United States Court of Appeals, District of Columbia Circuit
Argued October 15, 2014
M. William Munno argued the cause and filed the briefs for petitioner.
Jacob R. Loshin, Senior Counsel, Securities and Exchange Commission, argued the cause for respondent. With him on the brief were Michael A. Conley, Deputy General Counsel, John W. Avery, Deputy Solicitor, and Randall W. Quinn, Assistant General Counsel.
Before: ROGERS and
WILKINS, Circuit Judges, and RANDOLPH, Senior Circuit Judge.
On Petition for Review of an Order of the Securities & Exchange Commission
ROGERS, Circuit Judge
The Securities and Exchange Commission filed a civil complaint against Peter Siris, alleging he committed various securities law violations. Voluntarily settling the suit, Siris agreed in a consent judgment that in any related administrative proceeding before the Commission he would not contest the allegations of the civil complaint. Thereafter, the Commission commenced a follow-on proceeding against Siris to determine whether a remedial sanction was in the public interest and ordered that Siris be permanently barred from the securities industry and from participating in any offering of penny stock.
In Blinder, Robinson & Co. v. SEC, 837 F.2d 1099, 267 U.S.App.D.C. 96 (D.C. Cir. 1988), the court emphasized that, in a follow-on sanctions proceeding, the Commission must abide by a " clear distinction" between the district court's determination of a petitioner's liability under the securities laws and evidence about the circumstances surrounding his misconduct " germane to the [Commission] in exercising its judgment as to the nature and scope of sanctions that are appropriate in the public interest." Id. at 1109. As regards the appropriate sanction, the court instructed that " evidence relevant to a party's degree of culpability must be considered in deciding that issue."
Id. But the court explained that it was " in no way" suggesting that the petitioner could, in a follow-on sanctions proceeding, relitigate the factual issues " conclusively decided" in the underlying civil suit. Id.
Siris seeks vacatur of the Commission's order imposing a lifetime bar on the ground that the Commission contravened the court's instruction in Blinder by refusing to consider the entire record and mitigating evidence he proffered regarding the appropriate sanction. Review of the administrative record indicates that Siris sought, in effect, " to relitigate the factual question[s]," id., that he agreed in the consent judgment not to challenge directly or indirectly. Although the factual allegations in the complaint against Siris were not adjudicated after an evidentiary hearing, the terms of the consent judgment rendered those facts " conclusively decided," id., for purposes of the subsequent administrative proceeding. The Commission considered the relevant record, including Siris' evidence of the circumstances surrounding his misconduct that did not, in effect, seek to challenge the allegations of the complaint. For these reasons, and consistent with the deference due to the Commission's choice of sanction, we deny the petition for review.
Peter Siris founded and was a managing member of Guerilla Capital Management, LLC, an investment adviser to two funds Siris established that invest in Chinese companies listed on U.S. stock exchanges. Siris also founded Hua Mei 21st Century, LLC, a consulting firm. On July 30, 2012, the Securities and Exchange Commission (" Commission" ) filed a civil complaint against Siris, Guerilla, and Hua Mei in federal district court, alleging that they repeatedly engaged in insider trading and other securities-related misconduct. Many of the allegations involved Siris' relationship with China Yingxia International, Inc. (" China Yingxia" ), a health food company with operations in China. The complaint alleged:
o Siris sold China Yingxia stock in violation of the holding period, registration, and other requirements for stock resale set forth in Section 5 of the Securities Act, 15 U.S.C. § § 77e(a), (c). Compl. ¶ ¶ 32-47.
o Siris acted as an unregistered broker in violation of Section 15(a)(1) of the Securities Exchange Act, 15 U.S.C. § 78o(a)(1), by " raising over $2 million worth of investments [for China Yingxia] in exchange for ...