Richard J. Adams

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
Secretary

 

 

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 its 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, Exchange Act Release No. 39645 (February 11, 1998), 66 SEC Docket 1553.
5 Richard J. Adams, Exchange Act Release No. 44205 (April 19, 2001), 74 SEC Docket 2134.
6 Adams v. SEC, 287 F.3d 183 (D.C. Cir. 2002).
7 5 U.S.C. § 504(a)(1).
8 Sections 5(a), 5(c), and 17(a) of the Securities Act, and Sections 10(b) and 15(c) of the Securities Exchange Act and Rules 10b-5, 10b-6, and 15c1-2 thereunder.
9 Ackerly was a respondent in the underlying proceeding. Pursuant to an offer of settlement, he was barred from association with any broker, dealer, municipal securities dealer, investment adviser, or investment company. Thomas V. Ackerly, Exchange Act Rel. No. 36073 (August 9, 1995), 59Docket 3023.
10 A memorandum in the record from Ackerly to "all managers and corporate officers" reflects that full commissions would only be paid if customer purchases amounted to 125% of customer sales. If customer purchases were equal to customer sales, there would only be a 75% commission payout, and the commission rate would drop a further 5% for each additional 5% decline in customer purchases vis-a-vis customer sales.
11 This was presumably within 15 minutes after the start of aftermarket trading.
12 A Graystone salesman, Sean Boyle, testified that he commonly received aftermarket tick prices and wrote up all his sales tickets at the various price levels even before Graystone's IPOs became effective.
13 Pierce v. Underwood, 487 U.S. 552, 565, 566 n.2 (1988). See also Jackson v. Bowen, 807 F.2d 127, 130 (8th Cir. 1986) (The standard is met when "one permissible view of the evidence leads to the conclusion that the government has shown a reasonable basis in fact and law for its position.").
14 FEC v. Rose, 806 F.2d 1081, 1087 (D.C. Cir. 1986). See also Sierra Club v. Secretary of the Army, 820 F.2d 513, 518 (1st Cir. 1987).
15 Broad Avenue Laundry and Tailoring v. U.S., 693 F.2d 1387, 1391-1392 (Fed. Cir. 1982).
16 Kirk Montgomery, Exchange Act Rel. No. 45161 (December 18, 2001), 76 SEC Docket 1394, 1400.
17 See Natchez Coca-Cola Bottling Co. v. NLRB, 750 F.2d 1350, 1353 (5th Cir. 1985) (government was substantially justified where it would have established prima facie case if witnesses' testimony had been credited). See also Temp Tech Industries, Inc. v. NLRB, 756 F.2d 586, 590 (7th Cir. 1985).
18 John Montelbano, Exchange Act Rel. No. 47227 (January 22, 2003), 79 SEC Docket 1474, 1482; Michael J. Markowski, Exchange Act Rel. No. 43259 (September 7, 2000), 73 SEC Docket 625, 629, aff'd, 274 F.3d 525 (D.C. Cir. 2001); Pagel, Inc., 48 S.E.C. 223, 226 (1985), aff'd, 803 F.2d 942 (8th Cir. 1986).
19 Edward J. Mawod & Co., 46 S.E.C. 865, 872 (1977), aff'd, 591 F.2d 588 (10th Cir. 1979). We dealt with similar misconduct in C. James Padgett, 52 S.E.C. 1257, 1273-1275 (1997), aff'd sub nom. Sullivan v. SEC, 159 F.3d 637 (D.C. Cir. 1998) (Table).
20 See C. James Padgett, supra, 52 S.E.C. at 1269.
21 In December 1996, the Commission adopted Regulation M to replace Rules 10b-6, 10b-6A, 10b-7, 10b-8 and 10b-21. Exchange Act Rel. No. 38067 (December 20, 1996), 63 SEC Docket 1374. Regulation M did not change the substance of the requirements at issue here.
22 See SEC v. Graystone Nash, Incorporated, 820 F. Supp. 863, 872-873 (D. N.J. 1993), rev'd on other grounds, 25 F.3d 187 (3d Cir. 1994).
23 See Financial Equity Corp., 41 S.E.C. 997, 1000 (1964); Franklin, Meyer & Barnett, 37 S.E.C. 47, 51-52 (1956).
24 See SEC v. Graystone Nash, Incorporated, supra, 820 F. Supp. at 873-874. See also Harden v. Raffensperger, Hughes & Co., Inc., 933 F.Supp. 763, 767-768 (S.D. Ind. 1996).
25 17 F.3d 1453 (D.C. Cir. 1994).
26 28 U.S.C. § 2462 provides in relevant part:

Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued . . .
27 87 F.3d 484 (D.C. Cir. 1996).
28 See Howard F. Rubin, 52 S.E.C. 126 (1994) (After 3M, Commission denied motion to dismiss holding that Section 2462 applied only to administrative proceedings that sought penalties).
29 Adams v. SEC, supra, 287 F.3d at 191.
30 Howard F. Rubin, supra, 52 S.E.C. at 126, citing Decker v. SEC, 631 F.2d 1380, 1384 (10th Cir. 1980); U.S. v. Naftalin, 606 F.2d 809, 812 (8th Cir. 1979); Blaise D'Antoni & Assoc., Inc., v. SEC, 289 F.2d 276, 277 (5th Cir.), cert. denied, 368 U.S. 899 (1961); Associated Securities Corp. v. SEC, 283 F.2d 773, 775 (10th Cir. 1960); Pierce v. SEC, 239 F.2d 160, 163 (9th Cir. 1956).
31 See, e.g., De Veau v. Braisted, 363 U.S. 144, 160 (1960) (a license suspension or other disqualifying action is not punishment when the restriction relates to a present situation, such as the proper qualifications for a profession); Flemming v. Nestor, 363 U.S. 603, 616-617 (1960) (disqualification is not punishment where rationally connected to an exercise of regulatory power to protect public); James v. Director of Motor Vehicles, 336 F.2d 745, 746 (D.C. Cir. 1964) (reason for disqualification must be rationally related to public interest).
32 Section 21B was enacted by Congress in 1990 as part of the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, P.L. 101-429, 104 Stat. 931. Prior to passage of this act, this Commission did not have the authority to impose a monetary sanction in an administrative proceeding.
33 In 1991, the Division of Enforcement filed a civil injunctive action in the U.S. District Court for the District of New Jersey alleging that Adams and others engaged in the same violations of the federal securities laws that were at issue in this proceeding. The injunctive action was stayed pending resolution of this administrative proceeding.
34 See, Richard Adams, supra, 66 SEC Docket at 1553 n.1 (as a result of granting petition for review, factual findings in initial decision ceased to have any force or effect).
35 We have considered all of the parties' contentions. We have rejected or sustained them to the extent that they are inconsistent or in accord with the views expressed in this opinion.