Siegel v. SEC (D.C. Cir. 2010)

In a rare win for a registered representative challenging a disciplinary sanction imposed by FINRA and affirmed by the SEC, the United States Court of Appeals for the District of Columbia Circuit found the SEC had abused its discretion in ordering a Barrasso Usdin client to pay full restitution of $400,000 plus interest for suitability and selling-away charges stemming from two customer investments in a start-up company. The DC Circuit, calling the SEC’s position “nonsense” and “whimsical,” held the SEC had failed to show a causal connection between the customer’s losses and the conduct of the broker beyond mere proximate causation. The court concluded that the SEC's failure to analyze whether the losses were truly a result of the broker’s misconduct was an abuse of discretion. The opinion lays the groundwork for a body of law addressing the causation requirement that securities regulators must meet to impose restitution in disciplinary proceedings. The full opinion, which reversed and vacated the SEC’s decision on restitution, can be found at http://pacer.cadc.uscourts.gov/docs/common/opinions/201001/08-1379-1225096.pdf, or at 2010 WL 87610 (D.C. Cir. Jan. 12, 2010). 

George Freeman argued the case before the Circuit Court. With him on the brief was Andrea Mahady Price



  View File (.pdf)