Riordan v. Securities & Exchange Commission
627 F.3d 1230
D.C. Cir.2010Background
- Riordan paid kickbacks to New Mexico Treasurer Montoya in exchange for state securities business from 1996–2002.
- SEC filed civil action under §17(a), §10(b), and Rule 10b-5; ALJ found Riordan liable and imposed sanctions.
- SEC upheld sanctions: $500,000 civil fines, broker/dealer association ban, cease-and-desist order, and disgorgement of $938,353.78 (total $1,897,870.62 with interest).
- Riordan argued lack of substantial evidence and exclusion of proffered evidence; some evidence relates to pre-September 25, 2002 conduct.
- Threshold issue: whether five-year statute of limitations (28 U.S.C. § 2462) bars disgorgement for pre-2002 conduct; cease-and-desist and bar/fines addressed within limits.
- Court held that disgorgement is not a penalty barred by § 2462; cease-and-desist is remedial and not a penalty; sanctions upheld.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Substantial evidence of kickbacks | Riordan argues insufficient evidence to prove kickbacks 1996–2002. | Riordan contends record fails to show payments and linkage to deals. | Evidence 충분; SEC supported for October 2002 sales and broader misconduct. |
| Exclusion of Riordan’s evidence | Exclusion denied relevant bias proof toward Montoya. | Exclusion harmless; Montoya’s bias already evident; evidence outweighed by other proof. | Harmful error not shown; sanctions upheld. |
| Statute of limitations for disgorgement | All sanctions limited to 2002 conduct under § 2462 five-year limit. | Disgorgement can extend beyond five years; not a penalty under § 2462. | Disgorgement not a ‘penalty’ subject to § 2462; upheld disgorgement amount beyond 2002 conduct. |
| Cease-and-desist time-bar | Cease-and-desist based on continuing violations; may implicate § 2462. | Cease-and-desist is remedial and not a penalty. | Cease-and-desist not barred by § 2462; permissible. |
Key Cases Cited
- Siegel v. SEC, 592 F.3d 147 (D.C. Cir. 2010) (court defers to agency choice between conflicting views)
- Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951) (standard for reviewing factual sufficiency)
- 3M Co. v. Browner, 17 F.3d 1453 (D.C. Cir. 1994) (five-year limitations statute applicability)
- Zacharias v. SEC, 569 F.3d 458 (D.C. Cir. 2009) (disgorgement not a civil penalty under § 2462)
- SEC v. Bilzerian, 29 F.3d 689 (D.C. Cir. 1994) (disgorgement discussion in SEC actions)
- First City Financial Corp., 890 F.2d 1215 (D.C. Cir. 1989) (disgorgement analysis related to penalties)
- Drath v. FTC, 239 F.2d 452 (D.C. Cir. 1956) (cease-and-desist remedial nature)
- Johnson v. SEC, 87 F.3d 484 (D.C. Cir. 1996) (cease-and-desist not a penalty)