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Parties Involved:
Advanzeon Solutions, Inc.
Petitioner
Securities and Exchange Commission
Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 23-1332 September Term, 2024

FILED ON: DECEMBER 26, 2024 

ADVANZEON SOLUTIONS, INC., 

PETITIONER

v. 

SECURITIES AND EXCHANGE COMMISSION, 

RESPONDENT

On Petition for Review of an Order

 of the Securities and Exchange Commission 

Before: SRINIVASAN, Chief Judge, PILLARD and WILKINS, Circuit Judges. 

J U D G M E N T

This appeal was considered on the record from the Securities and Exchange Commission

(SEC) and on the briefs of the parties. See D.C. Cir. R. 34(j). The Court has accorded the issues 

full consideration and has determined that they do not warrant a published opinion. See D.C. Cir. 

R. 36(d). It is hereby 

ORDERED AND ADJUDGED that the petition for review be DENIED.

Petitioner Advanzeon Solutions, Inc., challenges the SEC’s decision to revoke the 

registration of all classes of its securities. In 1999, Advanzeon registered its securities under the 

Securities Exchange Act of 1934 (Exchange Act), triggering its obligation under the Act to file 

quarterly and annual financial reports. See 15 U.S.C. § 78m(a); 17 C.F.R. §§ 240.13a-1, 240.13a13. Advanzeon filed its required reports for the periods through the third quarter of 2020. It has 

not filed any reports for subsequent periods. 

In October 2023—by which time Advanzeon had failed to file a total of eleven required 

reports over a period of three years—the Commission revoked Advanzeon’s registration under 

Exchange Act section 12(j). That provision authorizes the Commission to revoke the registration 

of any security if the Commission finds that “the issuer[] of such security has failed to comply” 

with any Exchange Act provision, rule, or regulation, and the revocation is “necessary or 

appropriate for the protection of investors.” 15 U.S.C. § 78l(j). To determine that revocation of 

Advanzeon’s registrations was “necessary or appropriate for the protection of investors,” the 

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Commission applied the five-factor test laid out in Gateway International Holdings, Inc., which 

considers:

[i] the seriousness of the issuer’s violations, [ii] the isolated or recurrent nature of 

the violations, [iii] the degree of culpability involved, [iv] the extent of the issuer’s 

efforts to remedy its past violations and ensure future compliance, and [v] the 

credibility of its assurances, if any, against further violations.

Exchange Act Release No. 53907, 2006 WL 1506286, at *4 (May 31, 2006). The Commission 

found that all of the Gateway factors weighed in favor of revoking Advanzeon’s registrations and 

issued an order effecting that revocation. J.A. 140, 147.

Advanzeon acknowledges that it violated its Exchange Act reporting obligations but argues 

that, in light of the business and financial difficulties inflicted on it by the Covid-19 pandemic and 

various other external causes, the Commission acted arbitrarily and capriciously in finding that 

Advanzeon’s reporting violations supported revocation under the Gateway test. That argument is 

unpersuasive.

Advanzeon makes a cursory suggestion that its violations were only “isolated,” rather than 

recurrent, but Advanzeon forfeited that potential argument that the second Gateway factor weighs 

in its favor by failing to clearly articulate it. See Iowaska Church of Healing v. Werfel, 105 F.4th 

402, 414 (D.C. Cir. 2024) (“A party forfeits an argument by mentioning it only in the most skeletal 

way . . . .”) (internal quotation marks omitted). Advanzeon’s characterization is also entirely 

unfounded in light of its failure to file eleven required reports over a period of three years.

Advanzeon principally argues that the Commission should not have viewed it as “culpable” 

for its reporting delinquencies under the third Gateway factor because its reporting violations were 

caused by factors outside of Advanzeon’s control—namely, financial hardships imposed by the 

Covid-19 pandemic, multiple accounting firms’ failures to follow through on promises to assist 

Advanzeon with its filings, and being in the midst of Chapter 11 bankruptcy proceedings. That 

argument falls far short of demonstrating that the Commission’s determination was arbitrary or 

capricious. The Commission reasoned that Advanzeon’s violations “reflect a high degree of 

culpability” because it was “aware of the delinquencies and the importance of filing the company’s 

periodic reports” but nonetheless failed to do so over an extended period. J.A. 141-42. The 

Commission further explained that financial and other business difficulties, whether caused by the 

pandemic or not, “do not excuse an issuer’s failure to file periodic reports because such challenges 

are precisely the kind of material information that would have been significant to both current and 

potential investors in evaluating whether they wanted to buy, sell or hold [the issuer’s] securities.” 

J.A. 142 (internal quotation marks omitted). That determination was entirely reasonable and well 

within the Commission’s wide discretion to set standards for compliance with Exchange Act 

requirements. See, e.g., Siegel v. SEC, 592 F.3d 147, 155 (D.C. Cir. 2010) (noting that the 

Commission’s “conclusions regarding sanctions” are “peculiarly a matter for administrative 

competence” that this court will reverse “only if the remedy chosen is unwarranted in law or is 

without justification in fact”) (internal quotation marks omitted).

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Advanzeon also maintains that, in failing to treat Advanzeon’s Covid-induced deficiencies 

more leniently than it did, the Commission violated the “spirit” of its own March 2020 order, 

which granted a 45-day extension for periodic reports due by July 1, 2020. That argument is both 

forfeited and meritless. It is forfeited because Advanzeon failed to raise it before the Commission. 

See Doe v. SEC, 28 F.4th 1306, 1316 (D.C. Cir. 2022). And it is meritless because granting a 45-

day extension in acknowledgement of pandemic-related challenges in March 2020 is not 

“inconsistent” with requiring Advanzeon to file timely periodic reports during the ensuing three 

years. That is especially so given that the order allowed only a 45-day extension, and by the time 

of the revocation order, Advanzeon had failed to file its most overdue report for almost three years. 

Advanzeon’s argument that the Commission should have given it more credit for “doing 

its best” to remediate its past delinquencies by filing for bankruptcy and hiring a new accounting 

firm fares no better. The Commission relied on substantial and undisputed evidence in determining 

that Advanzeon’s remedial efforts were insufficient to call for a milder sanction than revocation. 

That evidence included Advanzeon’s failure to remedy any of its previously delinquent filings and 

its repeated failures to follow through on promises to file reports as to which it remained

delinquent. In light of these serious failures, nothing suggests that the Commission exceeded the 

bounds of its discretion in sanctioning Advanzeon by revoking its registration. Indeed, the 

Commission has sanctioned issuers with revocation even though, unlike Advanzeon, they 

remedied their delinquent filings once proceedings were initiated. See, e.g., Absolute Potential, 

Inc., Exchange Act Release No. 71866, 2014 WL 1338256, at *6–7 (Apr. 4, 2014). 

For the foregoing reasons, we deny Advanzeon’s petition for review. 

Pursuant to D.C. Circuit Rule 36, this disposition will not be published. The Clerk is 

directed to withhold issuance of the mandate until seven days after resolution of any timely petition 

for rehearing or rehearing en banc. See Fed. R. App. P. 41(b); D.C. Cir. R. 41(a)(1). 

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk 

BY: /s/ 

 Michael C. McGrail 

Deputy Clerk 

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