Broker-Dealer Litigation - Greenberg Traurig LLP

settled with the SEC prior to the conclusion of Goble’s case. Without affirming or denying
liability, they consented to permanent injunctions and civil penalties.
4. Section 16(b)
C.4
Katz v. SEC, 647 F.3d 1156, 2011 U.S. App. LEXIS 16141 (DC Cir. 2011).
Petitioner, a representative associated with a member of the NYSE, sought review of an
SEC order sustaining a NYSE disciplinary action. An NYSE hearing panel had found that
petitioner caused customer funds to be transferred to other customers’ accounts without
authorization, made misstatements to a customer, effected unsuitable transactions, and engaged
in unauthorized trading. A portion of the case, and NYSE’s findings, concerned a finding that
petitioner violated SEC Rules 17a-3 and 17a-4, by entering or causing to be entered inaccurate
information on a customer’s new account forms. The SEC had sustained the NYSE’s finding
that petitioner caused her firm to fail to learn essential facts about the customer by entering, or
causing to be entered, inaccurate information on the customer’s new account forms, including
her investment objective, income, net worth, and financial experience.
Petitioner challenged the SEC’s finding that she caused her firm’s books and records to
be inaccurate, largely on the grounds that similar charges had been brought with respect to the
account forms of other similar customers and dismissed by the SEC. From this, she argued, it
was arbitrary for the SEC not to also reject the books and records violation as to the remaining
customer. But, the court pointed to various findings of the SEC that supported the conclusion
that the account form of the remaining customer was inaccurate, and that the evidence supporting
those inaccuracies stood in contrast to the lack of evidence of inaccuracies that caused the other
charged violations to be dismissed. Therefore, the court held, it was not arbitrary for the SEC to
dismiss the books-and-records charges regarding those clients’ forms while affirming the finding
of a violation with respect to the remaining client’s form. Thus, the D.C. Circuit affirmed the
SEC’s order, not only with respect to the books-and-records findings, but as to all findings.
VanCook v. SEC, 653 F.3d 130 (2nd Cir. 2011).
Petitioner, a former stockbroker, sought review of an SEC order finding that he willfully
violated the Securities Exchange Act’s antifraud and recordkeeping provisions and imposing
penalties, by virtue of a scheme involving late trading of mutual funds and aiding and abetting
and causing his firm to keep inaccurate books and records, in violation of Section 17(a)(1) and
SEC Rule 17a-3. Specifically, the Section 17 violation pertained to the requirement that the firm
maintain a memorandum of an order, including the time at which the order was received. The
receipt of the order is important to mutual fund trading because only orders received by 4:00
p.m. are entitled to receive that day’s valuation, calculated by the mutual fund after 4:00 p.m.
based on that’s day’s trading activity. The SEC had barred petition from working in the
securities industry and required him to disgorge his unjust enrichment and imposed a civil money
C.4
113