McCune v. United States Securities & Exchange Commission, 672 F. App'x 865

McCune, a registered representative with Royal Alliance from 1996–2011, failed to timely amend his Form U4 to disclose multiple bankruptcies (2002, 2005) and several tax liens (2009–2011); he amended the Form U4 on April 7, 2011 after his employer discovered the omissions during audit prep.
FINRA charged him with violating FINRA Rules 1122 and 2010 for filing incomplete/misleading membership information; FINRA imposed a $5,000 fine, $1,522.94 in hearing costs, and a six‑month suspension from all capacities in the securities industry.
The SEC upheld FINRA’s disciplinary action; McCune petitioned for review pro se in the Tenth Circuit challenging willfulness, mitigation, and constitutionality of the suspension.
The SEC and FINRA found McCune ‘‘willfully’’ violated reporting duties; the SEC defined willful as intentionally committing the act that constitutes the violation (no additional scienter requirement).
The Tenth Circuit reviewed the SEC’s sanctions for abuse of discretion and factual findings for substantial evidence, and affirmed the SEC’s decision.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether FINRA/SEC had to prove scienter (knowledge of unlawfulness) for willfulness	McCune: FINRA must prove he knew his conduct was unlawful (higher scienter)	FINRA/SEC: Willful means intentional act; no requirement of awareness of law violated	Court: Willful = intentionally committing the act; substantial evidence showed McCune knew reporting duties, so willfulness proven
Whether mitigating circumstances (market concerns, voluminous manual) reduce sanction	McCune: Market turmoil and buried policy justify mitigation	FINRA/SEC: These factors were considered but violations were egregious and Guidelines support suspension	Court: Suspension at low end of Guidelines (6 months) reasonable; no abuse of discretion
Whether six‑month suspension violates Excessive Fines Clause	McCune: Suspension effectively causes large future lost income and is an excessive fine	FINRA/SEC: FINRA is a private actor; penalty payable to FINRA and only $5,000 fine was imposed	Court: Declined to treat projected lost income as an Eighth Amendment fine; Excessive Fines Clause inapplicable to his claim here
Challenge to monetary sanctions and costs	McCune: (not argued on appeal)	FINRA/SEC: sanctions stand	Court: Claims waived for failure to argue on appeal

ACAP Fin., Inc. v. U.S. SEC, 783 F.3d 763 (10th Cir. 2015) (FINRA authority and use of Sanctions Guidelines)
Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003, 715 F.3d 1231 (10th Cir. 2013) (background on FINRA/NASD succession)
Rooms v. SEC, 444 F.3d 1208 (10th Cir. 2006) (standard of review for SEC sanctions and due process/fair‑warning principles)
Decker v. SEC, 631 F.2d 1380 (10th Cir. 1980) (willfulness means intentionally committing the act; no knowledge‑of‑law requirement)
Mathis v. U.S. SEC, 671 F.3d 210 (2d Cir. 2012) (same interpretation of willfulness in SEC context)
Wonsover v. SEC, 205 F.3d 408 (D.C. Cir. 2000) (same interpretation of willfulness)
Ratzlaf v. United States, 510 U.S. 135 (1994) (criminal context holding that willfulness may require knowledge of unlawfulness; discussed and distinguished)
United States v. Bajakajian, 524 U.S. 321 (1998) (Excessive Fines Clause analysis in forfeiture context; relied on by McCune)
Browning‑Ferris Indus. v. Kelco Disposal, Inc., 492 U.S. 257 (1989) (Excessive Fines Clause limits fines payable to government)
Blum v. Yaretsky, 457 U.S. 991 (1982) (private action not transformed into state action by mere government approval)
Specialty Beverages, L.L.C. v. Pabst Brewing Co., 537 F.3d 1165 (10th Cir. 2008) (arguments not raised on appeal are waived)