- Court: 9th Circuit Court of Appeals Archives
- Area(s) of Law: Administrative Law
- Date Filed: 10-04-2022
- Case #: 21-55178
- Judge(s)/Court Below: Lee, J.; Before Bress, D. C.J.; Fitzwater, S. D.J.
- Full Text Opinion
Respondents, SEC, filed an enforcement action against Petitioners, alleging violations of broker-registration provisions of §15(a) and made material misrepresentations in violation of §10(b) of the Securities Exchange Act ("the Act"). Summary judgment was granted for Respondents finding Petitioners were brokers and violated §15(a) for not registering with SEC. Additionally, civil penalties and an injunction were imposed. Petitioners appealed the district court’s liability and remedies orders, arguing they did not trade "for the account of others". A “broker” is “any person engaged in the business of effecting transactions in securities for the account of others.” 15 U.S.C. § 78c(a)(4)(A). The Court was not convinced by Petitioner's arguments holding that any time someone "places another's capital at risk by trading securities", they are a "broker" and must register under § 15(a). Additionally, the Court also held that the district court did not abuse discretion in determining civil penalties, reasoning that the district court could consider the evidence of twenty-one conversations in which one of the Petitioners provided false zip codes and that the civil penalties provision authorized the district court to have discretion based on either statutory amount or gross pecuniary gain. In addition, the Court held that the district court acted in its discretion to impose injunctive relief, reasoning that Petitioners’ assurances were contradicted by their involvement with the security industry and past conduct. AFFIRMED.