UNITED STATES OF AMERICA
In the Matter of
CHRISTOPHER A. LOWRY
ORDER DENYING MOTION FOR
On October 15, 2001, we issued an order granting a petition for review filed by Christopher A. Lowry, the president of Lowry Investors Services, Inc., d/b/a No-Load Advisors, a registered investment adviser, with respect to the decision of an administrative law judge. On the same date,1 the Division of Enforcement filed a motion seeking summary affirmance of the law judge's decision. Lowry subsequently filed a response to the Division's motion. We have determined to deny the Division's motion.
The law judge found, among other things, that Lowry misappropriated $156,500 from a corporation he controlled, Fountainhead Retirement Plan Services, Inc., d/b/a 401(k) University, to purchase a personal residence and that he sold securities in 401(k) University to certain of his investment adviser clients without disclosing his misappropriation. Based on these findings, the law judge concluded that Lowry willfully violated Section 17(a) of the Securities Act of 1933,2 Section 10(b) of the Securities Exchange Act of 1934, 3 and Rule 10b-5 thereunder.4 The law judge also found that, on December 7, 2000, Lowry was permanently enjoined from violating those antifraud provisions and ordered to disgorge $156,500, plus prejudgement interest. The law judge barred Lowry from association with an investment adviser.
In his petition for review, Lowry identified what he claims to be eighteen separate factual errors in the law judge's decision. He further identified numerous public interest factors in support of his claim that a bar is unwarranted. Among other things, Lowry asserts, in his response to the Division's motion, that no investor funds were lost as a result of his actions and that, in the event he is barred, 401(k) University "will fail" and its investors "will be punished," contrary to the public interest.
The Division claims that summary affirmance is warranted because Lowry has "failed to plead the essential elements of a request for discretionary review and because he represents an ongoing threat to the investing public." According to the Division, Lowry's petition failed to allege that the law judge made a finding of material fact that was clearly erroneous, or a conclusion of law that was erroneous, or that the law judge's opinion reflects an exercise of discretion or decision of law or policy that should be reviewed by the Commission. The Division further charges that Lowry's request for review is nothing more than a tactic to delay the imposition of his sanction.
Our Rules of Practice permit a party that opposes Commission review of an initial decision pursuant to a petition for review to seek leave to file a brief in opposition. Ordinarily, we would expect a party that opposes review to follow this procedure.5 Our Rules provide us discretion to determine whether to grant review,6 and identify factors to be considered in making that determination.7 Here, in making the decision to grant review and establish abriefing schedule, we concluded that, at a minimum, the law judge's decision to impose a permanent bar, which Lowry directly challenges, constituted "[a]n exercise of discretion . . . that is important and that the Commission should review."
We previously have noted that "[s]ummary affirmance is rare, given that generally we have an interest in articulating our views on important matters of public interest and the parties have a right to full consideration of those matters."8 Summary affirmance is appropriate when it is clear that "submission of briefs by the parties will not benefit us in reaching a decision."9 That is not the case here. We wish to have the benefit of the parties' views on, among other matters, the appropriate sanctions in the public interest. We therefore will deny the Division's motion.
Accordingly, it is ORDERED that the motion for summary affirmance be, and it hereby is, denied.
By the Commission.
Jonathan G. Katz
|1||The Division's motion was received after issuance of our order.|
|2||15 U.S.C § 77q(a).|
|3||15 U.S.C. § 78j(b).|
|4||17 C.F.R. § 240.10b-5.|
|5||17 C.F.R. § 201.410(d). As the Commission noted in its comment to Rule 410(d), however, "routine opposition to a petition for review serves little purpose." Rules of Practice, 60 Fed. Reg. 32,773-32,774 (June 23, 1995). Indeed the Commission will grant leave to file a brief in opposition "only if it determines that briefing will significantly aid the decisional process." 17 C.F.R. § 201.410(d).|
|6||17 C.F.R. § 201.411.|
|7|| Rule 411(b)(2) provides that
17 C.F.R. § 201.411(b)(2). We further note that the comment to Rule of Practice 410 provides that
[T]he Commission grants a petition for review in virtually all cases [because of] a Commission determination that there is a benefit to joint deliberation by the Commission when exception is taken to an initial decision.
Rules of Practice, 60 Fed. Reg. 32,738, 32,773 (June 23, 1995).
|8||Richard Cannistraro, Exchange Act Rel. No. 39521 (Jan. 7, 1998), 66 SEC Docket 790, 791 n.3. See also Terry T. Steen, Exchange Act Rel. No. 38675 (May 27, 1997), 64 SEC Docket 1785, 1786 (denying summary affirmance and noting that such action is appropriate only where there are "compelling reasons"); Comment to Rule of Practice 411(e), 60 Fed. Reg. at 32,775 ("Summary affirmance may be appropriate . . . when the Commission believes that deliberation by the Commission would not be useful [and] has very rarely been granted.").|
|9||Cannistraro, 66 SEC Docket at 791 n.3. In Cannistraro, we summarily affirmed the decision of a law judge denying a Division motion to suspend indefinitely administrative proceedings against a respondent who had evaded service. Our decision was based on one of our Rules of Practice, which permitted postponement for "a reasonable period of time" and which we interpreted to mean not an "open-ended" period. In determining that summary affirmance was appropriate, we noted that the record was abbreviated, consisting primarily of the Division's motions for extensions of time to serve the respondent, and that such Commission action would "not be unjust for either party." Id. at 792.|
|Home | Previous Page||