U.S. Court of Appeals For the Seventh Circuit
Securities — sanctions
A lifetime ban from the securities markets was not an abuse of discretion where the petitioner failed to supervise inferiors engaged in churning account.
“Basically, Birkelbach asserts that the NAC ‘punished [him] for exercising his right to … appeal a wrongful decision’ from the hearing panel. (Appellee Reply Br. 14.) However, Birkelbach does not cite a rule, statute, constitutional provision, court case, or anything else which suggests that the SEC lacked the authority to affirm the increase of his sanction on appeal. As the SEC pointed out in its opinion, the NAC performs a de novo review of the entire record and may even take new evidence in certain circumstances. See FINRA Rule 9346; see also NASD Rule 9346 (retired). The FINRA rules specifically put those considering an appeal on notice that the NAC ‘may affirm, dismiss, modify, or reverse with respect to each finding, or remand the disciplinary proceeding with instructions.’ FINRA Rule 9348; see also NASD Rule 9348 (retired). Indeed, the rule goes on to state that the NAC ‘may affirm, modify, reverse, increase, or reduce any sanction, or impose any other fitting sanction.’ FINRA Rule 9348 (emphasis added); see also NASD Rule 9348 (retired). Birkelbach was certainly on notice that he risked an increase of his sanction should he take an appeal to that body. Finally, the SEC noted in its opinion that Birkelbach acknowledged to the NAC that it could increase his sanction, and thus his argument that he was ‘somehow blindsided by the increase rings hollow,’ William J. Murphy, 2013 WL 3327752, at *28 n.164, which he does not deny or rebut in his petition to this Court. Accordingly, we conclude that the SEC did not abuse its discretion in affirming the NAC’s decision to increase the sanction from a suspension to a lifetime bar in all capacities.”
Petition for Review of an Order of the Securities and Exchange Commission, Kapala, J.