19-3272

United States Securities and Exchange Commission v. Alpine Securities Corporation 

In the

United States Court of Appeals

For the Second Circuit ________

AUGUST TERM, 2019

ARGUED: MARCH 31, 2020

DECIDED: DECEMBER 4, 2020

No. 19-3272

UNITED STATES SECURITIES AND EXCHANGE COMMISSION,

Plaintiff-Appellee,

v.

ALPINE SECURITIES CORPORATION,

Defendant-Appellant.

________

Appeal from the United States District Court

for the Southern District of New York.

________

Before: WALKER, CABRANES, and SACK, Circuit Judges.

________

The Securities and Exchange Commission (SEC) filed a civil 

enforcement action against Alpine Securities Corporation (Alpine), a 

registered broker-dealer specializing in penny stocks and micro-cap 

securities. The SEC claimed that Alpine’s failure to comply with the 
2 No. 19-3272

reporting requirements for filing Suspicious Activity Reports (SARs) 

violated the reporting, recordkeeping, and record retention 

obligations under Section 17(a), of the Securities Exchange Act of 1934 

(Exchange Act), and Rule 17a-8 promulgated thereunder. The district 

court granted in part and denied in part the SEC’s motion for 

summary judgment and denied Alpine’s motion for summary 

judgment.

On appeal, Alpine argues that the district court erred: (1) in 

concluding that the SEC has authority to bring an enforcement action 

under Section 17(a) and Rule 17a-8 on the basis of Alpine’s failure to 

comply with the SAR provisions of the Bank Secrecy Act (BSA); (2) in 

concluding that Rule 17a-8 is valid; (3) in concluding that Rule 17a-8

does not violate the Administrative Procedure Act (APA); and (4) in 

finding Alpine liable for violations of Section 17(a) and Rule 17a-8 on 

the basis of its deficient SAR practices. Alpine further challenges the 

district court’s imposition of a civil penalty under the Exchange Act 

in the amount of $12 million.

For the reasons that follow, we AFFIRM the judgment of the 

district court. 

________

RACHEL M. MCKENZIE, Senior Counsel(Michael A. 

Conley, Solicitor; Daniel Staroselsky, Senior 

Litigation Counsel, on the brief), for Robert B. 

Stebbins, General Counsel, Securities and 
3 No. 19-3272

Exchange Commission, Washington, D.C., for 

Plaintiff-Appellee.

MARANDA FRITZ, Thompson Hine LLP, New York, 

NY (Brent R. Baker, Jonathan D. Bletzacker, Aaron 

D. Lebenta, Clyde Snow & Sessions, Salt Lake City, 

UT, on the brief) for Defendant-Appellant.

________

JOHN M. WALKER, JR., Circuit Judge:

The Securities and Exchange Commission (SEC) filed a civil 

enforcement action against Alpine Securities Corporation (Alpine), a 

registered broker-dealer specializing in penny stocks and micro-cap 

securities. The SEC claimed that Alpine’s failure to comply with the 

reporting requirements for filing Suspicious Activity Reports (SARs) 

violated the reporting, recordkeeping, and record retention 

obligations under Section 17(a), of the Securities Exchange Act of 1934 

(Exchange Act), and Rule 17a-8 promulgated thereunder. The District 

Court for the Southern District of New York (Denise L. Cote, J.), 

granted in part and denied in part the SEC’s motion for summary 

judgment and denied Alpine’s motion for summary judgment.

On appeal, Alpine argues that the district court erred: (1) in 

concluding that the SEC has authority to bring an enforcement action 

under Section 17(a) and Rule 17a-8 on the basis of Alpine’s failure to 

comply with the SAR provisions of the Bank Secrecy Act (BSA); (2) in 

concluding that Rule 17a-8 is valid; (3) in concluding that Rule 17a-8
4 No. 19-3272

does not violate the Administrative Procedure Act (APA); and (4) in 

finding Alpine liable for violations of Section 17(a) and Rule 17a-8 on 

the basis of its deficient SAR practices. Alpine further challenges the 

district court’s imposition of a civil penalty under the Exchange Act 

in the amount of $12 million.

For the reasons that follow, we AFFIRM the judgment of the 

district court. 

BACKGROUND

Prior to examining the issues in this case, a brief review of the 

relevant statutory and regulatory authority will be helpful.

i. The Bank Secrecy Act

Congress enacted the Foreign Transactions Reporting Act of 

1970, or Bank Secrecy Act (BSA), in 1970 due to concerns over (1) the 

adequacy of records retained by domestic financial institutions, (2) 

the failure of such institutions to report to the government large 

deposits and withdrawals of currency,1 and (3) the use of foreign 

financial institutions to evade “domestic criminal, tax, and regulatory 

enactments.”2

1 California Bankers Ass’n v. Shultz, 416 U.S. 21, 27-28 (1974).

2 Id.; see also Ratzlaf v. United States, 510 U.S. 135, 138 (1994) (“Congress 

enacted the Currency and Foreign Transactions Reporting Act (Bank 

Secrecy Act) in 1970, Pub.L. 91–508, Tit. II, 84 Stat. 1118, in response to 

increasing use of banks and other institutions as financial intermediaries by 

persons engaged in criminal activity. The Act imposes a variety of 

reporting requirements on individuals and institutions regarding foreign 

and domestic financial transactions.”).
5 No. 19-3272

The BSA authorizes the Secretary of the Treasury to mandate 

certain recordkeeping and reporting requirements for United States 

financial institutions.3 In enacting the BSA, Congress concluded that 

such records and reports “have a high degree of usefulness in 

criminal, tax, or regulatory investigations or proceedings.”4

When the BSA was initially enacted, Treasury regulations only 

required broker-dealers to retain records and file reports relating to 

domestic and foreign transactions above a certain dollar amount.5 In 

2001, however, Congress amended the BSA through the USA 

PATRIOT Act to require the Treasury, after consultation with the SEC 

and Board of Governors of the Federal Reserve System, to publish 

regulations requiring broker-dealers to report suspicious 

transactions.6 The Secretary of the Treasury delegated that 

responsibility to the Financial Crimes Enforcement Network 

(FinCEN) within the Treasury Department.7 

In 2002, FinCEN promulgated 31 C.F.R. § 1023.320, which

requires every broker-dealer to file a report of any suspicious 

3 California Bankers Ass’n, 416 U.S. at 26.

4 Id. (citing 12 U.S.C. §§ 1829b(a)(2), 1951; 31 U.S.C. § 1051).

5 See id. at 30-38.

6 Financial Crimes Enforcement Network; Amendment to the Bank 

Secrecy Act Regulations–Requirement that Brokers or Dealers in Securities 

Report Suspicious Transactions, 67 Fed. Reg. 44,048 (July 1, 2002) (SAR 

Regulation Adopting Release).

7 Treasury Order 180-01(a)-(b); Financial Crimes Enforcement Network, 

67 Fed. Reg. 64,697 (Oct. 21, 2002).
6 No. 19-3272

transaction relevant to a possible violation of law or regulation.

Specifically, broker-dealers must file a SAR if a transaction “is 

conducted or attempted by, at, or through a broker-dealer, it involves 

or aggregates funds or other assets of at least $5,000, and the brokerdealer knows, suspects, or has reason to suspect that the transaction 

(or a pattern of transactions of which the transaction is a part):” (1) 

“[i]nvolves funds derived from illegal activity;” (2) is designed, 

“whether through structuring or other means, to evade” the BSA and 

its regulations; (3) “[h]as no business or apparent lawful purpose;” or 

(4) “[i]nvolves use of the broker-dealer to facilitate criminal activity.”8 

Section 1023.320 also requires broker-dealers to retain a copy of any

SAR filed “for a period of five years from the date of filing” and to 

“make all supporting documentation available to FinCEN or any 

Federal, State, or local law enforcement agency, or any Federal 

regulatory authority that examines the broker-dealer for compliance 

with the Bank Secrecy Act, upon request.”9

Upon the issuance of this regulation, FinCEN announced that 

the “regulation of the securities industry in general and of brokerdealers in particular relies on both the Securities and Exchange 

8 31 C.F.R. § 1023.320(a)(2).

9 31 C.F.R. § 1023.320(d).
7 No. 19-3272

Commission . . . and the registered securities associations and 

national securities exchanges.”10

ii. The Exchange Act

The Exchange Act delegates to the SEC broad authority to 

regulate brokers and dealers in securities.11 Section 17(a) of the 

Exchange Act authorizes the SEC to promulgate rules to carry out 

Section 17(a)’s requirement that brokers and dealers “make and keep 

for prescribed periods such records . . . and disseminate such reports 

as the Commission, by rule, prescribes as necessary or appropriate in 

the public interest, for the protection of investors, or otherwise in 

furtherance of the purposes of this chapter.”12 

In 1981, the SEC promulgated Rule 17a-8 under Section 17(a). 

Rule 17a-8, instead of duplicating the reporting and retention 

requirements of the BSA, incorporated those requirements by 

mandating that every registered broker or dealer “who is subject to 

the requirements of the Currency and Foreign Transactions Reporting 

Act of 1970 [Bank Secrecy Act] shall comply with the reporting, 

recordkeeping and record retention requirements of chapter X of title 

31 of the Code of Federal Regulations.”13 Chapter X of Title 31 

10 SAR Regulation Adopting Release, 67 Fed. Reg. at 44,049.

11 See 15 U.S.C. § 78b; id. § 78q–1.

12 15 U.S.C. § 78q(a)(1).

13 17 C.F.R. § 240.17a-8.
8 No. 19-3272

concerns the Treasury’s rules for brokers or dealers in securities, 

including FinCEN’s SAR requirements under Section 1023.320.

The SEC observed that by not duplicating the existing BSA 

Treasury requirements, Rule 17a-8 would impose “no burden on 

competition.”14 The SEC further specified that the Rule was not 

confined to any specific identifiable reports and records so as to allow 

for any revisions to reporting requirements that the Treasury may 

adopt in the future.15 No comments were received from the public in 

response to the proposed rule. 16 In 2011, the SEC amended Rule 17a8 to make clear that it still considered the Treasury’s reporting 

obligations, which at that point included the SAR reporting 

requirement, as promoting the goals of the Exchange Act.17 

iii. Current Enforcement Action

Alpine is a registered broker-dealer and Financial Industry 

Regulatory Authority (FINRA) member that “acts as a clearing 

firm.”18 Over the years, the SEC and FINRA, which is overseen by the 

SEC, found numerous deficiencies in Alpine’s SAR reporting 

standards and submissions. In 2012, FINRA found that Alpine failed 

14 Recordkeeping by Brokers and Dealers, 46 Fed. Reg. 61,454, 61,455

(Dec. 17, 1981) (Rule 17a-8 Adopting Release).

15 Id.

16 Id.

17 Technical Amendments to Rule 17a-8: Financial Recordkeeping and 

Reporting of Currency and Foreign Transactions, 76 Fed. Reg. 11,327 (Mar.

2, 2011).

18 App’x 48, 50.
9 No. 19-3272

to file SARs over a two-month and a four-month period in 2011 and 

that many SARs that Alpine did file were inadequate. In 2015, the 

SEC found that for half of the SARs it reviewed, Alpine failed to 

provide a clear and complete description of the financial activity 

reported and that frequently Alpine was intentionally trying to 

obscure the suspicious nature of that activity. 

On June 5, 2017, the SEC filed this civil action against Alpine to 

enforce reporting and recordkeeping requirements of the securities 

laws. The SEC alleged that, through non-compliant SAR practices, 

Alpine violated the reporting, recordkeeping, and record retention 

obligations under Section 17(a) and Rule 17a-8. The SEC moved for 

partial summary judgment, submitting SARs to exemplify the 

categories of Section 17(a) and Rule 17a-8 violations it was alleging. 

Alpine cross-moved for summary judgment, principally arguing that 

the SEC lacked authority to bring such a suit because the Treasury

had sole authorization to enforce the BSA requirements.

The district court granted the SEC’s motion in part, but 

deferred its resolution of categories of allegedly deficient SARs 

pending discovery and additional briefing. The district court also

denied Alpine’s motion, rejecting Alpine’s argument that the SEC was 

improperly enforcing the BSA and upholding the SEC’s authority to 
10 No. 19-3272

enforce the reporting and recordkeeping provisions of the Exchange 

Act on the basis of non-compliance with SAR requirements.19

The district court determined that Rule 17a-8 was a reasonable 

interpretation of the Exchange Act because the SEC concluded that 

the SARs, which assist the Treasury Department in targeting illegal 

securities transactions, would also serve to protect investors by 

providing information relevant to determining whether there is any 

market manipulation.20 The district court further found that nothing 

in the Exchange Act or the BSA expressly precluded FinCEN and the 

SEC from exercising concurrent regulatory and enforcement 

authority.21 

The district court also rejected Alpine’s argument that the SEC 

violated the APA when promulgating Rule 17a-8. Specifically, the 

district court noted that the “text of the regulation itself, as well as the 

SEC’s 1981 notice of final rule, unambiguously demonstrate[d] the 

SEC’s intent [that] the nature of the Rule 17a-8 reporting obligation 

[would] evolve over time through the Treasury’s regulations.”22 The 

district court observed that Rule 17a-8’s evolving nature “made 

19 United States Sec. & Exch. Comm'n v. Alpine Sec. Corp., 308 F. Supp. 3d 

775, 789 (S.D.N.Y. 2018), reconsideration denied, No. 17CV4179(DLC), 2018 

WL 3198889 (S.D.N.Y. June 18, 2018), and reconsideration denied, No. 

17CV4179(DLC), 2019 WL 4071783 (S.D.N.Y. Aug. 29, 2019).

20 Id. at 796.

21 Id.

22 Id. at 797.
11 No. 19-3272

government more efficient by incorporating the obligations that had 

been and would be imposed by the Treasury.”23

After discovery and additional briefing, the SEC moved for 

summary judgment as to Alpine’s liability for thousands of Rule 17a8 violations based on deficient SARs reporting and recordkeeping 

practices. Evaluating the specific violations alleged, the district court 

granted summary judgment to the SEC as to 2,720 violations of Rule 

17a-8 on the basis of Alpine’s SARs reporting and recordkeeping 

practices in three categories: submitting SARs with deficient 

narratives, failing to submit SARs on deposit-and-sales patterns, and 

failing to retain support files for SARs. The district court denied 

summary judgment as to hundreds of other alleged violations by 

Alpine, which the SEC then declined to prosecute further.24

The district court then imposed a $12 million civil penalty and

enjoined Alpine from future violations of Section 17(a) and Rule 17a8. This appeal followed.

DISCUSSION 

On appeal, Alpine argues (1) this enforcement action is invalid 

because the SEC lacks authority to enforce the SAR provisions of the 

23 Id.

24 See, e.g., United States Sec. & Exch. Comm'n v. Alpine Sec. Corp., 354 F. 

Supp. 3d 396, 430-31, 443 (S.D.N.Y. 2018), reconsideration denied, No. 

17CV4179(DLC), 2019 WL 4071783 (S.D.N.Y. Aug. 29, 2019).
12 No. 19-3272

BSA; (2) Rule 17a-8, which requires compliance with BSA 

requirements, is invalid because it is not a reasonable interpretation 

of the Exchange Act; (3) Rule 17a-8 is invalid because its promulgation

did not comply with the APA; and (4) the district court erred in

finding that Alpine violated Section 17(a) and Rule 17a-8 on the basis 

of SAR compliance. Alpine further argues that the district court erred 

in imposing a civil penalty of $12 million on Alpine.

We review motions for summary judgment de novo.25

I. The SEC Has Authority to Enforce Section 17(a) of the 

Exchange Act Through This Civil Action

Alpine first contends that the SEC is not authorized to bring 

this civil enforcement action because the Treasury Department has 

sole authority to enforce the BSA. We disagree.

This enforcement action was brought solely under Section 17(a) 

of the Exchange Act and Rule 17a-8 promulgated thereunder. This 

suit therefore falls within the SEC’s independent authority as the 

primary federal regulator of broker-dealers to ensure that they 

comply with reporting and recordkeeping requirements of those 

provisions.26 The fact that Rule 17a-8 requires broker-dealers to 

25 See United States v. Epskamp, 832 F.3d 154, 160 (2d Cir. 2016) (quoting 

Roach v. Morse, 440 F.3d 53, 56 (2d Cir. 2006)); Mario v. P & C Food Mkts, 

Inc., 313 F.3d 758, 763 (2d Cir. 2002). 

26 See, e.g., VanCook v. SEC, 653 F.3d 130 (2d Cir. 2011) (enforcement 

action for violation of Section 17(a)).
13 No. 19-3272

adhere to the dictates of the BSA in order to comply with the 

recordkeeping and reporting provisions of the Exchange Act does not 

constitute SEC enforcement of the BSA. We thus reject Alpine’s 

argument that the SEC is enforcing the BSA, and not the Exchange 

Act. 

II. Rule 17a-8, Which Requires Compliance with BSA 

Requirements, Is a Reasonable Interpretation of 

Section 17(a) of the Exchange Act

Alpine next challenges the validity of Rule 17a-8, which 

requires compliance with BSA requirements, on that basis that it is 

not a reasonable interpretation of the Exchange Act.

We review questions of statutory interpretation de novo.27

Because this issue centers on an agency’s interpretation of a statute, 

we turn to the analytical framework established in Chevron, U.S.A. Inc. 

v. Nat. Res. Def. Council, Inc.28 “[A] reviewing court must first ask 

whether Congress has directly spoken to the precise question at 

issue.”29 Only if the statute is ambiguous or silent on the question

need a court proceed in the analysis. If Congress has not clearly 

27 See United States v. Epskamp, 832 F.3d 154, 160 (2d Cir. 2016) (quoting 

Roach v. Morse, 440 F.3d 53, 56 (2d Cir. 2006))

28 467 U.S. 837 (1984). 

29 Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 

132 (2000) (internal quotation marks omitted) (quoting Chevron, 467 U.S. at 

842).
14 No. 19-3272

spoken, “a reviewing court must respect the agency’s construction of 

the statute so long as it is permissible.”30 

The Exchange Act expressly delegates to the SEC the authority

to determine which reports from covered entities, including brokers 

and dealers, are “necessary or appropriate” to further the goals of the 

Exchange Act. The SEC, pursuant to that authority, may promulgate 

rules defining the recordkeeping and reporting obligations of brokerdealers that the SEC deems necessary to pursue those statutory 

aims.31

That is exactly what the SEC has done by promulgating Rule 

17a-8. The Exchange Act aims to protect the national securities 

market and “safeguard[] . . . securities and funds related thereto.”32

The SEC determined that the SARs, which assist the Treasury 

Department in targeting illegal securities transactions, would also 

serve to further the aims of the Exchange Act by protecting investors 

and helping to guard against market manipulation. For example, 

SARs facilitate the SEC’s effective enforcement with regard to market 

abuses associated with penny stock trading.33 The SEC thus 

30 Id. (citing INS v. Aguirre-Aguirre, 526 U.S. 415, 424 (1999)).

31 15 U.S.C. § 78q(a)(1).

32 15 U.S.C. § 78b; see also 15 U.S.C. § 78q–1.

33 See Ronald S. Bloomfield, Robert Gorgia, & John Earl Martin, Sr., S.E.C. 

Release No. 9553 (Feb. 27, 2014), vacated in part on other grounds, Robert 

Gorgia, S.E.C. Release No. 9743 (Apr. 8, 2015) (“Penny stocks present risks 

of trading abuses due to the lack of publicly available information about the 
15 No. 19-3272

promulgated Rule 17a-8, which requires compliance with those BSA 

regulations. In promulgating Rule 17a-8, the SEC acted pursuant to 

an express delegation of rulemaking authority. We thus hold that the 

SEC’s interpretation of Section 17(a), as expressed in Rule 17a-8, is 

reasonable.34

Alpine contends that in authorizing the Treasury to regulate 

suspicious activity in recordkeeping and reporting by broker-dealers 

under the BSA, Congress has precluded the SEC from regulating 

recordkeeping and reporting under the Exchange Act.

When “[c]onfronted with two Acts of Congress allegedly 

touching on the same topic, this Court is not at ‘liberty to pick and 

choose among congressional enactments’ and must instead strive ‘to 

penny stock market in general and the price and trading volume of 

particular penny stocks.”); see also Testimony Before the S. Comm. on Banking, 

Housing and Urban Affairs, 2002 WL 169600 (Jan. 29, 2002) (Annette L. 

Nazareth, Director, SEC Division of Market Regulation) (stating that the 

“SEC and Treasury staff readily reached consensus” on extending 

comparable SAR obligations to combat “money laundering risks.”).

34 Alpine’s argument that the district court improperly applied Auer

deference lacks merit. See Auer v. Robbins, 519 U.S. 452 (1997). As an initial 

matter, in Kisor v. Wilkie, the case on which Alpine relies, the Supreme Court 

held that “Auer deference retains an important role in construing agency 

regulations.” 139 S. Ct. 2400, 2408 (2019). Here, the text of Rule 17a-8

unambiguously encompasses the suspicious activity recordkeeping and 

reporting requirements of Section 1023.320 by referring to the chapter of the

Code of Federal Regulations in which those provisions appear. To the 

extent there is any ambiguity in Rule 17a-8, the SEC’s interpretation is 

reasonable and not “plainly erroneous or inconsistent with the regulation.” 

Nat. Res. Def. Council v. EPA, 808 F.3d 556, 569 (2d Cir. 2015) (citation 

omitted).
16 No. 19-3272

give effect to both.’”35 Because Alpine’s position is that the Exchange 

Act and the BSA cannot be “harmonized,” it “bears the heavy 

burden” of showing, based upon “a clearly expressed congressional 

intention,” that such a result should follow.36 Such an intention must 

be “clear and manifest,” and courts “come armed with the stron[g]

presum[ption] that repeals by implication are disfavored and that 

Congress will specifically address preexisting law when it wishes to 

suspend its normal operations in a later statute.”37

Here, the statutory and regulatory provisions are easily 

harmonized. Rule 17a-8 requires broker-dealers to comply with the 

duties imposed by the Treasury Department through the BSA.38 Far 

from conflicting, those duties imposed on broker-dealers by the BSA 

are “consistent with the purposes of the Exchange Act and the [SEC]’s 

obligation to enforce broker-dealer recordkeeping requirements.”39

Rule 17a-8’s incorporation of the BSA’s reporting obligation serves 

35 Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1624 (2018) (some internal 

quotation marks omitted) (quoting Morton v. Mancari, 417 U.S. 535, 551 

(1974)). 

36 Id. (quoting Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 

528, 533 (1995)).

37 Id. (internal citations and quotation marks omitted). 

38 Specifically, the rule requires that “[e]very registered broker or dealer 

who is subject to the requirements of the Currency and Foreign 

Transactions Reporting Act of 1970 [Bank Secrecy Act] shall comply with 

the reporting, recordkeeping and record retention requirements of chapter 

X of title 31 of the Code of Federal Regulations.” 17 C.F.R. § 240.17a-8.

39 Rule 17a-8 Adopting Release, 46 Fed. Reg. at 61,455.
17 No. 19-3272

the goal of regulatory enforcement by minimizing regulatory costs on 

broker-dealers, who need only comply with one set of reporting 

requirements.40 And the Treasury and the SEC have plainly worked 

in tandem, issuing policy statements and reports, and initiating 

enforcement actions since the BSA’s inception.41 For example, 

FinCEN’s adoption of the SAR regulation in 2002 expressly 

referenced Rule 17a-8 when it stated that “both the SEC and SROs 

[self-regulatory organizations] will address broker-dealer 

compliance” with the SAR reporting rule.42

The two cases upon which Alpine relies, Food & Drug Admin. v. 

Brown & Williamson Tobacco Corp.43 and Nutritional Health All. v. Food 

& Drug Admin,44 are unavailing. In Brown & Williamson, the Supreme 

Court rejected the claimed authority of the Food and Drug 

Administration (FDA) to regulate tobacco products through the Food, 

40 Congress was fully aware of this enforcement design. See Testimony 

Before the S. Comm. on Banking, Housing and Urban Affairs, 2002 WL 169600 

(Jan. 29, 2002) (Annette L. Nazareth, Director, SEC Division of Market 

Regulation) (stating that the SEC expected that, after Section 1023.320’s 

promulgation, “bank-affiliated broker-dealers should be subject to 

Treasury’s rule, rather than two separate SAR rules”).

41 See, e.g., Pinnacle Capital Markets, LLC, FinCEN No. 2010-4 (Aug. 26, 

2010); Oppenheimer & Co., Inc., SEC Release No. 74141, 2015 WL 331117 

(Jan. 27, 2015); SEC & FinCen, SEC and FinCEN Sign Information Sharing 

Agreement (Dec. 21, 2006).

42 SAR Regulation Adopting Release, 67 Fed. Reg. at 44,049.

43 529 U.S. 120 (2000).

44 318 F.3d 92, 104 (2d Cir. 2003).
18 No. 19-3272

Drug, and Cosmetic Act (FDCA).45 In support, the Court pointed out 

that such FDA authority would conflict with congressional intent 

because, if that were the case, the FDCA would “require the agency 

to ban [cigarettes]” which would “contradict Congress’ clear intent as 

expressed in its more recent, tobacco-specific legislation.”46 The 

Court supported its holding by pointing out that: (1) Congress had 

“considered and rejected bills that would have granted the FDA such 

jurisdiction”; and (2) the FDA had taken the “long-held position that 

it lacks jurisdiction under the FDCA to regulate tobacco products.”47

Nothing approaching these circumstances is present here. Fully 

aware that the SEC enforces the SAR provisions, Congress has never 

indicated its disapproval of joint SAR reporting enforcement.

In Nutritional Health, we found that congressional intent 

conflicted with FDA jurisdiction over certain products.48 The FDA 

claimed delegated authority under the FDCA to regulate the 

packaging of dietary supplements and drugs for the purpose of 

poison prevention.49 We held the FDA’s interpretation of its authority

to be unreasonable because Congress had later passed the Poison 

Prevention Packing Act (PPP Act), which “specifically targeted the 

45 529 U.S. at 126.

46 Id. at 137, 143.

47 Id. at 144.

48 318 F.3d at 95.

49 Id. at 94. 
19 No. 19-3272

problem of accidental poisoning,”50 and the PPP Act “expressly 

prohibited the FDA from prescribing ‘specific packaging designs, 

product content, package quantity, or with [one] exception . . . [,] 

labeling.’”51 In our view, the FDA’s interpretation was impermissible 

because the PPP Act “specifically and unambiguously” targeted and 

prescribed its own regulatory approach to addressing the accidental 

poisoning problem through packaging standards, and the Consumer 

Product Safety Act “unambiguously transferred authority to 

administer and enforce the PPP Act from the FDA to the [Consumer 

Product Safety Commission (CPSC)].”52 In both Brown & Williamson 

and Nutritional Health, a history of expressed congressional intent 

compelled the conclusion that the FDA lacked authority. No such 

history is present here. 

Alpine contends that Nutritional Health requires us to hold that 

the later-enacted SAR provision “specifically and unambiguously” 

demonstrates congressional intent for the Treasury to possess sole 

authority to “address money laundering and terrorist financing 

through the compilation of data derived from various financial 

institutions.” According to Alpine, this “specific authorization” to the 

50 Id. at 102. 

51 Id. at 104. 

52 Id. (citing Brown & Williamson, 529 U.S. at 132-33)).
20 No. 19-3272

Treasury Department trumps the general authorization to the SEC. 

We disagree. 

The SEC’s Rule 17a-8 Adopting Release, in 1981, expressly stated 

that the “Treasury has delegated to the Commission the responsibility 

for assuring compliance with the Currency Act and Treasury 

regulations.”53 No comments, or objections, were received from the 

public in response to proposed Rule 17a-8.54 Later, when FinCEN 

adopted the SAR reporting requirements through 31 C.F.R. § 

1023.320, it expressly stated that the Exchange Act enables “the SROs, 

subject to SEC oversight, to examine for BSA compliance” and 

therefore “both the SEC and SROs will address broker-dealer 

compliance with this rule.”55 That Congress never proposed to silo 

SAR enforcement authority in the Treasury strongly suggests that 

Congress intended for the SEC to maintain its compliance authority

and from the outset, it was envisioned by both agencies that the SEC 

would have enforcement authority over broker-dealers. 

In sum, Alpine has not met its “heavy burden” to show that 

Congress “clearly expressed [its] intention”56 to preclude the SEC 

53 Rule 17a-8 Adopting Release, 46 Fed. Reg. at 61,454. 

54 Id. Additionally, when this rule was proposed, FinCEN recognized 

that the SEC played a primary role in “reporting and maintaining data 

about securities law violations” and that the SEC had the authority, under 

Rule 17a-8, to examine for BSA compliance. SAR Regulation Adopting 

Release, 67 Fed. Reg. at 44,051.

55 SAR Regulation Adopting Release, 67 Fed. Reg. at 44,049.

56 See Epic Sys. Corp., 138 S. Ct. at 1624.
21 No. 19-3272

from examining for SAR compliance in conjunction with FinCEN and 

pursuant to authority delegated under the Exchange Act. 

III. Rule 17a-8 Does Not Violate the Administrative 

Procedure Act

Alpine next contends that, even if the SEC does have 

rulemaking authority under Section 17(a), Rule 17a-8 violates the 

APA. Specifically, Alpine argues that the open-ended nature of Rule 

17a-8, which permits the automatic incorporation of future BSA 

requirements, impermissibly allows the SEC to bypass the noticeand-comment requirements of the APA. We disagree.

The APA “requires an agency conducting notice-andcomment rulemaking to publish in its notice of proposed rulemaking 

‘either the terms or substance of the proposed rule or a description of 

the subjects and issues involved.’”57 The public had an opportunity 

to comment on both Rule 17a-8 and Section 1023.320(a)(2) of the BSA

regulations.

As discussed earlier, Rule 17a-8 was promulgated in 1981 

before FinCEN adopted its current SAR reporting requirements. At 

the time, the BSA regulations required broker-dealers to submit 

reports of currency transactions and transactions involving foreign 

accounts. The SEC indicated, when it proposed Rule 17a-8, that 

57 Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 174 (2007) (quoting 5 

U.S.C. § 553(b)(3)).
22 No. 19-3272

requiring broker-dealers to comply with the BSA was “consistent 

with the purposes of the Exchange Act and the [SEC]’s obligation to 

enforce broker-dealer recordkeeping requirements.”58

Moreover, when it was published for notice and comment, the 

proposed Rule 17a-8 expressly stated that it did “not specify the 

required reports and records so as to allow for any revisions the 

Treasury may adopt in the future.”59 When the SEC formally adopted 

the Rule, in its Rule 17a-8 Adopting Release, the SEC further made clear

that the Rule would “allow for any revisions the Treasury may adopt 

in the future.”60

Accordingly, we conclude that the public was afforded the

requisite notice and opportunity to comment on Rule 17a-8 and, in 

particular, its potential to require additional reporting requirements 

should the Treasury regulations specify them. 

58 Recordkeeping by Brokers & Dealers, Release No. 18073 (Aug. 31, 1981).

59 Rule 17a-8 Adopting Release, 46 Fed. Reg. at 61,455. Alpine argues 

that the SEC’s Rule 17a-8 Adopting Release also acknowledged that its role, 

with respect to the BSA, was limited to merely examination authority. That 

seems to be a mischaracterization. Rule 17a-8 Adopting Release stated that 

“most effective means of enforcing compliance” with the BSA requirements 

was through on-site “examinations” but there is no indication that SEC was 

limited to mere examination and could not enforce the BSA provisions. The 

same notice stated that the “Treasury has delegated to the Commission the 

responsibility for assuring compliance with the Currency Act and Treasury 

regulations.” 46 Fed. Reg. at 61,454. 

60 Rule 17a-8 Adopting Release, 46 Fed. Reg. at 61,454.
23 No. 19-3272

The suspicious activity recordkeeping and reporting 

requirements of Section 1023.320(a)(2), incorporated into Rule 17a-8,

were also subject to public notice-and-comment. In 2002, when it

proposed Section 1023.320(a)(2), FinCEN publicly stated that both the 

SEC and SROs would “address broker-dealer compliance” with its 

requirements, including through enforcement actions, as they had 

done with other BSA recordkeeping and reporting requirements for 

decades.61 In response to comments it received, FinCEN revised its 

proposed rule in “significant respects” and provided extensive 

guidance regarding, among other matters, the standard and scope of 

reporting.62 The publication of the SAR regulations under Section 

1023.320(a)(2) provided ample notice-and-comment opportunities in 

satisfaction of the APA’s requirements.

We reject Alpine’s argument that the SEC was required to seek 

future public comments each time FinCEN issued new BSA reporting 

requirements to avoid an “improper delegation [to Treasury] of 

rulemaking authority under the Exchange Act.” Alpine Br. 42-43.

“An agency delegates its authority when it shifts to another 

party almost the entire determination of whether a specific statutory 

61 Financial Crimes Enforcement Network; Proposed Amendment to the 

Bank Secrecy Act Regulations—Requirement of Brokers or Dealers in 

Securities to Report Suspicious Transactions, 66 Fed. Reg. 67,670 (Dec. 31, 

2001).

62 SAR Regulation Adopting Release, 67 Fed. Reg. at 44,049.
24 No. 19-3272

requirement . . . has been satisfied, or where the agency abdicates its 

final reviewing authority.”63 But Rule 17a-8 does not charge the 

Treasury with deciding which recordkeeping and reporting 

requirements would further the purposes of the Exchange Act. 

Instead, the SEC determined, through notice-and-comment 

rulemaking, that any reporting requirements that the Treasury 

imposed on broker-dealers pursuant to its independent authority 

under the BSA would be “consistent with the purposes of the 

Exchange Act and the [SEC’s] obligation to enforce the broker-dealer 

recordkeeper requirements.”64

Moreover, the SEC has not taken the position that Rule 17a-8 

obliges the SEC to automatically adopt any changes the Treasury may 

make to the BSA’s recordkeeping and reporting requirements, 

regardless of whether they are consistent with the purposes of the 

Exchange Act. Rather, the SEC has worked together with FinCEN on 

the SAR regulation, “update[d] the reference to the BSA 

implementing regulations” in 2011, and in a formal adjudication, 

reiterated that requiring broker-dealers to maintain records and file 

reports of suspicious activity is consistent with the purposes of the 

63 Fund for Animals v. Kempthorne, 538 F.3d 124, 133 (2d Cir. 2008) 

(internal citations and quotation marks omitted).

64 Rule 17a-8 Adopting Release, 46 Fed. Reg. at 61,455.
25 No. 19-3272

Exchange Act.65 Alpine has failed to demonstrate either that the SEC 

has impermissibly delegated authority to the Treasury under the 

Exchange Act, or that it has abdicated its final reviewing authority 

relating to broker-dealer recordkeeping and reporting requirements. 

Accordingly, in this case, there are no APA concerns because 

the public was fully aware of the interrelated and cohesive nature of 

the regulations of both agencies. Holding otherwise would only serve 

to waste governmental resources and hinder efficient enforcement. 

Because both Rule 17a-8 and the SAR regulation were open to 

public comment, this situation is distinguishable from United States v. 

Picciotto66 and City of Idaho Falls v. F.E.R.C.67 on which Alpine relies. 

Neither case is apposite.

In United States v. Picciotto, the D.C. Circuit held that additional 

conditions that were added to regulations governing the United 

States Park Service violated the APA, notwithstanding that the 

regulation contained an open-ended provision that had gone through 

notice and comment.68 But, unlike this case, in which the SAR 

requirement had been promulgated by the Treasury in compliance 

65 Technical Amendments to Rule 17a-8, 76 Fed. Reg. at 11,328; see also

Ronald S. Bloomfield et al., Release No. 71632, 2014 WL 768828 (Feb. 27, 

2014).

66 875 F.2d 345 (D.C. Cir. 1989).

67 629 F.3d 222 (D.C. Cir. 2011). 

68 875 F.2d at 346-47. 
26 No. 19-3272

with the APA, the additional regulatory conditions in Picciotto were 

never issued in compliance with the APA.69 

In City of Idaho Falls v. F.E.R.C, the Federal Energy Regulatory 

Commission (FERC) had previously approved a methodology, used 

by the Forest Service, for setting rental fees.70 FERC then incorporated 

a new Forest Service rental fee schedule without providing an 

opportunity for notice and comment.71 The D.C. Circuit held that 

“[b]ecause FERC previously approved and used the old Forest 

Service methodology, its implicit acceptance of the new methodology 

in the 2009 Update marked a change in its own regulations” which 

required notice-and-comment rulemaking.72 Our case differs from 

City of Idaho Falls because all changes to FinCEN reporting regulations 

are open to public comment and will be APA compliant whenever 

such changes occur, as happened with the issuance of Section

1023.320. 

In sum, we find that because: (1) the SEC made clear in its 

request for public comment that Rule 17a-8 incorporated present and 

future Treasury SAR reporting requirements, and would be modified 

accordingly; (2) FinCEN itself published its SAR reporting 

requirements for public comment; and (3) FinCEN expressly notified 

69 Id.

70 629 F.3d at 223.

71 Id. at 227-29.

72 Id. at 231.
27 No. 19-3272

the public that the SEC would continue to enforce the BSA’s reporting 

changes, Rule 17a-8 did not violate the notice-and-comment 

requirements of the APA.

IV. The District Court Did Not Err in Granting Summary 

Judgment with Respect to the SARs

The district court granted summary judgment to the SEC as to 

2,720 violations of Rule 17a-8 on the basis of certain of Alpine’s SARs 

reporting and recordkeeping practices—specifically, submitting 

SARs with deficient narratives, failing to submit SARs on depositand-sales patterns, and failing to retain support files for SARs. Alpine 

argues that the district court erred when it: (1) deferred to the SEC’s 

interpretation of FinCEN guidance; and (2) applied a “purely 

mechanical” test in finding that Alpine did not adequately comply 

with its SAR reporting requirements. Both arguments are without 

merit. 

First, there is no indication in this record that the district court 

improperly deferred to the SEC. The district court did nothing other 

than independently interpret the supporting FinCEN documentation, 

which was consistent with the SEC’s interpretation. 

The district court stated that it was relying on “instructions on 

the 2002 SAR Form, the 2012 SAR Instructions, and the SAR Narrative 

Guidance issued [by FinCEN] in 2003.”73 As relevant here, the 2002 

73 Alpine Sec. Corp., 354 F. Supp. 3d at 414.
28 No. 19-3272

SAR Form makes clear that the narrative section of the SAR “is 

critical.”74 It further provides, 

The care with which [the narrative section] is completed 

may determine whether or not the described activity and its 

possible criminal nature are clearly understood by 

investigators. Provide a clear, complete and chronological 

description . . . of the activity, including what is unusual, 

irregular or suspicious about the transaction(s), using the 

checklist below as a guide.75

The district court read the totality of the FinCEN guidance, in the 2002 

SAR Form, 2003 Narrative Guidance, and 2012 Instructions, to 

indicate that certain “red flags” may evidence SAR reporting 

violations. The “red flags” included: (1) related litigation; (2) shell 

companies and derogatory stock history; (3) stock promotion; (4) 

unverified issuers; (5) low trading volume; (6) foreign involvement; 

(7) basic customer information.76

As one example, the district court found that Alpine failed on 

multiple occasions to provide SAR information regarding related 

litigation. Specifically, Alpine “omitted information, which was 

present in Alpine’s support files for the SARs, [that] indicated that the 

74 Id. at 413 (emphasis in original); 2002 SAR Form at 3 (emphasis in 

original).

75 Alpine Sec. Corp., 354 F. Supp. 3d at 413-14 (emphasis in original).

76 Id. at 426-40.
29 No. 19-3272

SEC had sued one customer and its CEO for fraud in connection with 

asset valuations and improper allocations of expenses, that another 

customer had pleaded guilty to conspiracy related to counterfeiting, 

and that yet another customer had a history of being investigated by 

the SEC for misrepresentations.”77

Once the district court determined that such “red flags” 

triggered certain SAR obligations, it then used an objective test to 

determine whether summary judgment was warranted. We agree 

with the district court’s approach to summary judgment in this case

and reject Alpine’s argument that its own subjective belief as to what 

needed to be reported sufficed. 

Importantly, the text of 31 C.F.R. § 1023.320(a)(2) supports the 

district court’s finding that the SAR regulation imposes an objective 

test (i.e., broker-dealers shall file an SAR if it “knows, suspects, or has 

reason to suspect” that a transaction is suspicious). Alpine points to 

isolated parts of FinCEN guidance in support of its argument that a 

subjective test must be utilized.78 But, Alpine does so while ignoring 

FinCEN’s express statement that the SAR reporting provision 

requires an objective standard: 

The final rule retains the “has reason to suspect” language. 

FinCEN believes that compliance with the rule cannot be 

77 Id. at 426-27.

78 Alpine Br. 49.
30 No. 19-3272

adequately enforced without an objective standard. The 

reason-to-suspect standard means that, on the facts existing 

at the time, a reasonable broker-dealer in similar 

circumstances would have suspected the transaction was 

subject to SAR reporting. This is a flexible standard that 

adequately takes into account the differences in operating 

realities among various types of broker-dealers, and is the 

standard contained in the existing SAR rules for depository 

institutions and money services businesses.79

While subjective factors may be relevant where the enforcing agency 

shows that the broker-dealer actually “knows” or “suspects” that the 

transaction is subject to SAR reporting, the “reason to suspect” 

standard sensibly permits the use of objective “red flags” that would 

alert reasonable broker-dealers to the fact that that the transaction 

required a SAR report.80 Accordingly, the district court did not err in 

its determination that an objective analysis was proper.

We also reject Alpine’s claim that the district court’s 

examination was “purely mechanical.” The district court inspected

the allegedly deficient SARs before making its determination. In its 

100-page opinion, the district court recognized that each “SAR must, 

79 SAR Regulation Adopting Release, 67 Fed. Reg. at 44,053 (emphasis 

added). 

80 See SEC Br. 65.
31 No. 19-3272

of course, be examined individually” and, without announcing a 

mechanical or bright-line test, reviewed all of the alleged deficiencies

before concluding that, given the “sheer number of [Alpine’s] lapses

at issue in this case[,]” summary judgment was warranted.81 Indeed,

Alpine did not “contest in a large number of instances that it failed to 

include information in SAR narratives that the SAR Form itself directs 

a broker-dealer to include.”82

Alpine finally argues that the district court “ignore[d]” that 

certain assertions created genuine disputes of fact.83 We disagree. As 

noted above, in many instances, Alpine did not dispute the fact that 

it failed to include required information in SAR narratives. When 

Alpine raised properly supported factual disputes as to specific SARs,

the district court ruled in its favor. 84 But, for example, the district 

court did not err in rejecting as “vague and conclusory” Alpine’s 

assertion that it filed SARs for large deposits of low-priced securities 

even though it concluded it was not required to do so.85 Plainly, when 

Alpine’s evidence did create genuine disputes of material fact as to 

particular SARs, the district court considered it.

81 Alpine Sec. Corp., 354 F. Supp. 3d at 419, 436 (emphasis added).

82 Id. at 419.

83 Alpine Br. 69. 

84 See, e.g., Alpine Sec. Corp., 354 F. Supp. 3d at 431.

85 Id. at 423 n.44.
32 No. 19-3272

In sum, the district court did not err in granting summary 

judgment to the SEC as to Alpine’s liability on the basis of 2,720 

violations of the reporting, recordkeeping, and record retention 

requirements of Section 17(a) and Rule 17a-8. 

V. In Imposing the Civil Penalty, the District Court Did 

Not Abuse Its Discretion 

Alpine finally challenges the district court’s imposition of a $12 

million civil penalty for the 2,720 SAR violations of the reporting, 

recordkeeping, and record retention requirements of Section 17(a) 

and Rule 17a-8. The SEC requested that the district court impose a 

tier-one civil penalty of $10,000 for each SAR violation and $1,000 for 

each support-file violation, totaling $22.7 million.86 Alpine argued 

that the total penalty should fall between $80,000 and $720,000.87

Section 21(d) of the 1934 Exchange Act authorizes monetary 

penalties for statutory violations.88 In assessing a penalty, a court may 

impose “a first-tier penalty . . . for any violation,” regardless of mental 

state or other factors.89 Within the maximum penalty authorized by 

the statute, the “actual amount of the penalty” is left “up to the 

discretion of the district court.” Because the amount of the penalty is 

86 United States Sec. & Exch. Comm’n v. Alpine Sec. Corp., 413 F. Supp. 3d 

235, 245 (S.D.N.Y. 2019).

87 Id. at 248.

88 See 15 U.S.C. § 77t(d); 15 U.S.C. § 78u(d)(3).

89 SEC v. Ramilovic, 738 F.3d 14, 38 (2d Cir. 2013).
33 No. 19-3272

left to the sound discretion of the district court, we review an award

of penalties for abuse of discretion.90

Here, we conclude that the district court did not abuse its 

discretion in imposing the $12 million civil penalty. The breadth and 

duration of Alpine’s deficient reporting and recordkeeping activity 

supports the district court’s imposition of the civil penalty. The 

district court did recognize that Alpine “took some steps to improve 

. . . compliance.”91 But as the district court noted, “[a]lthough the 

extraordinary scale of Alpine’s violations decreased over the years, 

the violations did not cease.”92 The district court found that the “scale 

and duration” of the violations “undermine[d] Alpine’s assertion that 

its conduct was, at worst, merely negligent.”93

Alpine’s arguments to the contrary are without merit. Insofar 

as Alpine’s challenge to the civil penalty is based on the premise that 

the district court erroneously concluded that Alpine acted with 

“scienter,” the district court expressly noted that “a finding of scienter 

is not required to impose the tier-one penalty sought by the SEC.”94

Nor does the “sheer, unprecedented” amount of the penalty itself rise 

90 Id.

91 Sp. App’x 253.

92 Sp. App’x 256.

93 Sp. App’x 253. 

94 Sp. App’x 252-53 (emphasis added).
34 No. 19-3272

to the level of abuse of discretion.95 The total amount was driven by 

the “unprecedented number of violations” of Section 17(a) and Rule 

17a-8 committed by Alpine.96 Alpine’s argument that the district 

court disregarded evidence of the firm’s financial condition is 

similarly unavailing. The district court expressly stated that Alpine’s 

financial records indicated that it would have had the ability to pay 

the $22.7 million penalty requested by the SEC, but it still imposed a 

penalty that was “substantially less” due to Alpine’s financial 

condition.97

All in all, the district court acted within its discretion to impose 

the $12 million civil penalty in light of the particular facts and 

circumstances of this case, namely, Alpine’s “systematic and 

widespread evasion of the law.”98

We have considered Alpine’s remaining arguments on appeal 

and conclude that they are without merit.

95 Alpine Br. 81. Notably, Alpine itself does not argue that the individual 

$5,000 penalty for failing to file an SAR or filing a deficient SAR, or $1,000 

penalty for failing to produce a SAR support file upon request, are 

unreasonable.

96 See SEC Br. 100. Alpine’s argument that the penalty is excessive in 

light of the BSA’s comparable penalty provisions is of no moment. As 

discussed, the SEC brought this enforcement action pursuant to Section 17 

of the Exchange Act.

97 Sp. App’x 265. 

98 Sp. App’x 259-60.
35 No. 19-3272

CONCLUSION

For the reasons stated above, the judgment of the district court

is AFFIRMED.