47 F.4th 961
9th Cir.2022Background
- Trevor Saliba wholly owned NMS Capital Group, which acquired MCA Securities and became NMS Capital Securities, a FINRA member.
- FINRA imposed interim restrictions on Saliba’s role in the firm during review of a Continuing Member Application after learning he had undisclosed affiliated regulatory scrutiny; FINRA later issued revised, limited permissions.
- While restrictions were in effect Saliba signed firm agreements, participated in hiring, and (with the former CCO) backdated compliance attestations; he also purchased a second laptop in May 2013 but produced only one laptop and testified he used only that device.
- FINRA charged Saliba with violating FINRA Rules 2010 and 8210 (violating the restrictions, backdating documents, failing to produce/testifying falsely about a computer); a hearing panel imposed one bar, the NAC split the sanction into three separate bars tied to three subject matters.
- The SEC upheld two bars (for violating the interim/revised restrictions and for backdating forms), sustained the finding of a computer-related Rules 8210/2010 violation but remanded the sanction for that violation to FINRA, and Saliba timely petitioned for review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Court has jurisdiction to review the SEC’s affirmance of two industry bars | Saliba argues the SEC order should be fully reviewable as a final order | SEC argues the whole opinion should be treated as the order for review; some sanctions were remanded | Court has jurisdiction to review the two bars; those parts are final under Bennett test because they consummate agency decision and have immediate legal consequences |
| Whether the Court may review the SEC’s finding that Saliba violated Rules 8210/2010 re: computers (sanction remanded) | Saliba seeks review of the finding that he testified falsely and failed to produce a second laptop | SEC maintained the finding is final; remanded sanction remains with FINRA | Court lacks jurisdiction over this finding because the sanction was remanded; absent a final sanction the finding has no immediate legal consequences and judicial review would intrude on agency deliberations |
| Whether Saliba preserved his defense that he reasonably believed he complied with the Revised Restrictions | Saliba contends he acted in good faith and complied with the limited permissions | SEC/FINRA emphasize Saliba conceded the violation below and only contested sanction | Court held Saliba waived this argument by not raising it before the SEC, so it cannot be considered on review |
| Whether the SEC abused its discretion in sustaining bars for (a) violating the Restrictions and (b) backdating compliance forms | Saliba contends the bars are excessive and the testimony (including that of the former CCO) warranted credit | SEC relied on FINRA credibility findings, the egregiousness of repeated violations, and need to protect investors | Court held the SEC did not abuse its discretion: deference to FINRA credibility findings and the record support industry bars for both violations |
Key Cases Cited
- Bennett v. Spear, 520 U.S. 154 (final agency action test governs finality analysis)
- Oregon Natural Desert Ass'n v. U.S. Forest Serv., 465 F.3d 977 (9th Cir. 2006) (factors for assessing finality and pragmatic approach)
- Southern Cal. Aerial Advertisers' Ass'n v. Fed. Aviation Admin., 881 F.2d 672 (9th Cir. 1989) (an order may comprise part of an agency’s final disposition)
- Aaron v. SEC, 446 U.S. 680 (1980) (public protection standard supports sanctions)
- Krull v. SEC, 248 F.3d 907 (9th Cir. 2001) (standard of review for SEC disciplinary actions)
- Chicago Board Options Exchange, Inc. v. SEC, 889 F.3d 837 (7th Cir. 2018) (definition of "aggrieved" for appellate review)