Pages - 5.
Another decision posted only recently
Summary
Teicher was barred from association with any broker, dealer, investment company, investment adviser, or municipal securities dealer in 1998. He moved to modify the order to permit him to associate with an investment adviser. The Division of Enforcement opposed the motion.
The Commission initially pointed out that Teicher had sought to amend the initial decision by the ALJ, rather than the subsequent Commission decision on appeal. It pointed out that Commission rules provided that on appeal, ALJ decisions cease to have any effect once the Commission accepts the petition for review (appeal). Also, under the Administrative Procedure Act, the initial decision by an ALJ is not the final agency decision.
Teicher was convicted in 1990 of securities fraud and mail fraud based on insider trading. He was sentenced to eighteen months imprisonment, five years probation, and fined $200,000. His company, also convicted, was fined $600,000. In 1997 he was enjoined in a separate Commission civil action. The administrative proceedings were based on the criminal conviction. Those proceedings were litigated.
Teicher has created an unregistered investment adviser that manages assets of his immediate family. He represented that if the sanctions were modified, the entity would register with the Commission as an investment adviser and would have fewer than fifteen clients, each of whom would be sophisticated.
Contrary to the Division's claim that Teicher was in reality asking that the sanctions be modified to permit him to associate with an adviser, the Commission found that since Teicher had not yet filed a formal application to associate with an adviser, it was not expressing any views on whether he should be permitted on application to so associate.
Commission policy has been that administrative bars should be removed only "in compelling circumstances." In evaluating such applications, the Commission will consider such factors as the time that has passed since the bar, the compliance record of the applicant since the bar, the age and experience of the applicant, whether verifiable and unanticipated consequences of the bar have been identified, the persuasiveness of the Division's response, and other circumstances that would make the relief inconsistent with the public interest.
Here, the Commission denied the relief because it found "no compelling interest" to do so. In other words, the petitioner has a very heavy burden of proof in such cases. Further, it characterized Teicher's underlying conduct to involve "extensive" insider trading and "serious" anti-fraud violations. The Commission also characterized the nine years since the bar as "not unduly lengthy" and when taken alone, would not favor relief. In a footnote, the Commission pointed out that it had previously made the same point about an application filed 29 years after a bar.
Further, the Commission pointed out that it generally grants incremental relief when it modifies bar orders. Because Teicher has not sought to associate with any regulated entity, he has no history of compliance in an associated capacity. Here, Teicher seeks to reassociate, not as a supervised person, but as the head of a firm he controls. The Commission concluded that permitting Teicher to associate with an investment adviser would not be in the public interest.
Comment
While not a surprising result, the final conclusion that Teicher should not be allowed to associate with an investment adviser contradicts the earlier discussion in the opinion that the Commission expresses no view on whether or not Teicher should be permitted to associate with an adviser since he has not formally applied to do so.
