John M. Lucarelli, Exchange Act Rel. 56075, July 13, 2007

Dismissal of proceeding based on criminal proceeding.

Summary

Respondent was convicted by a jury on one count of conspiracy to commit mail fraud and one count of securities fraud.  Administrative proceedings were instituted based on that verdict.  The proceedings were stayed pending entry of a judgment by the district court.  Several months later, the court entered a judgment of acquittal and set aside the jury verdict.  The Division of Enforcement agreed that the proceedings should be dismissed, but argued that the dismissal should be without prejudice.  It argued that this was appropriate because the U.S. Attorney had moved that the district court reconsider its acquittal.  

The Commission found only that there was no jurisdictional basis for the proceeding based on the judgment of acquittal.  It did not address whether the dismissal should be with or without prejudice, noting that the Commission's rules do not make such a distinction.

Comment

At last a short decision, less than three full pages, although it managed to cram in seven footnotes.

Terry Harris, Investment Advisers Rel. 2622, July 26, 2007

Dismissal of Proceedings, criminal conviction

Pages - 4

The ALJ barred Harris from association with an investment adviser based on the Division of Enforcement's motion for summary disposition.  The proceedings were  based on his criminal conviction in Alabama.  Since Harris' criminal conviction was reversed on appeal, it could no longer serve as a basis for proceedings under the Investment Advisers Act.  There was insufficient evidence in the record to determine whether an Alabama cease and desist order against Harris was final (which could have been al alternative jurisdictional basis for the proceeding).  The ALJ did not rely on that order in entering her order and made no finding of whether it was final.  Therefore the proceedings cannot be based on that order.   The proceedings were therefore dismissed.