says the securities and exchange commission testimony and evidence that did not support their position cherry picking out of context statements that support their points and ignoring evidence that clearly exonerates mr mcgee secondly the  oppressive and imposed an inappropriate burden on competition your honour's according to the a p a and supreme court precedent this court not only may but is required to overturn agency decisions that are not supported by substantial evidence here here's my question you make a lot of the fact that he might not have been aware of what griffin was up to and what was going on i just i don't see any relevance to the gryphon case in this case this case is about this particular transaction and the failure to disclose the fifty thousand dollars that's what it's about is not your honor this case is it is  alleged that apart from the other younger indiscretions that are pointed out by the other side your honor it is alleged that our client was involved in high level fraud was aware of this issue let's leave out what about the fifty thousand just take that that transaction the failure to disclose to your client that you're getting fifty thousand dollars in respect with regard to a transaction that is ten percent and the failure to disclose  honor first of all mr mcgee was unaware of the fact that he would be obtaining a commission intel eight days after he after the sale of the fifty four act product went through secondly under new york state law there is no requirement to disclose and a commission is new york state law control here i mean this is a these are federal regulations are for yes your honor however the product involved was a fixed indexed annuity and according to the c fixed annuities are not securities which mean i you're slipping into the third this is the second point you're making but there's case law to say that if it's part of a transaction that involves the trade sale of securities and there was a existing securities and putting them into into new securities actually she didn't even know that she thought she was just giving him two to him to do it and he's in his new company name  to handle i mean i'm not at all aware of which the level of her knowledge or it seems as though she was really rely very heavily on your client your everything your honor first of all to go back to sanford and to point out how it is different in this case in that case the court specifically said this is not a case in which after a law full transaction a broker decided to seal the proceeds and that is why they decided that that case involved a security and therefore was regulated by finra in our case there was a lot of transaction but for griffin's fraud this whole issue never would have been a problem there i mean the investigators would have looked into it no your nothing you do with the security flaws but zen for did say that when you have a multi step transaction if there's a security on and on either side of that transaction or somewhere in the course of star although the product that was sold was a security the issue here is the product that was bought mckee received the shoe in terms of what the disclosure of what the feed was based on but it's a question of whether there's a material admission or fraud in connection with the purchase and sale of securities and so then we have to look at well is the connection restricted to the security that is actually it  question or cat it also be the security that was sold in order to purchase the security question when it's all one part of one transaction yes your honor it seems to me that the case law indicates a broader interpretation of in connection with in this regard your honor i do agree with you that in some cases that there is overall a broad interpretation however this would be an overly broad interpretation and here is why again  see the court said this is not a case in which after a lawful transaction a broker decided to steal proceeds that the broker in that case had intended from the beginning our client mr mcgee was misled by the fraud just like everyone else he was also we were misled about his fee which was going to be ten percent for doing this your honor at the time of the sale he was he did not know that he was going to be receiving a commission  tel eight days after the sale he received that commission isn't there evidence on both sides of that granted there is not conclusive evidence that he knew about the commission before there's not conclusive evidence but there's sufficient evidence for the us for the for finra to have actually waded in the othe r direction your honor i would again argue there is not substantial substantial evidence and that is what the burden was from the f c c to prove by substantial evidence that he was aware of this transaction or i in or that he was aware that he would receive the commission you when she was aware of it to disclose immediately once he was aware of the transaction your honor he did not disclose because he was under no obligation to do so the compliance officer for cattery grant who knows about these laws probably better than anyone  investigated in this case said based on the law he was not required to disclose his commission because it was not a security that's an in house investigation that's going on designed to had any alliance to mr mcgee at that point they were more concerned about catteries position and about their image so she had no incentive to cover up for him your honor for the foregoing reasons we respectfully request that you  may please the court benjamin an order of the securities and exchange commission i hope to be brief your honor i just wanted to make two points regarding evidence the first is that according to the stipulations entered in the record and you can find this a page eighty ninety eight mr mcgee stipulated and i quote here before c s purchase of the fifty four c g a the chair will give to nudity miggy was aware that fifty four paid commissions to third party financial professionals such as mcgee for the sales  days and that right there is substantial evidence that he knew before the purchase of this in nudity that he would be receiving a commission as to the question of the amount of the commission or of the well that's what i was going to go to the amount if you didn't know the amount at that point was or to disclose what he did know the amount before she actually affected the purchase because if you look at his own testimony he testifies that between the time that he filled out all of the the redemption forms for the annuities and sent them off to the hartford and pacific life on her behalf he contacted mr griffin and mr griffin told him he would be getting ten percent before he went back to collect the checks and take the money over to fifty for freedom he made a chart and this this actually i believe also is in the record there is a spread sheet where it shows the commission he gets and it's ten percent of the gross proceeds of the liquidation so he's not even being paid a ten percent commission on the amount that she purchases the charitable gift annuity and he's being paid the commission on the securities transaction itself yet you're saying he got the commission on the on the securities transaction that he got the commission  y a house on which he gets a six percent brokerage brokerage commission is that even why is that not very similar and how could that be a commission on a securit of the gross proceeds of the securities transaction which just suggests that these are not unrelated events so in your hypothetical of the sale of the house your honor and i think sanford backs this up if you read sanford carefully sanford is talking about a situation where someone is counseled or recommended that they enter a securities transaction with a mind for what the proceeds will be used for and what sanford stands for exactly my hypothetical yes your honor and if the sale of that house were in fact fraudulent that would be a problem and if the commission if i'm a broker and i'm recommending to my customer know it's a really good investment opportunity for you to liquidate your government bonds take the proceeds and buy this house if i don't disclose to them as a broker that i going to make a commission on the sale of that house i have violated fingers rules very likely and again i'm speaking hypothetically your honor i like to be clear about that is very strange i mean you probably would be violating the law the realty association the rules of the well again your honor it the question is what is the transaction how are you defining the transaction and the recommendation here the recommendation here was a liquidate to purchase strategy liquidate your variable annuities to purchase a charitable gift so you have as a broker dealing with your customers disclose all material information to the recommendation now the fact and again sanford speaks to this the fact that the securities transaction itself does not involve any misconduct or fraudulent fraudulent behavior like just just the sale of the securities itself my understanding is not disclosing commission securities transaction violations doesn't matter don't know i'm just going to pick a random number here suppose he had gotten a fifteen percent commission on the liquidation of the variable annuities well that is actually not an industry standard commission it's an excessively high commission that would have to be disclosed to her on the flip side because he's a broker and he has a brokerage relationship with his customer if he had gotten a standard in house commission from his employer on the liquidation of the variable annuities that perhaps doesn't need special and specific disclosure it would be disclosed in the closing documents on the sa itself but again if it's in excess of commission it probably has to be disclosed independently and specifically to the customer and commission under the circumstances i'm afraid i can't answer that question i don't know what the commission on the sale of a variable annuity would be my  i just don't know your honor well let me go ahead does the court have to decide whether or not the c g s are in fact securities in order to affirm the decision no that's unnecessary unders inferred again the question here is the connection between the liquidation of the security here and its undisputed that the variable annuities are disk securities and the purchase of a charitable gift to do it and here the evidence supports that this was a recommendation for an investment transaction it was a recommendation to annuities and purchase a charitable gift nudie and because he made the recommendation he was and are under an obligation to disclose all material information to the recommendation believe the term and sanford is independent events yes or not i sanford does speak in that terms it also talks about how this coincides and that speaks towards the independence of the two events and here they are not independent at all you refer to the commission on the sale of the variable annuity as a commission on the purchase of the charitable gift you're absolutely which may not be a security you're absolutely correct at shakeups believe about fifty four thousand that she purchased for the charitable gift annuity the amount of the commission was forty nine thousand dollars which was ten percent of the roughly four hundred ninety some odd thousand dollars that was the gross proceeds from the liquidation of the variable annuit now the reason for the difference in the cars that was because only a portion of that money was used to buy the fixed annuities correct well that's correct in the portion that was used was the net proceeds she had to pay surrender charges and taxes on the variable annuities so the difference between the four hundred ninety some thousand in the four hundred fifty some thousand is represented by surrender charges paid to the annuity companies and taxes this didn't have anything to do with the actual annuities that were purchased by fifty four after this transaction because i believe that was a lesser amount right that was an even lesser amount that's like two hundred fifty or something something something along those lines and lincoln lincoln financial refunded those as soon as they were aware of the fact that was in new york residence and so that's that so the amount of the you know the restitution is the difference yes yes the rest of yes that's correct your honor what's your view as to whether or not the c j is a security i really couldn't opine on that at this point that the commission expressly said in the order that it was unnecessary to decide in this case so i would prefer not to speculate if the court has no further questions the commission asked that you deny the petition we'll hear about  honors first of all the sale here was different from the sale in sanford because the sale was not coerced additionally in sanford the broker had intent from the very beginning and the court specifically stated that th tell us about that yes so this is a second circuit case in which broker who is involved for or who is a broker for nine years he was an upstanding citizen was a minimal participant in fraud and in that case the court found that a two case that says that where you sell a security that is a security to buy something else a house or a fixed income will you will be or something else is not all right there's no there's no what variable and fixed annuity is that a fixed annuity is a c g a and again when the seat the purchase of the cd is what is at issue because that is what was connected with the commission here getting back to my second point which is that the sanctions were excessive oppressive and impose an inappropriate burden the f c c or mccarthy rather be the f c c does show that these burdens were excessive an oppressive he already hasn't had his thank you thank you both will reserve decision