Commission Denies Motion To Reconsider

Mitchell M. Maynard, Dorice A. Maynard, IA Act Rel. 2901, July 16, 2009

In May the Commission issued an opinion that barred the Maynards from investment adviser association. That order was based on an order issued by Vermont regulators that barred them from investment adviser and broker-dealer association. Vermont found that, among other things, they misappropriated investor funds.

In denying the motion the Commission noted that its rules allow such motions only to "correct manifest errors of law or fact or to permit the presentation of newly discovered evidence." Such motions are not to be used to rehash previous arguments. The only new matter raised by the motion was an error in the original opinion describing a California action against the Maynards. The Commission erroneously found that the final California order had found the Maynards had filed a false document with the state (although that allegation had been included in the original charging document). The Commission found that this error did not implicate the Commission's conclusion that the Maynards had engaged in extensive and long term violations.

Finally, the Maynards sought to introduce what they claimed was new evidence relating to SEC staff contact with their counsel and other matters. The Commission noted that it had previously ruled that those matters were not relevant as its original ruling relied on the Vermont order and findings.

Perpetual Securities, Inc., Cathy Y. Huang, Exchange Act Rel. 56962, December 13, 2007

Denial of motion to reconsider.

Summary

The Commission largely sustained NASD sanctions in an October, 4, 2007, opinion (see below) On October 26, 2007, after receiving an extension of time to file, respondents' filed a motion for reconsideration.

The Commission noted that such a motion is an "exceptional remedy designed only to correct manifest errors of law or fact in the previous opinion.  Further, factual matters raised in such motions will only be considered if additional factual evidence raised could not have been known or adduced before entry of the order being appealed.  

The Commission noted that here, respondents' had used their motion largely to rehash arguments they had made on direct appeal and had raised no new matters.  For example, respondents' reiterated their arguments that there was misconduct by the NASD in the underlying proceeding.  The Commission noted that it had considered those very arguments on appeal and had rejected them.  The Commission also rejected the claim that its Secretary's office had failed to serve its previous opinion, noting that delivery to respondents was by courier and confirmed after an initial problem transmitting it by facsimile.  Also, respondents' claimed that the opinion included a factual error.  The Commission noted that the statement in its opinion had been based on respondents' brief on appeal. 

Respondents' also made a claim of impropriety by the NASD staff that was not raised on appeal.  Because the matter could have been raised on appeal, the Commission ruled that this claim was not proper in a motion for reconsideration.  

Comment

Let the actual appeal begin.  The Commission labored for 6 weeks to issue a perfunctory 3 1/2 page opinion.  Delay in ruling on such motions only encourages more such motions as it allows appellants to delay final resolution of the matter.

Laminair Corp., TAM Restaurants, Inc., Upside Development, Inc., Exchange Act Rel. 56789, November 15, 2007

Motion for reconsideration.

Pages - 4.

Summary

The Division of Enforcement moved for reconsideration of a Commission ruling denying its motion to amend the order instituting proceedings to strike TAM Restaurants as a party.  The proceedings were begun to determine whether to revoke or suspend the registrations of three corporations, including TAM, due to delinquent filings.  The caption of the proceedings lists TAM (n/k/a Aerofoam Metals) as a respondent.  

The Division moved to strike Aerofoam Metals, claiming that Aerofoam was not the successor of TAM.  The Division's motion was based on information provided by Aerofoam that it had acquired a different corporation also named TAM.  The Commission denied the motion because it found that the relationship between TAM and Aerofoam was unclear and needed to be further developed on the record.  

The Division moved for reconsideration, claiming that the sua sponte order of the Commission to request further development of the record was unusual without briefing.  The Commission noted that its rules do not allow its law judges to amend an order instituting proceedings unless the amendment involves new matters that are within the scope of the original order.  The Commission explained that the Division's motion to drop a party was not within the scope of the original OIP and could not be decided by the law judge.  Hence, it decided the original motion on its own.

The Division, in its motion to reconsider claims that Aerofoam is not in fact the successor of TAM and was not a separate respondent, but was only listed in the caption as a successor of TAM.  Further, the Division argues that under Exchange Act Rule 12b-2 Aerofoam was not the successor of TAM.  

The Commission noted that under its rules reconsideration is an extraordinary remedy designed to correct manifest errors of law or fact or to deal with new evidence.  Such motions should not be used to reiterate arguments previously made or to cite legal authority that was previously available.  The Commission held that the Division motion does not meet this stringent standard because it does not identify errors of fact or law, nor does it present new evidence.

Comment

This could be considered a spanking.  Why the Division chose to spend its own and the Commission's time filing such a motion, instead of simply attending the hearing ordered by the previous Commission order into the relationship between TAM and Aerofoam is a mystery.  

The original Commission order was filed on October 22, 2007.   The Division's motion to reconsider was filed October 25, 2007.  The Commission ruled in three weeks, proving that it can act promptly in these matters.  

The Rockies Fund, Inc., Exchange Act Rel. 56344, August 31, 2007

Motion for reconsideration.

Time from motion to opinion - 3 months, 19 days.

This is another one I won't comment on due to the fact that I worked on this case when I was at the Commission.  The decision was issued in August, but was apparently not posted to the Commission's web site until recently.  This opinion denies a motion for reconsideration filed by respondents concerning a Commission opinion (on remand from the D.C. Circuit) issued in December 2006.