Victor Teicher, Exchange Act Rel. 56744, November 5, 2007

Motion to Amend Administrative Order

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.   

Laminaiare Corp., TAM Restaurants, Inc., Upside Development, Inc., Exchange Act Rel. 56685, October 22, 2007

Denial of Motion to Amend Order Instituting Proceedings

Pages - 4

Summary

This is the companion decision to the Commission's November 15, 2007 decision.  It was only recently posted to the Commission's web site.

These proceedings were brought pursuant to Exchange Section 12(j) to suspend or revoke the registration of, among others, TAM Restaurants, now known as Aerofoam Metals, Inc.  the Division of Enforcement sought to amend the order instituting proceedings to strike Aerofoam as a party.  The ALJ initially granted the motion, despite the fact that the Commission's rules permit the ALJ to amend the OIP only if the amendment is within the scope of the original order.  Motions to dismiss all charges against a respondent are not considered to be within the scope of the original order, and thus may only be ruled on by the Commission itself.

Respondent TAM opposed the Division's motion arguing that there was uncertainty about whether or not Aerofoam had in fact acquired TAM.  The Division had claimed that TAM was not actually acquired by Aerofoam, claiming it had information that Aerofoam had acquired a different company also named TAM.  Aerofoam did not object to the motion.

The Commission ruled that while orders to amend should be freely granted, this rule is subject to the proviso that other parties should be neither surprised, nor prejudiced by amendments.  Finding the evidence confusing, the Commission denied the motion, finding that the record concerning the relationship between TAM and Aerofoam requires "further development.

Tudor Investment Corp., Exchange Act Rel. 56782, November 13, 2007

Vacate cease and desist order

Pages - 2

Summary

Tudor moved to vacate a cease and desist order entered by the Commission in September 1996 that prohibited future violations of Exchange Act Rule 10a-1 (the short sale only on "plus tick" rule).  The Division of Enforcement did not oppose the motion.

Rule 10a-1 was repealed by the Commission in July 2007.  Tudor argued that the cease and desist order prohibited conduct that is now legal.  

The Commission granted the motion explaining only that to do so was "appropriate."

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.  

Charles C. Fawcett, IV, Exchange Act Rel. 56770, November 8, 2007

NASD appeal.  5th amendment assertion in NASD investigation.

Time between appeal and decision - 8 months, 30 days.

Time between last brief and decision - 6 months, 9 days

Pages - 14

Summary

NASD found that Fawcett violated its cooperation rule, barred him, and ordered him to pay costs of $1500.  The Commission sustained the NASD.

Following an investigation by the New York Attorney General into market timing and late trading of mutual funds NASD began an investigation of Fawcett.  Following a subpoena by the AG to his employer Fawcett deleted nine e-mails from his computer.  The day after he deleted the e-mails, Fawcett's firm sent out a memorandum to employees instructing them to save relevant documents, including e-mails.  Fawcett's employer began an internal investigation and Fawcett failed to disclose in an interview that he had deleted the e-mails.  Later, Fawcett contacted counsel who had conducted the interview and admitted he had deleted "a couple" of e-mails because he had panicked.  He further admitted he knew about a subpoena before he deleted the e-mails.  The e-mails were ultimately recovered.  The employer determined that three of the deleted e-mails were not covered by the subpoena, six were.  Respondent was fired by his firm because he had deleted e-mails relevant to a regulatory investigation.

Over a five month period NASD sent three written requests for information to Fawcett.  His attorney requested an extension of the first deadline due to pending SEC and New York investigations.  The NASD staff denied this request.  The second NASD request met a similar response, in which Fawcett's lawyer claimed he was under criminal investigation.  NASD staff also denied this request for an extension of time to respond.  Finally, NASD asked Fawcett to appear to testify under oath and produce documents.  He failed to do so.

Fawcett argued that he was entitled to invoke his Fifth Amendment rights and refuse to provide information to the NASD without sanction.  This is not a new issue for the Commission.  It found that NASD is not inherently a state actor before whom the Fifth Amendment applies.  As it has done before, the Commission rejected an argument that because the NASD exercises a "public function" delegated by Congress, persons may invoke the 5th without consequence.  As the Commission stated, "Fawcett's position, however, is directly contrary to established precedent, and we find no basis in this case for departing from that precedent."

The Commission noted that the Second Circuit has previously ruled that the NASD is a private actor, not a state actor.  It distinguished the Brentwood Academy v. Tennessee Secondary Sch. Athletic Ass'n case, noting that there was no allegation of cooperation or interaction between NASD and the government in this case that would justify a finding that NASD effectively engaged in state action.  

Fawcett also argued that the e-mails were not relevant to NASD's investigation.  The Commission, citing long standing precedent noted that it "does not fall to the recipient of an NASD information request to decide for himself whether his compliance would assist NASD's investigation."

Last, the Commission noted that in evaluating sanctions, Exchange Act Section 19(e)(2) requires it to sustain them unless it finds, with due regard for the public interest and protection of investors that the sanctions are excessive, oppressive, or impose an unnecessary or inappropriate burden on competition.  The Commission sustained the sanctions because, among other things, they are consistent with NASD Sanction Guidelines, there was no mitigation, and general deterrence is served.   The Commission noted particularly the importance of the NASD cooperation rule given NASD's lack of subpoena authority.   

Comments

Strangely, in concluding that Fawcett's "Hobson's choice" was not a mitigating factor, the opinion does not cite the various cases holding that there is no absolute right to assert the Fifth Amendment in a civil case regardless of whether this presents such an unpleasant choice.  See, for example, Baxter v. Palmigiano, 425 U.S. 308 (1976), SEC v. Dresser Industries, Inc., 628 F.2d 1375 (D.C. Cir. 1980), cert. denied 449 U.S. 993 (1980).

This is another case that presented no significant factual or legal issues.  Yet it took the Commission more than six months to issue the opinion after the last brief was filed.

Navistar International Corp., Exchange Act Rel. 56769, November 8, 2007

NYSE appeal.

Time from appeal to decision - 9 months

Time from last brief to decision - 5 months, 23 days

Pages - 16

Summary

Navistar appealed the decision of the NYSE to remove its common stock and other securities from listing and registration on the exchange.  The exchange took this action because the company failed to file its fiscal year 2005 annual report with the Commission and was unable to come into compliance within a twelve month cure period.  The dismissed the proceeding, finding the NYSE had acted properly.

NYSE rules require listed companies to file timely their annual reports with the Commission as a condition for continued exchange listing.  The rules provide for a six month grace period and an additional discretionary extension of six months.  Absent extraordinary circumstances, the Exchange begins suspension and delisting procedures at the end of the second six month extension.  Here, Navistar was unable to file its 2005 annual report, and sought an additional six month extension after it was unable to file timely during the initial six months.  The NYSE granted the discretionary second six month extension.

NYSE rules permit an extension beyond the twelve month extension if due to the nature of the issuer's business and its very large market capitalization a delisting would be significantly contrary to the national interest and the interests of public investors.  The rule provides the Exchange may extend the listing on this basis "at its sole discretion."

During discussions with Navistar, NYSE staff informed the company that the SEC was "uncomfortable" with the invocation of the national interest exception noted above and had discussed removing the exception from NYSE rules.  As a result the NYSE staff told Navistar none of its delinquent filers would be considered for a national interest exception.

Thereafter Navistar met with SEC staff and argued that the national interest exception should be invoked.  The SEC staff informed the company that the decision on whether to invoke the national interest exception was for the NYSE to determine.  At a later meeting with NYSE staff, the company was informed that the exchange would begin delisting procedures if the company was not timely in its filings after twelve months.  

Navistar appealed the exchange staff decision to the NYSE board of directors.  During the pendency of the appeal, the exchange permitted the stock to continue to trade.  At the evidentiary hearing, the company admitted that delisting would not trigger any defaults.  NYSE staff argued that Navistar was not one of the largest companies on the exchange and there was no evidence that delisting would have a negative impact on the national economy.   NYSE sustained the delisting decision.  To date, Navistar has not filed its 2005 annual report.

The Commission found that NYSE based the delisting on specific grounds that exist in fact, namely that the company was untimely in filing its annual report.  Further, the Commission found that the delisting was in accordance with exchange rules.  The exchange's rules give it sole discretion to provide exemptions from listing requirements and provide that exemptions will be granted only in "very rare circumstances."  It noted that the national interest exception should only apply when there is an adverse impact not only on the issuer, but also the "country as a whole."  Further, the Commission found that Navistar did not meet the threshold requirements of the exemption because its market capitalization was $2.5 billion, not enough to be included in the S&P 500.  Although large, Navistar's size did not make it "extraordinary."  Nor was there evidence based on the company's business, that delisting would effect the national interest.  Although a defense contractor, Navistar admitted at the hearing that the delisting would not endanger those contracts.

Navistar argued that NYSE staff had claimed that the exemption only applied to Fannie Mae and had therefore acted discriminatorily.  It referred to congressional testimony by the SEC chairman who referred to the NYSE rule as a "unique exception for Fannie Mae" and stated that the SEC had encouraged NYSE to amend the rule to place an expiration date on it.  The Commission rejected this argument, stating that both it and NYSE had considered and rejected Navistar's claim to the national interest exception on the merits.  The Commission also rejected Navistar's claim that there was no reason for giving an exception to Fannie Mae, but denying one to Navistar.  It noted that Fannie Mae's capitalization was twenty-one times larger than Navistar's and that Fannie Mae has a unique market position and that a loss of investor confidence in it could in fact impact the national economy.  The opinion adopted this formulation - the exemption can be properly invoked if delisting would have a "fundamental, profound, systematic effect on the national interest."  Here, there was no evidence that the delisting would seriously impair Navistar's business.  Therefore, arguments by Navistar about the impact of delisting on the national economy were moot.

Finally, the Commission found that NYSE applied the rule consistent with the intent of the Exchange Act.  It noted that timely financial information is critical to the proper operation of the financial markets.  It found that although delisting might have a negative effect on the issuer's current shareholders, potential future investors would not be well served by allowing continued exchange trading by an untimely filer.  Last, the Commission noted the national interest exception will be no longer available for issuers who are delinquent after 2007.

Morton Bruce Erenstein, Exchange Act Rel. 56768, November 8, 2007

NASD appeal, failure to cooperate

Time between appeal and decision - 9 months, 30 days.

Time between last brief and decision - 6 months, 21 days.

Pages - 17

Summary

Respondent, a registered representative appealed NASD sanctions.  The NASD found that he had failed to answer a question about his tax returns during testimony before the NASD staff and failed to timely respond to a written request for information from the NASD.  He was suspended from association for one year.

The NASD inquiry was based on a customer complaint that claimed Erenstein had, among other things, made unsuitable recommendations to a customer, and converted a customer's funds.  After his counsel responded to a request for a written response to the complaint, respondent then provided testimony to NASD staff.  He claimed that that the purportedly converted funds was compensation paid by the customer for assistance in liquidating certain securities.  He claimed he had orally informed his firm of this arrangement, but admitted he did not obtain written approval from his firm for this outside activity.  During his testimony he refused to answer a question from NASD staff about whether he reported the $10,000 he claimed was income on his tax returns. He claimed he had no documents that would verify that he had done specific work for the customer to earn the purported fee as opposed to converting the funds.  NASD staff then asked him to provide copies of his tax returns.  He refused to do so.  Respondent's counsel argued that the tax information was not relevant or that it was subject to a "heightened " standard of relevance.

About 7 months later, after receiving a Wells notice concerning possible disciplinary charges, respondent submitted the tax returns "under protest."  The $10,000 was not included in his initial tax return for the year in question, but was included in an amendment filed 5 years later. 

After proceedings were filed by the NASD, respondent filed for bankruptcy.  A discharge was entered by the bankruptcy court and the NASD staff determined not to seek monetary penalties against respondent.  

The NASD hearing panel imposed a bar.  On appeal the NASD reduced the sanction to a one year suspension, noting that respondent had eventually produced the tax return information sought by NASD staff.

The Commission found that there was no dispute concerning the facts that established the violations.  

The Commission also found that there is no obligation for the NASD to explain why it sought the information being sought as the rule speaks of "any matter involved in" an investigation.  The Commission cited various long standing precedent and noted that it is well established that an associated person may not "second guess" an NASD information request or "set conditions on their compliance."  A belief that the NASD does not need the information is no excuse for failure to provide it.  Thus, the NASD is not required to establish the relevancy of the request.  However, the Commission found the information requested here to be relevant, noting that omission of the money from his tax returns could support an inference that he had converted the funds and reporting the income would support an inference he did not.

Respondent's argued that because he acted on the advice of counsel, a sanction based on that advice denied him his right to counsel.  He also argued that tax returns are confidential and that "discovery" is permitted only with a heightened showing of relevancy.  The Commission distinguished the cases cited by respondent concerning limits on NASD inquiry.  It noted that the Quattrone case involved only the issue of whether there was a genuine issue of material fact concerning whether the NASD complied with its own rules, and therefore summary disposition was inappropriate.  The Ochanpaugh case is not relevant because it dealt with the issue of whether the information sought by the NASD constituted  books of an associated person.  Here there was no question but that the tax returns were respondent's and in his possession.  

Also, the Commission rejected the argument about confidentiality of tax returns, noting that the courts permit such discovery where the taxpayer has made an issue of his income or where they are relevant and the information is not easily obtainable from another source. The Commission found that the cases cited by respondent do not support his claim that tax returns are subject to a heightened relevancy standard.  Here, respondent made his income an issue by claiming the money he had received was income he earned due to services he provided his customer.

Finally, the Commission dismissed the reliance on counsel argument by noting that reliance on counsel is immaterial to a person's obligation to supply information to the NASD.  Further, the NASD in imposing a sanction, took into account that respondent had relied on counsel's advice.

Respondent raised a number of procedural objections, including to the length of time the NASD took to consider the matter.  These were all rejected by the Commission.  It noted that the decision it reviews is that of the NASD on appeal, not the hearing panel decision.

Last, the Commission rejected respondent's claim a that the sanction was excessive.  It noted the crucial nature of the NASD cooperation rule because the NASD lacks subpoena authority to conduct investigations. The NASD guidelines provide for a two year suspension where there is mitigation.  Here, the one year suspension struck the appropriate balance according to the Commission.  The Commission also found that general deterrence is an appropriate goal in sanctioning, but that it is not sufficient by itself, as a justification for a suspension.  

 

Comment

In dealing with the tax returns, the Commission did not distinguish a NASD investigation from discovery in a civil matter and arguendo assumed the relevancy of the concept, finding on the facts that respondent had made an issue of his income.  It could have quashed this line of argument permanently by simply noting that the ability of NASD (or its own staff) to investigate a matter is simply not governed by the standards that may apply to discovery in a civil matter.  See, for example, SEC v. Isbrandtsen, 245 F.Supp 518 (S.D.N.Y., 1965) ( SEC entitled to make persistent and thororough inquiry).

The Commission has again provided an extensive discussion of why it believed the sanction appropriate in this case. 

Again, my long standing query --- why did it take 9 months to issue this decision?  The matter was routine and raised no difficult legal or factual issues.

David A. Finnerty, et. al., Exchange Act Rel. 56765, November 6, 2007

Motion to sever

Pages - 5

Summary

One respondent in this proceeding with 20 respondents moved to sever pursuant to Rule 201(b). That rule permits severance if a settlement offer is pending before the Commission or if the movant "otherwise show[s] good cause."   The respondents are registered specialists who were associated with five firms and were charged with improper floor trading on the NYSE between 1999 and 2003.  The parties have agreed to a two stage hearing where the first stage will deal with issues of fact common to all respondents and the second will deal with specific conduct by respondents to be organized sequentially and grouped by firm.  The moving respondent sought to be severed from the second stage.

In considering motions for severance the Commission first determines whether the allegations were properly consolidated.  If so, it determines whether there is good cause for severance.  The respondent here argues that the consolidation is prejudicial to him because it creates an inference that his conduct was more widespread than it actually was.  He claims severance is necessary to prevent him from being "tarred" with wrongdoing he was uninvolved in.  The Division of Enforcement argued that consolidation was proper because the conduct of respondents was similar and involves common legal issues.  The common issues cited by the Division include the firm's training, internal policies, and compensation.  It also argues that severance would result in duplicative evidence and a "tremendous" waste of judicial resources.

The Commission found that consolidation was proper due to common legal and factual issues that will be involved at each phase of the hearing.  The Commission rejected the "tarring" argument, noting that the ALJ "should have little difficulty in judging movant['s] case [] solely on the basis of the evidence adduced with respect to [him]."  Finally, the Commission noted that considerations of "adjudicatory economy carry great weight" in considering a motion to sever.  It found that there will be common questions of fact concerning multiple respondents in the phase two group involving the moving respondent.

Comment

Unlike final decisions, interlocutory decisions by the Commission do not note how long the matter has been before the Commission.  Since the Commission denied a similar motion by another respondent in this case, one can only hope that the Commission acted promptly in deciding this motion without delaying the proceeding.  But, because it does not tell us when the motion was filed, we unfortunately have no way of knowing.

Sisung Securities Corp., Lawrence J. Sisung,Jr., Exchange Act Rel. 56741, November 5, 2007

NASD Appeal, Municipal Securities Rulemaking Board Rules

Time between appeal and decision - 1 year, 1 month, 9 days.

Time between last brief and decision - 10 months, 2 days.

Pages - 16

Summary

The NASD found that the firm and its president violated MSRB rules.  The firm was fined 30,000 and $10,000 jointly and severally with the president.  The president was fined $20,000 and 10,000 jointly and severally with the firm.  The Commission upheld some of the findings of violations and reversed others.

The NASD found violations of Rule G-37, the "pay to play rule" which prohibits engaging in municipal securities business within two years of making contributions.  The NASD also found violations pertaining to record keeping concerning political contributions.  The charges involved a real estate development firm owned by the president of the brokerage firm that shared office space with the broker and made campaign contributions through checks signed by the president.  Some of the persons receiving contributions sat on a Louisiana state commission that was required to approve any bonds issued by the state or any of its political subdivisions.  Counsel advised the president that such contributions would not bar the securities firm from underwritings for political subdivisions as opposed to the state commission.

The NASD attributed the contributions to the president and his firm even though they did not formally make them.  The Commission upheld this finding, noting that where a municipal finance professional signs checks or authorizes contributions to officials personally, the contributions should be attributed to the individual.  

The Commission overturned the findings of the pay to play rule violations because the contributions were not made to an "official of an issuer" as defined in the rule. This was because the members of the state commission did not "possess the requisite authority to influence the outcome of the hiring of a dealer or financial advisor for municipal securities business by a political subdivision issuer."  It held that in order to be subject to the rule, the official was required to have the authority to appoint persons responsible for the selection of the securities dealer and that ability to influence, standing alone was insufficient.  

The Commission encouraged the MSRB to consider amending the rule to prohibit the type of conduct here due to its concerns that the conduct raised issues of possible improper influence, although it noted there was no evidence of that here.

The Commission upheld the finding of record keeping violations.  MSRB rules require that municipal securities dealers keep records of contributions, whether direct or indirect. Respondents argued that the firm making the contributions kept records, and that it was not necessary to make a separate duplicate record on the books of the securities dealer.  The Commission rejected this argument, noting that the NASD had no examination authority over the books of the affiliate.  

The Commission rejected Respondents' claim that the Equal Access to Justice Act applies to proceedings of a self regulatory organization such as the NASD.  

Finally, the Commission upheld the sanctions that related to the books and records violations it sustained the NASD fines, namely $20,000 against the firm, of which $10,000 was joint and several with the president.  The fines exceeded those set forth in the NASD guidelines for non-egregious cases.  Respondents did not address the sanctions in their briefs.  

Comment

The Commission opinion offers little explanation of why the fines were appropriate, noting simply that the NASD did not impose other sanctions.  The opinion did not explain why a departure from the NASD guidelines was appropriate, other than to recite that the rather banal claim that the public interest requires appropriate sanctions.  It did not find that the conduct was egregious.  This reasoning obviously begs the question.  There is really no explanation of why the NASD sanctions were appropriate other than the Commissions ipse dixit conclusion that they were.  Unlike some recent Commission decisions that offer real explanations and discussion of sanctions, this one reverts to the style of decision that has caused the D.C. Circuit no little impatience with the Commission's articulation of its sanction decisions.

This facts of this case were not disputed.  It involved a straightforward interpretation of a MSRP rule.  So, why did it take the Commission more than a year to rule on this hardly earth shattering case?

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.