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U.S. Securities and Exchange Commission

Washington, D.C.

Rel. No. 44205 / April 19, 2001

Admin. Proc. File No. 3-8327-EAJ

In the Matter of

61 Morley Lane
Bloomfield, New Jersey 07003



Applicant, who had prevailed in Commission broker-dealer proceedings, sought an award of fees and expenses under the Equal Access to Justice Act. Held, the application is denied because it was not timely filed.


Marc B. Dorfman, of Foley & Lardner, and Arthur M. Schwartzstein, of Arthur M. Schwartzstein, P.C. (of counsel), for Richard J. Adams.

David M. Becker, Richard M. Humes, Samuel M. Forstein, and Michele R. Vollmer, for the Division of Enforcement.

Appeal filed: December 21, 2000.
Briefing completed: March 29, 2001.


The Division of Enforcement appeals from the decision of an administrative law judge awarding Richard J. Adams fees and expenses under the Equal Access to Justice Act ("EAJA"). 1

The Commission action underlying Adams' claim charged that Adams, a vice president and financial and operations principal of Graystone Nash, Incorporated, formerly a registered broker-dealer, 2participated in a fraudulent and manipulative scheme involving Graystone initial public offerings and their aftermarkets. The law judge dismissed the proceedings against Adams on two separate grounds. She found that the evidence did not establish that Adams had committed any violations, and, citing Johnson v. SEC, 3 that the proceedings against Adams were barred by the statute of limitations contained in 28 U.S.C. § 2462 since all of the conduct at issue had occurred more than five years prior to the institution of proceedings.

We granted the Division's petition for review of that decision. In his brief on appeal, Adams argued, among other things, that the law judge had correctly decided the limitations issue, and that the proceedings against him should therefore be dismissed. That request was granted. On February 11, 1998, we dismissed the proceedings against Adams, citing the age of the case and the fact that the Division of Enforcement did not oppose dismissal. 4 Adams did not file his EAJA application until May 8, 1998, 86 days after the proceedings against him were dismissed.


We agree with the Division that Adams' EAJA application was untimely and must therefore be denied. The EAJA provides that an application for fees and expenses by a party who has prevailed against the Government in an adversary adjudication must be filed "within thirty days of a final disposition" in that adjudication. 5 Our EAJA regulations define "final disposition" as the date when "any . . . complete resolution of the proceeding . . .becomes final and unappealable, both within the Commission and to the courts." 6

Since the EAJA is a limited waiver of sovereign immunity, it must be strictly construed. 7 The EAJA time limitation is not simply a statute of limitations but an integral part of the sovereign's consent. Thus it is a jurisdictional prerequisite to governmental liability, 8 and claims that are not timely filed cannot be entertained. 9

The law judge found, and Adams argues, that Adams had 90 days from our dismissal order to file his EAJA claim. Adams' position is that the 30-day period specified in the EAJA for filing a claim did not begin to run until the 60-day period during which he assertedly could have filed an appeal had expired. We do not agree.

Section 25(a)(1) of the Securities Exchange Act grants "a person aggrieved by a final order of the Commission" the right to appeal to a United States Court of Appeals within 60 days. However, a party cannot appeal a judgment in his favor. 10 Because Adams prevailed, he was not aggrieved by our dismissal order, and therefore had no standing to appeal. Our order was a "final disposition" of the proceedings against Adams. Thus, he had only 30 days from the time it was issued to file a claim under the EAJA.

Adams argues that our order was appealable because he was "aggrieved." He claims that our dismissal was entered without prejudice to the reinstitution of the proceedings against him, which gave him a basis for appeal. 11 In support of his claim, Adamsnotes that our order did not specifically state that it was entered "with prejudice." He also notes that the Division had requested that any dismissal be without prejudice to reinstitution of the proceedings if an injunction were entered against Adams in a pending Commission injunctive action based on the same allegations. Adams points to language in our dismissal order referring to the injunctive action, and claims that this reference demonstrates our "clear intent" to dismiss without prejudice.

Adams' contentions are wholly lacking in substance. We did not grant the Division's request to dismiss without prejudice, and our reference to the pending injunctive action did not evidence an intent to do so. Our order terminated once and for all any administrative action against Adams based on the allegations of willful violations of the securities acts then pending before us. It is not our practice, nor do we consider it necessary, to add the words "with prejudice" to final orders of dismissal. 12 We note that Adams never requested us to clarify our order, or to amend it by adding those words.

Adams also suggests that he was aggrieved because our order did not preclude the Division from pursuing him in the then pending injunctive action. Adams ignores the fact that the injunctive action was a different proceeding in a different forum. We fail to see how the existence of that action could provide the basis for an appeal of the administrative proceeding. The law judge stated that Adams "certainly would have preferred" a decision on the merits in the administrative proceeding that might arguably have bound the Division in the injunctive action. However, "courts and agencies are not required to make findings on issues the decision of which is unnecessary to the results they reach." 13

Adams also contends that he could have appealed from the statement, contained in a footnote to our dismissal order, to the effect that the law judge's initial decision ceased to have any force or effect once we granted the Division's petition for review. That statement simply expresses a well-established principle of law. 14Moreover, a party has no standing to appeal from a judgment in his favor in order to seek review of statements that are not necessary to support the judgment. 15

Adams alternatively argues that, as the law judge found, he could have appealed our order (and unspecified prior rulings) pursuant to the Administrative Procedure Act ("APA") since, in the words of that statute, he was a person "suffering legal wrong" or "adversely affected" by agency action 16 "for which there [was] no other adequate remedy in a court." 17 However, as the Supreme Court has stated, "Congress did not intend the general grant of review in the APA to duplicate existing procedures for review of agency action . . . . [The APA] "does not provide additional judicial remedies in situations where the Congress has provided special or adequate review procedures." 18 Here Congress provided such procedures in Section 25(a)(1) of the Exchange Act. Thus Adams could not have appealed under the APA. Moreover, as we have already made clear, Adams was not a person "suffering legal wrong" or "adversely affected" by agency action.

We conclude that our order dismissing the proceedings against Adams was unappealable. Adams' claim under the EAJA was therefore untimely, and must be denied.

An appropriate order will issue. 19

By the Commission (Acting Chairman UNGER and Commissioners HUNT and CAREY).

Jonathan G. Katz

before the

Rel. No.44205 / April 19, 2001

Admin. Proc. File No. 3-8327-EAJ

In the Matter of

61 Morley Lane
Bloomfield, New Jersey 07003


On the basis of the Commission's opinion issued this day, it is

ORDERED that the application of Richard J. Adams for an award of fees and expenses under the Equal Access to Justice Act be, and it hereby is, denied.

By the Commission.

Jonathan G. Katz


1 5 U.S.C. § 504. The law judge awarded Adams $53,646.03.

2 Graystone was a respondent in the underlying proceedings which were dismissed as to Graystone following the firm's liquidation and the cancellation of its broker-dealer registration. Graystone Nash, Incorporated, Securities Exchange Act Release No. 36173 (August 31, 1995), 60 SEC Docket 244.

3 87 F.3d 484 (D.C. Cir. 1996).

4 Richard J. Adams, Securities Exchange Act Release No. 39645, 66 SEC Docket 1553.

5 5 U.S.C. § 504(a)(2).

6 Rule 44(b) of our EAJA regulations, 17 C.F.R. § 201.44(b).

7 Ardestani v. INS, 502 U.S. 129, 137 (1991).

8 Action on Smoking and Health v. CAB, 724 F.2d 211, 225 (D.C. Cir. 1984); Clifton v. Heckler, 755 F.2d 1138, 1144-1145 (5th Cir. 1985).

9 Long Island Radio Co. v. NLRB, 841 F.2d 474, 477 (2d Cir. 1988).

10 See, e.g., Spencer v. Casavilla, 44 F.3d 74, 78 (2d Cir. 1994).

11 See LaBuhn v. Bulkmatic Transport Co., 865 F.2d 119, 121-122(7th Cir. 1988).

12 See, e.g., Warren G. Trepp, Securities Exchange Act Release No. 41913 (September 24, 1999), 70 SEC Docket 2037; W. David East, Jr., Securities Exchange Act Release No. 43569 (November 16, 2000), 73 SEC Docket 2538; D.E. Wine Investments, Inc., Securities Exchange Act Release No. 43929 (February 6, 2001), ___ SEC Docket ____.

13 INS v. Bagamasbad, 429 U.S. 24, 25 (1976).

14 See, e.g., U.S. v. Alexander, 743 F.2d 472,477 (7th Cir. 1984). ("[I]f there is an administrative appeal, the initial decision of the administrative law judge is not the 'final agency decision.' 5 U.S.C. § 557(b).")

15 Airtouch Paging v. FCC, 234 F.3d 815,818 (2d Cir. 2000). See also Partmar Corp. v. Paramount Pictures Theatres Corp., 347 U.S. 89,99 n.6 (1954)

16 5 U.S.C. § 702.

17 5 U.S.C. § 704.

18 Bowen v. Massachusetts, 487 U.S. 879, 903 (1988)(citations omitted).

19 In view of our determination, we do not reach the issue of whether the Division's position in the underlying proceeding was "substantially justified" within the meaning of the EAJA.


Modified: 4/20/2001