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Berk Law PLLC Challenges SEC Decision As Arbitrary And Capricious Before the United States Court of Appeals for the District of Columbia Circuit

Posted in In the Courts

On January 9, 2013, Steven Berk and Matthew Bonness appeared before the DC Circuit in the case of Saad vs. SEC to argue that the SEC’s decision affirming a “life time ban” imposed on John Saad by FINRA was arbitrary and capricious.  Mr. Saad, a securities broker with a pristine record was terminated by his employer for a one-time incident involving the misappropriation of funds from his company expense account totaling $1144.

Berk maintained that a lifetime ban was particularly inappropriate and should be reversed for several key reasons.  First, FINRA guidelines are designed to be remedial not punitive.  Under the circumstances of this case, a lifetime ban, was punitive.  FINRA should have instead imposed a “tailored” remedy to match the nature of the wrong doing.  Second, a lifetime ban was an inappropriate sanction where no customer funds are at issue – such as the instant case.  And third, even if a lifetime ban is applicable, it must be predicated on “egregious” conduct.  Berk argued that a one-time incident, with no victims, involving an amount just above $1,000 hardly ranks as egregious.  Indeed, the challenged sanction seems particularly out of step with the numerous securities brokers and wall street operators who created billions in losses – almost destroying the economy and walked away with out even a slap on the wrists.

Berk expects a decision in the case by the DC Circuit in the next 2 to 3 months.