Saad v. Securities & Exchange Commission
405 U.S. App. D.C. 254
D.C. Cir.2013Background
- FINRA charged Saad with submitting false travel and cell-phone expense reimbursements and concealing the misconduct.
- A FINRA Hearing Panel found NASD Rule 2110 violation and imposed a permanent bar on Saad.
- NAC and the SEC affirmed the FINRA sanction.
- Saad argues mitigating factors require less severe relief; he does not contest culpability.
- SEC acknowledged some mitigation but failed to address at least two potentially weighty factors (employment termination pre-detection, extreme stress).
- Court remands for the SEC to reconsider the sanction in light of all mitigating factors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the SEC abused its discretion in upholding a lifetime bar | Saad contends mitigating factors were ignored | SEC applied appropriate standard and considered evidence | Remanded for further consideration of mitigating factors |
| Whether the sanction guidelines were applied correctly | Guidelines used were not properly aligned to misappropriation | Guidelines provide starting points and analogies; not binding rules | Remanded to assess sanction with full factor consideration |
| Whether the SEC adequately addressed mitigating factors tied to termination prior to detection | TERMINATION and pre-detection discipline should mitigate | Guidelines not bound to treat termination as automatic mitigation | Remand to address this factor explicitly |
| Whether extreme personal stress should mitigate the sanction | Personal stress should lessen severity | Stress is illustrative but not controlling under guidelines | Remand to evaluate stress as a potential mitigating factor |
Key Cases Cited
- PAZ Sec., Inc. v. SEC, 494 F.3d 1059 (D.C. Cir. 2007) (necessity of addressing mitigating factors in sanction review)
- PAZ Sec., Inc. v. SEC, 566 F.3d 1172 (D.C. Cir. 2009) (de novo SEC review of NASD sanctions; remedial purpose)
- Siegel v. SEC, 592 F.3d 147 (D.C. Cir. 2010) (challenge to agency sanction adequacy; reasonable explanation required)
- Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359 (U.S. 1998) (requirement of reasoned decisionmaking in agency actions)
- State Farm Mut. Auto. Ins. Co. v. FDA, 463 U.S. 29 (U.S. 1983) (reasoned decisionmaking and consideration of important factors)
- Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29 (U.S. 1983) (necessity of reasoned decisionmaking in administrative rulings)