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.