotels said they would not be able to last six more months at the current projected revenue and occupancy levels, and half of the hospitality owners polled said they are in danger of foreclosure. Without government assistance, 74 percent of hotels said they would be forced to lay off more employees. 

Another study released by the AHLA last month found that unemployment within the hospitality and leisure sector is at 38 percent, nearly four times that of the national average (10.2 percent). In an effort to the save industry, the organization is calling on lawmakers to swiftly pass additional Covid-19 relief.

“It’s time for Congress to put politics aside and prioritize the many businesses and employees in the hardest-hit industries. Hotels are cornerstones of the communities they serve, building strong local economies and supporting millions of jobs,” said Chip Rogers, president and CEO of the AHLA. “Every member of Congress needs to hear from us about the urgent need for additional support, so that we can keep our doors open and bring back our employees.”

According to the AHLA, urban hotels have been hit especially hard and are seeing occupancy rates around 38 percent. Research from hospitality-data provider STR shows the average occupancy rate for all U.S. hotels in August was 48.6 percent, up slightly from 47 percent in July. This marked the lowest occupancy rate for any August on record (STR was founded in 1985), and the company expects U.S. hotel demand will not fully recover until 2023. 

“Our industry is in crisis. Thousands of hotels are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come,” said Rogers. “We need help urgently to keep hotels open so that our industry and our employees can survive and recover from this public-health crisis.”

Rogers recently indicated that more than 8,000 hotels could close in September if business travel does not pick up and funding from the Paycheck Protection Program runs out. According to AHLA, only 20 percent of hotels have received any debt relief from commercial mortgage-backed security lenders on Wall Street. Without aid from Congress, the industry association expects massive foreclosures.

More than half (58 percent) of Manhattan hotels remain closed, according to the latest Manhattan Lodging Index from PricewaterhouseCoopers. Findings from the report show approximately 61,450 hotel rooms in Manhattan had not reopened as of early September. Of these, nearly 2,700 are expected to be shuttered permanently. 

“You won’t see meaningful increases in operating metrics for Manhattan hotels until we see a return of the business traveler, and that likely comes after a widely distributable vaccine and therapeutics become available,” said Warren Marr, managing director of U.S. hospitality and leisure for PwC.

Some properties are already closing their doors. Among the hotels lost to Covid-19 are the Omni Berkshire Place, Times Square Edition, Hilton Westchester, W New York Downtown and the Hilton Hotel Times Square, all of which are in New York state. A report from The Wall Street Journal suggests 20 percent of the state’s total hotel supply (about 250,000 rooms) could close permanently. 

As an additional indicator of industry health, U.S. hotel transactions were down 74 percent year-over-year from March through May, according to the latest Hotel Transaction Almanac, produced by STR’s Consulting and Analytics office and CoStar Group. May represented the largest decline in the total volume of hotel deals, falling 94 percent compared with last year. According to STR, only 68 assets representing a combined total of $112 million were sold in the month of May, compared with 329 hotels worth $1.8 billion in May 2019. The number of transactions will likely begin to rebound as investors look for distressed inventory, according to the report.

Economic Impact of COVID-19

Since mid-February, U.S. properties have lost more than $46 billion in room revenue, according to the AHLA. Hotels across the country are on track to lose more than $400 million in room revenue per day due to COVID-19, which equates to losses of $2.8 billion weekly.

As a result, many hotels — 87 percent, according to the AHLA — were forced to furlough or lay off staff members. More than 7.7 million hospitality and leisure jobs were lost at the peak of the pandemic and 4.3 million remain out of work. Even as properties have reopened and occupancy picks up, layoffs continue. In many cases, furloughed employees are now losing their jobs permanently.

In the latest news, Marriott International plans to let go of 17 percent of its corporate workforce. According to The New York Times, the company confirmed that it will lay off 673 people in late October. Marriott had initially furloughed two-thirds of its corporate staff in March. In June, the furloughs were extended until early October. The hotel giant said it does not expect to return to prior levels of business until beyond 2021. Effective Sept. 20, Marriott will no longer be listed on the Chicago Stock Exchange, a move the company said would reduce administrative costs and requirements.

Hotel and casino giant MGM Resorts was expected expected to lay off 18,000 of its furloughed staff, starting Aug. 31. The company had furloughed 62,000 employees in March, according to Reuters.

InterContinental Hotels Group eliminated 10 percent of its corporate staff in July, as part of a $150 million cost-cutting plan that is expected to continue in 2021. Oyo Rooms, which operates more than 43,000 hotels with more than 1 million rooms around the world, announced in mid-July that more than 90 percent of its U.S. workforce would be let go. 

Las Vegas-based Boyd Gaming, which owns and operates 29 casino properties across 10 states, many with hotels, announced July 13 that it had let go more than 25 percent of its workers. The cut essentially turns a large number of furloughs into permanent layoffs. According to a company spokesperson, the number of layoffs is “at the lower end” of 25 to 60 percent of the total workforce — the range that the company had warned in May could be affected.

In June, Hilton let go of 22 percent of its corporate workforce. Rosen Hotels & Resorts, which owns and operates nine properties in Orlando, has also announced layoffs. The company implemented a “substantial reduction of workforce across multiple locations” on July 31. 

“It is with deep personal regret that I announce a significant downsizing of staff at Rosen Hotels & Resorts. Never in the 46-year history of my company would I have envisioned such a drastic decision,” said Harris Rosen, president and COO of Rosen Hotels & Resorts. “Since the onset of COVID-19 earlier this year, we have maintained as many staff as possible, with the hope of business returning to usual in June of this year. Regrettably, this did not come to pass… This is especially painful for me, as I consider these valued associates as extended members of the Rosen family, without whose contributions our company would never have achieved the success it has through the years.”

Doug Dreher, president and CEO of The Hotel Group, called the effect of the coronavirus pandemic on the hospitality industry “devastating” and expected his company to lay off at least a third of its workforce.

“It is for us the Great Depression, utterly devastating,” said Dreher. “We’ve tried to get ahead of it. We’re working with lenders, but we need help. We need help in every imaginable way. The human toll breaks your heart.” 

Reopening Hotel Properties

Many hotels have reopened their doors and are welcoming guests back with new cleaning protocols in place. Omni Hotels & Resorts, for example, has reopened most of its properties which had shut down during the pandemic. At the height of the pandemic, the hotelier had temporarily closed more than 40 of its properties. Only nine have yet to reopen, according to Omni’s travel advisory page. 

Gaylord Hotels was forced to temporarily close its five properties in the U.S. Four have since reopened: the Gaylord Texan Resort & Convention Center, Gaylord Opryland Resort & Convention Center, Gaylord Palms Resort & Convention Center and Gaylord Rockies Resort & Convention Center. A reopening date for the Gaylord National Resort & Convention Center has not yet been set.

Gaming resorts, which were among the first to suspend operations en masse, are also reopening their doors. A Covid-19 Casino Tracker from the American Gaming Association reports that all 989 casinos in the U.S. were forced to close due to the pandemic. Of these, 901 have since reopened.

MGM Resorts and Wynn Resorts, for example, suspended operations at their Las Vegas properties on March 16. The companies, along with other Nevada gaming powerhouses such as Caesars Entertainment and Las Vegas Sands, reopened select casinos on June 4 in accordance with the state’s reopening plan. The companies are reopening more Nevada properties as demand rises. On Sept. 30, Park MGM and the NoMad Las Vegas will be the last MGM properties to begin welcoming guests again. Both will be smoke-free.

“Opening Park MGM and NoMad represent significant milestones, as they are the last of our properties to welcome back employees and guests alike,” said Bill Hornbuckle, CEO and president of MGM Resorts. “The last six months have presented extraordinary challenges and I could not be prouder of the MGM Resorts team for the tireless effort required to get us here. There is much work ahead as we remain focused on the health and safety of our employees and guests, but this is an important moment for us.”

Meanwhile, other hotels might be closed for good. This includes four Station Casino properties in Las Vegas that might never reopen, according to Frank Fertitta III, CEO of Station Casinos’s parent company Red Rock Resorts. Texas Station, Fiesta Henderson, Fiesta Rancho and Palms Casino Resort have all been closed for months and might never welcome guests back. “We don’t know if — or when — we’re going to reopen any of the closed properties. We think it’s too early to make that decision at this time,” said Fertitta during the company’s Q2 earnings call on Aug. 4.

In Connecticut, two tribal casinos reopened on June 1. The Mohegan Sun and Foxwoods Resort Casino released detailed reopening plans with new safety protocols to keep guests and staff members safe. Atlantic City casinos reopened on July 2, and Massachusetts casinos also welcomed guests back in July. Plainridge Park was the first to reopen on July 8, followed by the Encore Boston Harbor on July 12 and MGM Springfield on July 13. Meanwhile, New York’s Resorts World Casino and Jake’s 58 Casino Hotel reopened on Sept. 9 and the Empire City Casino is scheduled to reopen on Sept. 21.

Despite a surge in new coronavirus cases in the state of Florida, Orlando’s Walt Disney World began a phased reopening of its theme parks and resort hotels on July 11. Disneyland, in Anaheim, Calif., had announced a July 17 opening but has postponed that as the state has yet to release reopening guidelines for theme parks. A new date has not been set. 

A COVID-19 hotel-status directory from EproDirect, a hospitality industry marketing agency, indicates whether more than 4,000 hotels are currently open, and if they are accepting individual reservations and group bookings. While most of the properties listed are in the United States, hotel reps from any destination worldwide can list their hotel’s status for free.

New Openings and Renovations Delayed

The pandemic is also affecting properties in the pipeline. The Langham, Boston was due to unveil a multimillion-dollar renovation this fall. However, the completion date has been pushed back to early 2021 due to a local halt on construction.

The grand opening of Universal’s Endless Summer Resort – Dockside Inn and Suites has also been postponed. The resort was scheduled to open in mid-March; a new date has not yet been announced. 

Marriott is expecting to open and sign fewer hotel deals in 2020 than anticipated. In addition, the company has temporarily deferred most brand standards to help owners and franchisees, including delaying renovations due in 2020 by one year, according to Marriott president and CEO Arne Sorenson. 

“The coronavirus is fast becoming the most significant event to ever impact our business; that includes the 12-month period after 9/11 and the financial crisis of 2009,” said Sorenson during an investor update on March 19. But he noted that the development pipeline has not ground to a complete halt. “We’ve been signing deals and we have development committees that are meeting monthly. The volume is lighter and the numbers will be lower than we anticipated but they won’t be zero.”

The SEC announced on Monday that it had awarded $2.4 million to a whistleblower whose “timely submission of information prompted the agency to initiate an investigation and bring an enforcement action that stopped ongoing misconduct”.

The SEC said the whistleblower’s continued assistance helped them bring charges against the wrongdoing. 

Jane Norberg, Chief of the SEC’s Office of the Whistleblower, said: “The whistleblower awarded today quickly came forward with critical information and helped investigative staff target key information and identify important witnesses. Information from whistleblowers has again proven to be crucial in helping the Commission detect violations and better protect investors and the marketplace.”

This is the second such meaningful award announced within the last week by the SEC. Recall, just about a week ago, we noted when the SEC doled out more than $10 million to an unnamed “persistent” tipster.

Norberg said at the time: “This award recognizes the persistent efforts of the whistleblower to expose serious financial misconduct.”

“This whistleblower also provided extensive and ongoing assistance to the investigative team over the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation,” she said.

In sum, the SEC has awarded about $520 million to 94 separate people since issuing its first whistleblower award in 2012. Payments for the awards are “made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators,” the release noted.

Whistleblowers can be eligible for an award when they provide the SEC with “original, timely, and credible information that leads to a successful enforcement action,” according to the agency.

Awards often range from 10% to 30% of money collected when sanctions bestowed by the SEC exceed $1 million.