Initial Decision Release No. 1403

Administrative Proceeding

File No. 3-15755

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of

Mark Feathers

Initial Decision

September 25, 2020

Appearances: John B. Bulgozdy and Lynn Dean for the Division of 

Enforcement, Securities and Exchange Commission

Mark Feathers, pro se

Before: James E. Grimes, Administrative Law Judge

Summary

I grant the Division of Enforcement’s motion for summary disposition. 

Respondent Mark Feathers is barred from associating with a broker, dealer, 

investment adviser, municipal securities dealer, municipal advisor, transfer 

agent, or nationally recognized statistical rating organization, and from 

participating in an offering of any penny stock.

Procedural Background

The Securities and Exchange Commission initiated this proceeding in 

February 2014, when it issued an order instituting proceedings (OIP) under 

Section 15(b) of the Securities Exchange Act of 1934.

1 This is a follow-on 

proceeding based on a judgment entered in November 2013 by the United 

States District Court for the Northern District of California. The district court 

enjoined Feathers from future violations of Section 17(a) of the Securities Act 

 

1 OIP at 1; see 15 U.S.C. § 78o(b).
2

of 1933, Sections 10(b) and 15(a) of the Exchange Act, and Exchange Act Rule 

10b-5.

2

The administrative law judge originally assigned to this proceeding issued 

an initial decision in May 2014, barring Feathers from the securities industry.3

The Commission summarily affirmed.4 Feathers sought review in the United 

States Court of Appeals for the Ninth Circuit, which granted his petition for 

review and, given Lucia v. SEC,

5 remanded for a new hearing before a different 

administrative law judge.6

Following remand and reassignment to a new administrative law judge,

that administrative law judge issued an order providing instructions as to his 

summary disposition procedure.

7 The order explained that a motion for 

summary disposition “must be accompanied by a statement of material facts 

as to which the moving party contends there is no genuine issue,” and must 

“consist of short numbered paragraphs.”8 And an opposition must dispute each 

paragraph or “agree[] that the asserted fact is undisputed.”9 The order also 

warned that the failure to controvert an asserted fact could permit the 

administrative law judge to find the uncontroverted fact admitted.10 Finally, 

 

2 OIP at 2; see SEC v. Small Business Capital Corp., No. 5:12-cv-3237-EJD

(N.D. Cal. Nov. 6, 2013) (the Civil Case). 

3 Mark Feathers, Initial Decision Release No. 605, 2014 WL 2418472 (ALJ 

May 30, 2014).

4 Mark Feathers, Exchange Act Release No. 73634, 2014 WL 6449870 (Nov. 

18, 2014).

5 138 S. Ct. 2044 (2018).

6 See Feathers v. SEC, 774 F. App’x 354, 358 (9th Cir. 2019). In this opinion, 

the court of appeals affirmed the district court’s judgment in the Civil Case. 

Id. at 356.

7 See Mark Feathers, Admin. Proc. Rulings Release No. 6724, 2020 SEC 

LEXIS 2754, at *3–5 (ALJ Jan. 15, 2020).

8 Id. at *3–4.

9 Id. at *4.

10 Id. at *5.
3

because Feathers is unrepresented, the order required the Division to provide 

him with certain information about how summary disposition functions.11

Although this proceeding was reassigned to me in April 2020,12 I was 

unaware of the order governing the summary disposition procedure until 

Feathers protested in July 2020 that the Division had not complied with the 

order when it moved for summary disposition.13 I thus ordered the Division to 

refile its motion in compliance with the procedural order issued in January 

2020.

14

The Division refiled its motion for summary disposition in late July 2020. 

Consistent with the summary disposition procedure outlined above, the 

Division informed Feathers that “[t]o oppose the Division’s motion,” he must 

support his opposition with “sufficient evidence contradicting the material 

facts asserted by the Division” and that “bare allegations or denials” would not 

be enough to counter the Division’s assertions. Instead, he would need to 

“submit evidence—such as declarations, your own affidavit and/or the 

affidavits of others, prior testimony, documentary evidence, or facts that can 

be officially noticed.” Feathers filed an opposition but did not contest the 

Division’s statement of undisputed facts. The Division filed a reply. 

In conducting this proceeding and considering the Division’s motion, I’ve 

given no weight to the opinions, orders, or rulings issued in this proceeding

before the Lucia decision.15

Findings of Fact

In support of its motion for summary disposition, the Division filed a 

statement of material facts to which there is no genuine issue. As discussed 

below, Feathers has failed adequately to contest the Division’s statement of 

material facts. As explained in the procedural order, I am entitled to deem true 

 

11 Id.

12 Mark Feathers, Admin. Proc. Rulings Release No. 6749, 2020 SEC LEXIS 

940 (ALJ Apr. 6, 2020). 

13 Mark Feathers, Admin. Proc. Rulings Release No. 6777, 2020 SEC LEXIS 

3370 (ALJ July 17, 2020).

14 Id.

15 See Pending Admin. Proc., Securities Act Release No. 10536, 2018 WL 

4003609, at *1 (Aug. 22, 2018).
4

the undisputed facts asserted by the Division. I elect, however, to rely in 

reaching findings and conclusions in this initial decision primarily on the 

supporting evidence submitted by the parties and official notice taken of the 

dockets in the Civil Case and in Feathers’s criminal case, together with the 

orders, decisions, and proceeding transcripts in those cases.

16 I have applied 

preponderance of the evidence as the standard of proof.17

Unless otherwise indicated, the findings of fact are supported by the 

district court’s August 16, 2013 order granting the Commission’s motion for 

summary judgment.18 The district court’s factual findings in deciding 

summary judgment in the Civil Case cannot be controverted in this 

proceeding.19

Feathers established two investment funds in 2007: Investors Prime 

Fund, LLC, and SBC Portfolio Fund, LLC (together, the Funds). The Funds’ 

offering documents stated that the Funds were managed by Small Business 

Capital Corporation (SBCC), which Feathers founded. The offering documents 

stated that SBCC had the “sole authority” to manage the Funds’ affairs.20

Feathers and SBCC were the only managers of the Funds. Feathers and his 

wife were the only signatories on the Funds’ and SBCC’s bank accounts. 

Feathers thus controlled SBCC and the Funds.

Feathers and SBCC issued the Funds’ securities and solicited investors to 

invest in the Funds. He paid “investor representatives” a salary and 

commissions for selling the Funds’ securities.21 Through Feathers’s efforts, the 

 

16 See United States v. Feathers, No. 5:14-cr-531-LHK (N.D. Cal.) (the 

Criminal Case); 17 C.F.R. § 201.323 (governing official notice). The Division’s 

unopposed request that I take official notice of the docket in the Criminal Case 

is granted. Feathers’s request that I take official notice of filings in the Civil 

Case is granted.

17 See John Francis D’Acquisto, Investment Advisers Act of 1940 Release 

No. 1696, 1998 WL 34300389, at *2 (Jan. 21, 1998).

18 See Bulgozdy Decl., Ex. 2. 

19 Shreyans Desai, Exchange Act Release No. 80129, 2017 WL 782152, at *3 

(Mar. 1, 2017).

20 Bulgozdy Decl., Ex. 2 at 2.

21 Id. at 28.
5

Funds sold over $46 million of their securities. Neither Feathers nor SBCC 

ever registered as brokers or dealers.

Feathers prepared offering documents for the Funds from 2009 through 

2011. He exercised final approval authority on the offering documents. Except 

for loans secured by real property, these documents prohibited loans from the 

Funds to the manager. And Investors Prime’s offering documents provided that 

Investors Prime would pay its audit, tax preparation, and protective advance 

costs, together with costs to maintain acquired real property. But SBCC would 

bear all other costs.

The Funds’ offering documents also stated that investment decisions 

would be guided by conservative lending standards. All loans from the Funds 

would thus be secured by deeds of trust for real property with a loan-to-value 

ratio of between 65% and 75%. By 2011, Investors Prime’s offering materials 

asserted that all existing loans were secured by “first trust deeds.”22 At the 

same time, Small Business Capital’s offering documents said that no loans 

were outstanding to the manager or its affiliates.

The Funds’ offering documents also represented that investor returns on 

profits would be proportionate to their relative investments. Investors Prime 

offering documents represented that profits would be “allocated entirely to” 

investors and Small Business Capital’s offering documents said investors 

would receive a proportionate share of fund income.23

It turned out that very little of what Feathers asserted was true. From 

2009 through 2012, Feathers caused the Funds to transfer over $7.4 million to 

SBCC. Feathers did not disclose these transfers to investors. 

Feathers used accounting gimmicks to allow the Funds to pay SBCC’s 

management fees, which SBCC was not earning, and to make the transfers 

appear as loans and thus the Funds’ assets. This allowed Feathers to 

misrepresent the Funds’ income, performance, expenses, and liabilities and 

falsely made it appear that the Funds were generating income. It also allowed 

the Funds to pay target returns. But because the Funds were not generating 

profits, the payments were actually made from investor funds.

Contrary to the Funds’ offering documents, the transfers were not secured

by real property and therefore had no loan-to-value ratio. And they were not 

guided by conservative lending standards. Statements in Investors Prime’s 

2011 offering materials that first trust deeds secured all existing loans were 

 

22 Id. at 14 (capitalization altered).

23 Id. at 15.
6

untrue. Similarly untrue were statements in Small Business Capital’s 2011 

offering documents that no loans were outstanding to the manager or its 

affiliates.

Feathers knew that he was deceiving investors. In 2010, an auditor 

discovered the scope of the transfers and told Feathers he could not issue an 

unqualified audit opinion. Feathers had the auditor issue a qualified opinion 

instead and did not fix any issues. In 2012, the auditor told Feathers that 

simply listing something as a loan did not make it so. The auditor also 

concluded that Feathers was misleading investors and recommended that 

Feathers retain counsel.

Based on these actions and omissions, the Commission filed an injunctive 

action against Feathers in 2012, in the United States District Court for the 

Northern District of California.24 Within a month, the court granted a 

preliminary injunction and froze the assets of the Funds, SBCC, and 

Feathers.25 In 2013, the district court granted the Commission’s motion for 

summary judgment and held that Feathers, SBCC, and the Funds committed 

securities fraud in violation of Securities Act Section 17(a), Exchange Act

Section 10(b), and Exchange Act Rule 10b-5.

26 The court also held that 

Feathers was liable as a control person for SBCC’s violations of these 

provisions and its operation as an unregistered broker in violation of Exchange 

Act Section 15(a).

27 In November 2013, the court permanently enjoined 

Feathers from violating these provisions and ordered him to disgorge nearly 

$7.5 million plus over $285,000 in interest.28

Feathers was indicted in 2014 on multiple counts of securities and mail 

fraud related to his involvement with the Funds, SBCC, and another fund.29

The district court revoked Feathers’s bond in 2017, after he e-mailed a threat 

 

24 Complaint, Civil Case (June 21, 2012), ECF No. 1.

25 Preliminary Injunction and Order Appointing Permanent Receiver, Civil 

Case (July 10, 2012), ECF No. 34.

26 Bulgozdy Decl., Ex. 2, at 29.

27 Id.

28 Order Granting in Part and Denying in Part Plaintiff’s Motion for 

Injunctive Relief and Monetary Remedies, Civil Case (Nov. 6, 2013), ECF. 

No. 622.

29 Indictment, Criminal Case (Oct. 29, 2014), ECF No. 1.
7

to eight people.30 In late 2017, Feathers pleaded guilty to a single count of mail 

fraud in violation of 18 U.S.C. § 1341.

31 The district court sentenced Feathers 

in 2018 to 33 months’ imprisonment.32

Conclusions of Law

1. Summary disposition is appropriate

Under Rule 250(b), which governs summary disposition in 75-day cases, 

an administrative law judge may grant a motion for summary disposition if 

“there is no genuine issue with regard to any material fact and ... the movant 

is entitled to a summary disposition as a matter of law.”33 The Commission has 

upheld summary disposition in cases such as this one, where a court has 

enjoined or convicted a respondent and the sole determination concerns the 

appropriate sanction.34

The Division moves for the entry of industry and penny-stock bars against 

Feathers. In opposition to the Division’s motion, Feathers does not dispute the 

Division’s assertion of undisputed facts and instead focuses on whether the 

district court should have entered an injunction against him. But, as I’ve 

explained to Feathers, he cannot collaterally attack the district court’s orders

 

30 Minute Entry for Bond Hearing, Criminal Case (Mar. 23, 2017), ECF 

No. 109; Bulgozdy Decl., Ex. 3.

31 Minute Entry for Change of Plea Hearing, Criminal Case (Dec. 20, 2017),

ECF No. 161.

32 Judgment in a Criminal Case at 2, Criminal Case (Mar. 9, 2018), ECF 

No. 170. Although this proceeding was initiated based on Feathers’s injunction 

and not his conviction—the district court entered judgment on Feathers’s 

conviction years after the Commission issued the OIP—it is still appropriate 

to consider Feathers’s conviction in assessing whether the public interest 

supports barring him from the securities industry. See Toby G. Scammell, 

Advisers Act Release No. 3961, 2014 WL 5493265, at *4 & n.22 (Oct. 29, 2014), 

vacated in part on other grounds, Advisors Act Release No. 5272, 2019 WL 

2775920 (July 2, 2019).

33 17 C.F.R. § 201.250(b). 

34 Gary M. Kornman, Exchange Act Release No. 59403, 2009 WL 367635, at 

*10 (Feb. 13, 2009), pet. denied, 592 F.3d 173 (D.C. Cir. 2010); Jeffrey L. 

Gibson, Exchange Act Release No. 57266, 2008 WL 294717, at *5 & n.21 (Feb. 

4, 2008) (collecting cases), pet. denied, 561 F.3d 548 (6th Cir. 2009). 
8

in this forum.35 So Feathers’s opposition provides no basis to deny the 

Division’s motion. And the record evidence together with the district court’s 

orders provide a sufficient basis to decide this matter in the Division’s favor.36

2. The public interest supports imposing collateral bars

Under the Exchange Act, the Commission may impose collateral and 

penny-stock bars37 against Feathers if, as is relevant here, (1) he was 

associated with or seeking to become associated with a broker or dealer at the 

time of his misconduct; (2) he was enjoined from “any conduct ... in connection 

with the purchase or sale of any security”; and (3) imposing bars is in the public 

interest.38

As to the first factor, the district court held that SBCC acted as an 

unregistered broker, in violation of Exchange Act Section 15(a), and found 

Feathers responsible as a control person for SBCC’s activity.39 Because 

Feathers controlled SBCC, he was associated with it.40 And that association 

coincided with Feathers’s fraudulent misconduct. The first factor is satisfied.41

 

35 See Prehearing Tr. 56 (“I’m not reviewing the District Court’s decision to 

issue an injunction, because I’m bound to take that decision as a given.”), 57–

58, 63–65; see also Mark Feathers, Admin. Proc. Release No. 6752, 2020 SEC 

LEXIS 1066, at *2 n.2, *4 n.13 (ALJ Apr. 17, 2020).

36 See James S. Tagliaferri, Exchange Act Release No. 80047, 2017 WL 

632134, at *7 (Feb. 15, 2017) (“The party opposing summary disposition may 

not rely on bare allegations or denials but instead must present specific facts 

showing a genuine issue of material fact for resolution at a hearing.” (internal 

quotation marks omitted)). 

37 A collateral bar, also called an industry bar, is a bar that prevents an 

individual from participating in the securities industry in capacities in 

addition to those in which the person was participating at the time of his or 

her misconduct. See Scammell, 2014 WL 5493265, at *1 & n.1. 

38 15 U.S.C. § 78o(b)(4)(C), (6)(A)(iii). 

39 Bulgozdy Decl., Ex. 2 at 29.

40 See 15 U.S.C. § 78c(a)(18) (defining, for purposes of the Exchange Act, the 

phrase person associated with a broker or dealer to include “any person directly 

or indirectly controlling ... such broker or dealer”).

41 See Tzemach David Netzer Korem, Exchange Act Release No. 70044, 2013 

WL 3864511, at *8 & n.68 (July 26, 2013) (holding that the Commission may
9

As to the second factor, the district court permanently enjoined Feathers

from committing securities fraud related to the purchase or sale of securities

and from acting an unregistered broker.

42 The court thus enjoined Feathers

from “conduct ... in connection with the purchase or sale of any security.” This 

injunction satisfies the requirements of the second factor.

Finally, to decide whether imposing bars would be in the public interest, 

I must consider the factors discussed in Steadman v. SEC.

43 These publicinterest factors include:

the egregiousness of the respondent’s actions, the isolated 

or recurrent nature of the infraction, the degree of 

scienter involved, the sincerity of the respondent’s 

assurances against future violations, the respondent’s 

recognition of the wrongful nature of his conduct, and the 

likelihood that the respondent’s occupation will present 

opportunities for future violations.44

The Commission also considers the deterrent effect of administrative 

sanctions.

45 This public interest inquiry is “flexible ... and no one factor is 

dispositive.”46 Before imposing a bar, an administrative law judge must 

 

“sanction an associated person of an unregistered broker-dealer ... in a followon administrative proceeding”).

42 Order Granting in Part and Denying in Part Plaintiff’s Motion for 

Injunctive Relief and Monetary Remedies at 3–4, Civil Case (Nov. 6, 2013), 

ECF. No. 622 (enjoining Feathers from violating Securities Act Section 17(a), 

Exchange Act Sections 10(b) and 15(a), and Exchange Act Rule 10b-5). 

43 603 F.2d 1126, 1140 (5th Cir. 1979), aff’d on other grounds, 450 U.S. 91 

(1981); see Scammell, 2014 WL 5493265, at *5. 

44 David R. Wulf, Exchange Act Release No. 77411, 2016 WL 1085661, at *4 

(Mar. 21, 2016), vacated in part on other grounds, Exchange Act Release 

No. 86309, 2019 WL 2903943 (July 5, 2019). 

45 Peter Siris, Exchange Act Release No. 71068, 2013 WL 6528874, at *11 n.72 

(Dec. 12, 2013), pet. denied, 773 F.3d 89 (D.C. Cir. 2014). General deterrence is 

relevant but not determinative of whether the public interest supports imposing 

a bar. PAZ Sec., Inc. v. SEC, 494 F.3d 1059, 1066 (D.C. Cir. 2007).

46 Kornman, 2009 WL 367635, at *6 (quoting David Henry Disraeli, 

Securities Act Release No. 8880, 2007 WL 4481515, at *15 (Dec. 21, 2007), pet. 

denied, 334 F. App’x 334 (D.C. Cir. 2009)). 
10

specifically determine why doing so would serve the Commission’s interests in 

protecting the investing public.47

The Commission has explained that because “[t]he securities industry 

presents continual opportunities for dishonesty and abuse,”48 an industry 

participant’s “propensity for dishonest behavior is of particular concern.”49 The 

industry must therefore “heavily depend[] [on] the integrity of its 

participants.”50 Given these facts and the Commission’s investor-protection 

mission, the Commission has stated that “in most fraud cases,” the publicinterest analysis will warrant a “‘severe sanction.’”

51

Here, the public-interest factors weigh in favor of industry and pennystock bars. Feathers repeatedly lied to investors. He told them that the Funds 

would invest conservatively. And except for loans secured by real property, 

that the Funds would not loan money to SBCC. But after making these 

representations, Feathers caused the Funds to transfer over $7.4 million to 

SBCC. Additionally, even if the transfers were loans, as Feathers represented 

to the Funds’ auditor, they were unsecured. Feathers then lied to prospective 

investors in Investors Prime by declaring that first trust deeds secured all 

existing loans. And he lied to Small Business Capital’s investors by asserting 

that no loans were outstanding to the manager or its affiliates.

Feathers also used his characterization of the transfers as loans to make 

a series of other false representations. By calling the transfers loans, Feathers 

 

47 See Ross Mandell, Exchange Act Release No. 71668, 2014 WL 907416, at 

*2 (Mar. 7, 2014) (“[A]lthough the initial decision discussed the public interest 

factors in general terms, it did not sufficiently articulate why the facts and 

circumstances of this case warrant the industry-wide bars imposed or how such 

bars ‘protect the trading public from further harm’ by this respondent.”),

vacated in part on other grounds, Exchange Act Release No. 77935, 2016 WL 

3030883 (May 26, 2016). 

48 Conrad P. Seghers, Advisers Act Release No. 2656, 2007 WL 2790633, at 

*7 (Sept. 26, 2007), pet. denied, 548 F.3d 129 (D.C. Cir. 2008).

49 Frank Kufrovich, Exchange Act Release No. 45437, 2002 WL 215446, at 

*5 (Feb. 13, 2002).

50 Adrian Antoniu, Exchange Act Release No. 25169, 1987 WL 110283, at *6 

(Dec. 3, 1987).

51 Siris, 2013 WL 6528874, at *11 n.71 (quoting Gibson, 2008 WL 294717, at 

*7). 
11

could label the transfers as the Funds’ assets. This allowed him to lie about the 

Funds’ income, performance, expenses, and liabilities. Feathers was thus able 

to claim that the Funds were generating income when they were not doing so. 

And by falsely claiming income, Feathers could pay returns. But because the 

Funds were not generating profits, Feathers made the payments from investor 

funds.

By lying to investors about what he would do with their investments and 

about fund performance, using investor capital to make prohibited transfers to 

the Funds’ manager—effectively to himself—and then using investor funds to 

make Ponzi-style payments to earlier investors, Feathers behaved in a manner 

that is, by any measure, egregious.

But there is more. The district court also enjoined Feathers from violating 

Section 15(a) of the Exchange Act based on his control-person responsibility for 

SBCC’s unregistered broker activity. Section 15’s registration requirement “is 

‘of ... utmost importance in effecting the purposes of the [Exchange] Act’ 

because it enables the SEC ‘to exercise discipline over those who may engage 

in the securities business and it establishes necessary standards with respect 

to training, experience, and records.’”

52 Feathers’s failure to register, which

frustrated this important effort, bolsters the determination that Feathers’s 

conduct was egregious.

Feathers’s misconduct was also recurrent. He made multiple 

misstatements in multiple documents over several years.

Feathers acted with a high degree of scienter. He was responsible for the 

contents of the Funds’ offering documents and thus knew he could not simply 

make unsecured transfers from the Funds to SBCC. And even if he did not 

know this at first, he knew it by 2010, when the Funds’ auditor discovered the 

scope of the transfers and told Feathers he could not issue an unqualified audit 

opinion. Moreover, when it permanently enjoined Feathers, the district court 

held that he acted with scienter. And when he pleaded guilty to mail fraud, 

 

52 SEC v. Benger, 697 F. Supp. 2d 932, 944 (N.D. Ill. 2010) (quoting Celsion 

Corp. v. Stearns Mgmt. Corp., 157 F. Supp. 2d 942, 947 (N.D. Ill. 2001)); see

Allen M. Perres, Securities Act Release No. 10287, 2017 WL 280080, at *3 (Jan. 

23, 2017) (quoting Benger), pet. denied, 695 F. App’x 980 (7th Cir. 2017).
12

Feathers necessarily admitted that he acted with the specific intent to deceive 

or defraud,

53 and thus with scienter.54

Feathers has made no assurances, sincere or otherwise, against future 

violations and has done nothing to show that he recognizes the wrongfulness

of his conduct. To the contrary, he has tried to show that he is the victim and 

has done nothing wrong. As the district court noted during Feathers’s 

sentencing hearing, Feathers was extremely litigious.55 The district court 

detailed how Feathers attacked the receiver in the Civil Case by filing a 

meritless bar complaint against the receiver’s counsel and filing a meritless 

complaint against the receiver with the Chartered Financial Analyst 

Institute.

56 Feathers also harassed the receiver by sending e-mails hurling 

“false accusations, personal attacks,” and about 35 threats to bring legal 

action.57 And during his criminal case, Feathers e-mailed his counsel, four 

Commission attorneys, the receiver, and the receiver’s counsel, threatening 

physical injury to anyone who uttered the word “Ponzi” and stating, “you have 

been able to introduce prejudice with the use of the word Ponzi in public and 

in hidden court pleadings. You won’t get away with it again (with me at 

least).”58 Finally, during this proceeding, Feathers has continually tried to

attack the basis for the district court’s injunction, launching accusations at 

various participants in the Civil Case. In short, Feathers has shown that he 

does not accept the district court’s judgment or responsibility for his actions.

Feathers’s refusal to accept responsibility for his actions, particularly 

given that his conduct was egregious and that he acted with scienter, makes it 

likely that he would engage in more misconduct if he were allowed to remain 

 

53 United States v. Milwitt, 475 F.3d 1150, 1156 (9th Cir. 2007); see Bulgozdy 

Decl. Ex. 4, Sentencing Hr’g Tr. at 46, Criminal Case (Mar. 7, 2018), ECF 

No. 192 (stating that when he pleaded guilty, Feathers admitted that he 

“knowingly participated in the scheme to defraud” and “acted with intent to 

defraud”).

54 See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976) (“[T]he 

term ‘scienter’ refers to a mental state embracing intent to deceive, 

manipulate, or defraud.”).

55 Bulgozdy Decl. Ex. 4, Sentencing Hr’g Tr. at 20–22.

56 Id. at 20–22, 46–47.

57 Id. at 20–22, 46–47.

58 See Bulgozdy Decl., Ex. 3; Bulgozdy Decl., Ex. 4, Sentencing Hr’g Tr. at 46.
13

in the securities industry.59 Indeed, Feathers’s occupation would present him 

with “opportunities for future illegal conduct.”

60 His refusal to accept 

responsibility and attempts to shift blame must therefore weigh heavily 

against him in the public-interest analysis.61

Finally, imposing a bar will serve the Commission’s interest in deterring 

others from engaging in similar misconduct. 

In sum, Feathers’s fraudulent conduct was egregious and if he managed 

to remain in the industry, he would have the opportunity engage in more 

misconduct. The Commission’s interest in protecting the investing public 

would be served by not allowing an individual to remain in the industry who 

(1) has shown that he is willing to deceive investors about what he was doing 

with their investments, and (2) has shown—by refusing to understand the 

wrongfulness of his actions—that he would likely engage in misconduct again.

3. Feathers has presented nothing to warrant denying the Division’s motion 

for summary disposition

In opposition to the Division’s motion, Feathers ignores the relevant 

issues; he does not dispute that the district court enjoined him or the public

interest supports imposition of industry and penny-stock bars.62 He also does 

 

59 See Geiger v. SEC, 363 F.3d 481, 489 (D.C. Cir. 2004) (holding that a 

finding that conduct was egregious “justifies the inference” that misconduct 

will recur); Michael J. Markowski, Exchange Act Release No. 44086, 2001 WL 

267660, at *4 (Mar. 20, 2001) (holding that a respondent’s “failure to recognize 

the wrongfulness of his conduct presents a significant risk that, given [the] 

opportunity [to return to the industry], he would commit further misconduct 

in the future”).

60 John W. Lawton, Advisers Act Release No. 3513, 2012 WL 6208750, at *11 

(Dec. 13, 2012), vacated in part on other grounds, Advisers Act Release No. 

4402, 2016 WL 3030847 (May 27, 2016).

61 See Francis V. Lorenzo, Exchange Act Release No. 74836, 2015 WL 

1927763, at *13 & n.46 (Apr. 29, 2015), vacated in part on other grounds, 872 

F.3d 578 (D.C. Cir. 2017), aff’d, 139 S. Ct. 1094 (2019).

62 In a prior motion, Feathers argued that he was never a broker or dealer 

and was only a lender who raised capital as an issuer. Respondent’s Request 

to Terminate Hearings Due to Governmental Abuse of Power, and Violations 

of the APA (July 30, 2020). But he cannot dispute that he was associated with 

a broker within the meaning of the Exchange Act. The district court explicitly

found in the Civil Case that “SBCC operated as an unregistered broker-dealer 
14

not dispute any of the Division’s asserted undisputed facts. Instead, he attacks 

the district court’s injunction and asserts that because he recently moved in 

the Civil Case under Federal Rule of Civil Procedure 60, “it is premature to 

discuss sanctions.” As noted, Feathers’s attack in this forum on the district 

court’s injunctive order is doomed. And the pendency of a Rule 60 motion—

particularly one filed nearly seven years after entry of the injunctive 

judgment—is not a basis to delay this proceeding.63

Feathers has also affirmatively moved for summary disposition. In his 

motion, Feathers attacks the conduct of several government participants in the 

Civil Case, references a report prepared by Annette Stalker, which he offered 

during the Criminal Case, and quotes one investor who spoke during 

Feathers’s sentencing hearing. 

Feathers, however, cannot attack in this forum the conduct of Commission 

participants in the Civil Case.64 Claims of this nature must be adjudicated by 

the district court.65

The Stalker report has been the subject of multiple motions and orders in 

this proceeding. Initially, I observed in an April 2020 order that “[b]ecause the 

content of the report ... contradicts findings made by the district court in the 

civil case that is the predicate for this ... proceeding, it is not clear that I could 

properly consider it.”66 And although I declined to rule on its admissibility 

because Feathers had not yet offered the report into evidence, I explained that 

if he offered it as an expert report, he would have to comply with the 

Commission’s Rule of Practice governing experts.

67 Otherwise Feathers would 

 

in violation of Section 15(a) of the Exchange Act; and that Feathers” is “liable 

as [a] control person[] under Section 20(a) of the Exchange Act.” Bulgozdy 

Decl., Ex. 2 at 29.

63 Cf. Michael T. Studer, Exchange Act Release No. 50411, 2004 WL 

2104496, at *2 (Sept. 20, 2004) (“Neither Studer’s motion for a new trial nor 

his pending appeal of the injunctive court’s decision affects the finality and 

preclusive effect in this proceeding of the court’s determinations.”), aff’d, 148 

F. App’x 58 (2d Cir. 2005). 

64 See Harold F. Harris, Exchange Act Release No. 53122A, 2006 WL

307856, at *6 (Jan. 13, 2006).

65 Id.

66 Feathers, 2020 SEC LEXIS 1066, at *2.

67 Id. at *3 (citing 17 C.F.R. § 201.222(b)).
15

need to be ready to show that the report is relevant, material, not unduly 

repetitious, and reliable, especially as it might relate to the public-interest 

factors.68

This prompted Feathers to ask for a ruling on the Stalker report’s 

admissibility. But because he provided no basis for me to rule, I denied his 

motion as premature and explained that if he wanted to rely on it for purposes 

of summary disposition, he needed to “(1) show that the report is relevant; and 

(2) submit a sworn declaration or affidavit from Stalker showing that if called 

to testify at a merits hearing, she would testify in a manner consistent with 

her report.”69

Feathers moved to reconsider but in doing so, he tacitly conceded the 

report’s irrelevance by arguing that it “wholly rebuts the very basis for” the 

district court’s underlying judgment.

70 Because he provided no basis to 

conclude that he should be exempt from the rules of practice, and thus no basis 

to reconsider, I denied his motion.

71

This brings us to Feathers’s current reference in his motion for summary 

disposition to the Stalker report. Feathers asserts that the report contradicts 

the opinions offered by the Commission’s experts during the Civil Case.72 But 

attacking the Commission’s experts’ opinions could only be relevant to an 

attack on the district court’s injunction, which I cannot entertain. And aside 

from his assertion about how the Stalker report contradicts the Commission’s 

experts, Feathers makes no attempt to show how the report is relevant, to the 

public-interest inquiry or otherwise. So he has provided no basis for me to 

consider it. 

Finally, Syd Raineri, the investor witness who spoke during Feathers’s 

sentencing hearing, contended that (1) Feathers was wrongly accused, (2) the 

Funds would have fully paid all investors if the Funds did not have to pay the 

receiver, (3) the “government overstepped [its] authority” because of the 

 

68 Id. (citing 17 C.F.R. § 201.320).

69 Mark Feathers, Admin. Proc. Rulings Release No. 6768, 2020 SEC LEXIS 

2561, at *3 (ALJ June 12, 2020).

70 Mark Feathers, Admin Proc. Rulings Release No. 6771, 2020 SEC LEXIS 

3125, at *1 (ALJ July 1, 2020).

71 Id. at *1–2.

72 Resp’t Mot. Summ. Disp. at 1–2.
16

Madoff scandal, and (4) Feathers pleaded guilty only because he “wanted to get 

it over with” and was worn down by “[t]he fact that he had so many litigated 

matters.”73 But none of these opinions help Feathers. Feathers’s guilty plea, 

which he cannot attack in this forum, contradicts Raineri’s first and fourth 

assertions. The third has no bearing on this matter. This leaves the second 

opinion, which could be somewhat relevant to the public-interest factors, but 

Feathers provides nothing to explain how or why Raineri reached his 

conclusion. 

Feathers’s motion for summary disposition is thus DENIED.74

4. Feathers’s remaining motions are denied

Since being assigned to this matter I have adjudicated several of 

Feathers’s motions. Feathers has, however, filed additional motions, many of 

which repeat arguments presented in already decided motions. I have deferred 

ruling on many of Feathers’s pending motions. For the sake of clarity, all of 

Feathers’s pending motions, including his multiple and repeated stay 

motions75 and motions for sanctions and to refer various matters to the Office 

of Inspector General,76 are DENIED.

 

73 Id. at 2; Bulgozdy Decl., Ex. 4, Sentencing Hr’g Tr. at 29–33. 

74 See 17 C.F.R. § 201.250(b) (requiring a summary-disposition movant to 

show that “there is no genuine issue with regard to any material fact and that

the movant is entitled to a summary disposition as a matter of law”).

75 Feathers at first moved for a stay pending adjudication of his request for a 

subpoena directed to the FDIC. Although I’ve certified that request to the 

Commission, Feathers withdrew his motion for a stay pending resolution of his 

subpoena request. Reply & Mot. to Withdraw (May 22, 2020); see Mark Feathers, 

Admin. Proc. Rulings Release No. 6762, 2020 SEC LEXIS 3215, at *2 (ALJ May 

29, 2020). There is therefore no need to delay this proceeding while the 

Commission decides whether to pursue the documents Feathers seeks.

76 Feathers seeks sanctions against Division counsel for a misstatement in a 

motion in the Civil Case in 2012. In recommending the appointment of a 

receiver, counsel erroneously stated that the receiver “is a licensed CPA”

rather than CFA. Recommendation by Plaintiff Securities and Exchange 

Commission that Thomas A. Seaman Be Appointed Receiver at 2, Civil Case 

(June 21, 2012), ECF No. 6. Counsel acknowledged the mistake, and—months 

before it permanently enjoined Feathers—the district court accepted that the 

mistake was a typo, found no prejudice, and denied Feathers’s motion to 

dismiss and for sanctions based on the error. Mot. Hr’g Tr. at 59–60, Civil Case 

(May 10, 2013), ECF No. 541. This issue has already been resolved by the 
17

Order

The Division’s motion for summary disposition is GRANTED.

Under Section 15(b) of the Securities Exchange Act of 1934, Mark

Feathers is BARRED from associating with a broker, dealer, investment 

adviser, municipal securities dealer, municipal advisor, transfer agent, or 

nationally recognized statistical rating organization.

Under Section 15(b) of the Securities Exchange Act of 1934, Mark 

Feathers is BARRED from participating in an offering of any penny stock, 

including acting as a promoter, finder, consultant, agent, or other person who 

engages in activities with a broker, dealer, or issuer for purposes of the 

issuance of trading in any penny stock, or inducing or attempting to induce the 

purchase or sale of any penny stock.

This initial decision will become effective in accordance with and subject 

to the provisions of Rule 360.77 Under that rule, a party may file a petition for 

review of this initial decision within twenty-one days after service of the initial 

decision. A party may also move to correct a manifest error of fact within ten 

days of the initial decision, under Rule 111.78 If a motion to correct a manifest

error of fact is filed by a party, then a party will have twenty-one days to file a 

petition for review from the date of the undersigned’s order resolving such 

motion to correct a manifest error of fact. 

The initial decision will not become final until the Commission enters an 

order of finality. The Commission will enter an order of finality unless a party 

petitions for review or moves to correct a manifest error of fact or the 

Commission determines on its own initiative to review the initial decision as 

to a party. If any of these events occur, the initial decision will not become final 

as to that party.

_______________________________

James E. Grimes

Administrative Law Judge

Served by e-mail on all participants.

 

district court, but, even if it were not, I cannot adjudicate in this administrative 

proceeding questions about litigation conduct in other forums. See Harris, 2006 

WL 307856, at *6.

77 See 17 C.F.R. § 201.360. 

78 See 17 C.F.R. § 201.111.