NOT PRECEDENTIAL

UNITED STATES CO UR T OF APPEALS

FOR T HE THIRD CIRCUIT

___________

No . 1 9

- 1 9 9 7

__________

KEITH P. SEQUEIRA

,

P e t i t i o n e r

v.

S E C U R I T I E S & EXCHANGE C O M M I S S I O N

________ ____________________________

On Pe tition for Review of an O rder of the

S e c u r i t i e s a n d E x c h a n g e C o m m i s s i o n

(Agency No. SEC

- 1:3

- l 7734r )

_______ _________________ _ ___________

Submitted Pursuant to Third Circuit LAR 34.1(a)

M a y 1 1

, 2 0 2 0

Before: A M B R O

, G R E E N A W A Y

, J R

. a n d P O R T E R

, Circuit Judges

(Opi nion fil e d June 11, 2020 )

_____ ______

OPINION *

___________

PER CURIAM

Ke i t h P

. S e q u e i r a

, p r o c e e d i n g p r o s e

, petitions for a review of an order issued by

th e Securities and Exchange Commission ( SEC o r C o m m i s s i o n ) upholding t h e F i n a n c i a l

* Thi s disposition i s not an opinion of the full C ourt a nd pursuant to I.O.P. 5.7 does not

constitute binding preceden t.2

I n d u s t r y R e g u l a t o r y A u t h o r i t y ’ s ( F I N R A ) d e c i s i o n t o i n d e f i n i t e l y s u s p e n d h i m f

r o m

a s s o c i a t i n g w i t h a n y m e m b e r f i r m

. F I N R A i m

p o s e d t h e s u s p e n s i o n beca use S e q u e i r a

f a i l e d t o p a y a n a w a r d t o W e l l s F a r g o A d v i s o r s t h a t w a s e n t e r e d b y a F I N R A a r b i t r a t i o n

p a n e l

. F o r t h e f

o l l o w i n g r e a s o n s

, w e w i l l a f f i r m

.

S e q u e i r a w o r k e d f

o r W e l l s F a r g o a s a r e g i s t e r e d b r o k e r

. I n F e b r u a r y 2 0 1 0

, W e l l s

F a r g o l o a n e d S e q u e i r a o v e r $ 4 7

, 0 0 0 pursuant to a “ Client Servi ce and Loyalty Award

Level One Agreement ” and a promissory note. Under the terms of those doc uments,

S e queira w as obli gated to repay the loan i f he was termina ted. Both the Level One

Agreement and t h e pr om issory note contained arbi tration clauses stating that “any action

institute d as a result of any controversy arising out of [the L e v e l O n e A g r e e m e n t o r t h e

note ]

, or

... [ t h e ] interpretation thereof shall be bro ught before the arbitration facility of

[FINR A] to the exclusion of all o thers.” W e l l s F a r g o t e r m i n a t e d S e q u e i r a ’ s e m p l o y m e n t

i n A u g u s t 2 0 1 0

. S e q u e i r a failed to r e p a y t h e l o a n

, a n d W e l l s F a r g o c o m m e n c e d a

F I N R A a r b i t r a t i o n a c t i o n a g a i n s t h i m

. A F I N R A a r b i t r a t i o n panel awarded Wells Fargo

compen sat or y damag es, plus in terest, as well as attorneys’ fees

. I n t h e A u g u s t 5

, 2 0 1 4

,

l e t t e r n o t i f

y i n g S e q u e i r a o f the d e c i s i o n

, F I N R A e x p l a i n e d t h a t i t c o u l d s u s p e n d h i s

r e g i s t r a t i o n i f h e f

a i l e d t o c o m p l y with t h e a w a r d

.

S e q u e i r a d i d n o t p a y t h e a w a r d

. I n s t e a d

, h e f i l e d i n a c t i o n i n t h e S u p e r i o r C o u r t o f

N e w J e r s e y s e e k i n g t o v a c a t e t h e a r b i t r a t i o n a war d

. B u t b e c a u s e h e f a i l e d t o p r o p e r l y

s e r v e t h e s u m m o n s a n d c o m p l a i n t o n t h e d e f e n d a n t s

, t h e s t a t e c o u r t d i s m i s s e d t h e a c t i o n3

w i t h o u t p r e

j u d i c e f o r l a c k o f p r o s e c u t i o n o n M a r c h 2 7

, 2 0 1 5

. T h e r e a f t e r

, S e q u e i r a

u n s u c c e s s f

u l l y s o u g h t t o h a v e t h e c a s e r e i n s t a t e d

. 1

M e a n w h i l e

, o n J u l y 2 7

, 2 0 1 6

, W e l l s F a r g o n o t i f i e d F I N R A t h a t S e q u e i r a h a d n o t

c o m p l i e d w i t h t h e a w a r d

. S h o r t l y t h e r e a f t e r

, FINRA’s Office of Dispute Re solutio n t o l d

Sequeira that, effective August 19, 2016, FINRA would suspend Sequeira from

associa ting with any FINRA member firm unles s he d e m o n s t r a t e d t hat he h ad ( 1 ) paid the

aw ard; ( 2 ) entered into a se ttlement agreement concerning the award; ( 3 ) time ly filed an

action to vacate or modify the award and that such motion had not been denied; or ( 4 )

f iled for bankruptcy and tha t t h e a w a r d h a d n o t b e e n d e e m e d n o n

- d i s c h a r g e a b l e

. I n

r e s p o n s e

, S e q u e i r a a r g u e d t h a t h e s a t i s f i e d c o n d i t i o n ( 3 ) b e c a u s e h i s a c t i o n i n t h e

S u p e r i o r C o u r t h a d b e e n d e n i e d w i t h o u t p r e j u d i c e

, r a t h e r t h a n o n t h e m e r i t s

. A F INRA

h e a r i n g o f

f i c e r i s s u e d a n e x p e d i t e d w r i t t e n decisi on

, r e j e c t i n g S e q u e i r a ’ s a r g u m e n t a n d

o r d e r i n g t h a t S e q u e i r a b e s u s p e n d e d f r o m a s s o c i a t i n g w i t h a n y m e m b e r f i r m s u n t i l h e

paid the award in full, settled the matter, or fi led a bankruptcy p etition

. S e q u e i r a s o u g h t

1 I n p a r t i c u l a r

, Sequeira m o v e d f o r a n e x t e n s i o n o f t i m e t o f i l e a n d s e r v e a n a m e n d e d

c o m p l a i n t

, b u t t he S u p e r i o r C o u r t d e n i e d h i s r e q u e s t

. L a t e r

, t h e S u p e r i o r C o u r t d e n i e d

S e q u e i r a ’ s m o t i o n t o r e c o n s i d e r t h e d e n i a l o f t h e m o t i o n f

o r a n e x t e n s i o n o f t i m e

, n o t i n g

t h a t t h e c a s e “ r e m a i n s c l o s e d

. ” U n d e t e r r e d

, S e q u e i r a a t t e m p t e d t o r e i n s t a t e t h e a c t i o n b y

s e r v i n g h i s o r i g i n a l c o m p l a i n t o n W e l l s F a r g o

. O n S e p t e m b e r 3 0

, 2 0 1 6

, t h e S u p e r i o r

C o u r t c o n c l u d e d t h a t S e q u e i r a f a i l e d t o provide either good caus e o r e xceptional

circumstances for his failure to p rosecute the action

, a n d a g a i n s t a t e d t h a t t h e c a s e

“ r e m a i n s c l o s e d

. ” T h e S u p e r i o r C o u r t ’ s o r d e r s w e r e a f f i r m e d

. S e e S e q u e i r a v

. W e l l s

F a r g o A d v i s o r s

, L L C

, D o c k e t N o

. A

- 1995

- 16T1

, 2 0 1 8 W L 3 0 1 8 8 8 2 ( N

. J

. S u p e r

. C t

. , A p p

. D i v

. , J u n e 1 8

, 2 0 1 8 )

.4

r e v i e w o f t h a t d e c i s i o n b y t h e C o m m i s s i o n

. S e e S e c u r i t i e s E x c h a n g e A c t S e c t i o n 1 9 ( d )

[ 1 5 U

. S

. C

. § 7 8 s ( d ) ]

.

T h e C o m m i s s i o n c o n c l u d e d t h a t the s p e c i f i c grounds o n w h i c h F I N R A based

Sequeira’s suspension exist e d in fact, that t h e s u s p e n s i o n was in accordance with

F I N R A ’ s rules, and that FINRA h a d appli e d it s rule s in a manner consis tent with the

S e c u r i t i e s E x c h a n g e A c t

. 2 S e e S e c u r i t i e s E x c h a n g e A c t S e c t i o n 1 9 ( f ) [ 15 U.S.C. 78s(f) ]

.

Accordingly, the Commission dism iss e d Sequeira’ s application for review

. S e e I n re

Application of Keith Patrick S e queira fo r Revie w o f Act ion Taken by F INRA

, E x c h a n g e

A c t Release No. 85231

, 2019 WL 995508

, a t * 9

- 1 0 ( S E C Mar. 1 , 2 019)

. S e q u e i r a

p e t i t i o n s f

o r review o f t h e C o m m i s s i o n ’ s o r d e r

.

We have jurisdiction to review a final order of the Commission under Secti on

25(a) o f the Se cu ritie s Exchange Act, 15 U.S.C. § 78y(a)(1 ). We review th e

C o m m i s s i o n ’ s decision to uphold sa nctions for abuse of discretion and overturn the

sanction only if “unwar rant ed in law or

... without justification in fact

... . ” Butz v.

Glover Li vestock C o mm ’ n Co.

, Inc.

, 411 U.S. 182, 185

- 86 (197 3) ( c i t a t i on a n d int ernal

quotation marks omitted)

. An abus e of disc retion occurs where (1) a sanction is

“palpably di sproportionate to t he violation,” or (2) the Commission “fail[s] to support the

2 In an earli er decision, the Comm i ssion had remanded the m at ter t o a he aring off icer for

clari fication whether t he sanction imposed was dis c iplinary or n on

- disci pli nary. T he type

of sanction imposed affects the standard of review applied by the Commission.

Ther eafte r, a FINRA he aring officer issued a second e xp ed ited de cisio n clarifying t hat

the s uspen sion was n ot in tended to be disciplin ary in nature, but inste ad was aimed at5

sancti on c hose n wi th a m ea ningf ul statement of find ings and c onclusions, a nd the reasons

or basis therefor, on all th e materia l issues of fact, law, or discretion presented on the

record.” McCar thy v

. S E C , 406 F.3d 1 8 8 188 ( 2 d C i r

. 2 0 0 5 ) (citation omitted) (int ern a l

qu ot at ion ma rk s omi tted).

A s n o t e d a b o v e

, a p a r t y w h o d o e s n ot c o m p l y with a n a w a r d i s s u e d b y F I N R A

may a vo id susp ension by d e m o n s t r a t i n g

, i n t e r a l i a

, that h e has f iled a timely motio n to

vacate or modify the award and the motion has not been denied

. S e e FI NR A Regula to ry

No tice 10

- 31, 2010 WL 2712571, a t *2 ( e f f e c t i v e J u l y 2

, 2 0 1 0 )

. S e q u e i r a c o n t e n d s t h a t

t h i s d e f e n s e s h o u l d h a v e s h i e l d e d h i m f r o m s u s p e n s i o n because

, a l t h o u g h t h e New Jerse y

S u p e r i o r C o u r t dismissed his a c t i o n to vacate the award

, i t d i d s o wi th out pr ej udice

,

r a t h e r t h a n “ on the merits.” A p p e l l a n t ’s B r.

, 35. T h e C o m m i s s i o n p r o p e r l y r e j e c t e d t h i s

a r g u m e n t

. A s t h e C o m m i s s i o n e x p l a i n e d

, FINRA r u l e s “ do not require that a mot ion to

vacate an arbitration award be denied on the merits. Nor do t he y distin gu ish r equ ests to

vacate arbit ration awards that are denied ‘w ith prejudice ’ f rom those that ar e denie d

‘without prejudice. ’” S e e S e q u e i r a

, 2019 WL 995508

, a t * 5 ; s e e a l s o FINR A Manual,

By

- Laws of the Corporation, Art. VI, Sec. 3(b) ( s t a t i n g t h a t FI NRA ma y suspe nd any

person who fails to comply with an arb itration a ward “ where a ti mely motion to va cate or

modify [ a n ] award

... has been denied ” )

. Moreover, the possibility

, h o w e v e r r e m o t e

, that

“ i nfl uenc [ing] Seq ueira to comply with the arb itration awar d. ”6

Sequ e ira ’s dismissed s tate court action might b e reinst at ed does n o t c h a n g e t h e f a c t t h a t

h i s a t t e m p t t o v a c a t e the a w a r d h a d b e e n d e n i e d

.

S e q u e i r a ’ s r e m a i n i n g c l a i m s a l s o l a c k m e r i t

. F i r s t

, S e q u e i r a a r g u e s that F I N R A

l a c k e d j u r i s d i c t i o n t o c o m p e l h i m t o a r b i t r a t e h i s d i s p u t e w i t h W e l l s F a r g o b e c a u s e t h e

a r b i t r a t i o n c l a u s e s d i d n o t n o t i f y h i m t h a t h e w a s w a i v i n g h i s r i g h t t o s u e

. T h e

C o m m i s s i o n c o r r e c t l y r e

j e c t e d t h i s a r g u m e n t b e c a u s e a n a r b i t r a t i o n a w a r d c a n n o t b e

c o l l a t e r a l l y a t t a c k e d b y a r e s p o n d e n t i n a F I N R A e x p e d i t e d p r o c e e d i n g

. T h e

C o m m i s s i o n h a d j u r i s d i c t i o n t o r e v i e w o n l y F I N R A ’ s d e c i s i o n t o s u s p e n d S e q u e i r a b a s e d

o n h i s f a i l u r e t o p a y t h e a w a r d

. A n y c h a l l e n g e t o t h e a w a r d i t s e l f

, i n c l u d i n g a c l a i m t h a t

t h e a r b i t r a t i o n p a n e l l a c k e d jurisdiction

, s h o u l d h a v e b e e n brought “ i n a c o u r t o f

c o m p e t e n t juri sd ict i on

. ” S ee FINR A Rule 13904(j) ; Robert Tretiak, Exchange Act

Release No. 47534, 56 S.E.C. 209, 200 3 WL 1339 182, at *5 ( S E C Mar. 19, 2003) (“As

we have stated o n numerous occas i ons, a n applicant may not collaterally attack an

arbitration award ... in a d is cip l in ary p roceedi ng for failure to pay that award.”).

S e c o n d

, h e a s s e r t s t h a t F I N R A ’ s i n i t i a l d e c i s i o n c o n t a i n e d l i b e l o u s s t a t e m e n t s

.

T h e C o m m i s s i o n p r o p e r l y c o n c l u d e d t h a t t h e l i b e l a l l e g a t i o n s w e r e “ o u t s i d e t h e s c o p e o f

t h i s p r o c e e d i n g

. ” S e q u e i r a

, 20 19 W L 99550 8

, a t * 8

. T h e a l l e g e d l y l i b e l o u s s t a t e m e n t s

w e r e m a d e i n F I N R A ’ s i n i t i a l d e c i s i o n

, r a t h e r t h a n i n i t s d e c i s i o n f

o l l o w i n g t h e

C o m m i s s i o n ’ s r e m a n d

. S e e n o t e 2

, s u p r a

. T h u s

, t h o s e s t a t e m e n t s w e r e n o t p a r t o f t h e

F I N R A d e c i s i o n t h a t t h e C o m m i s s i o n r e v i e w e d

. I n a d d i t i o n

, t h e s t a t e m e n t s h a d n o7

b e a r i n g o n whether F I N R A ’ s s u s p e n s i o n m e t t h e a p p l i c a b l e s t a n d a r d s u n d e r S e c u r i t i e s

E x c h a n g e A c t S e c t i o n 1 9 ( f )

.

F i n a l l y

, S e q u e i r a argues t h a t t h e r e i s n o b a s i s f o r h i s s u s p e n s i o n b e c a u s e W e l l s

F a r g o w r o t e o f

f t h e v a l u e o f t h e a r b i t r a t i o n a w a r d i n i t s 2 0 1 8 t a x f i l i n g s

. S e q u e i r a d i d n o t

a s s e r t that c l a i m d u r i n g t h e a g e n c y p r o c e e d i n g s

. T h e r e f o r e

, h e i s b a r r e d f

r o m r a i s i n g i t

f o r the f i r s t t i m e h e r e

. See S e c u r i t i e s E x c h a n g e A c t S e c t i o n 2 5 ( c ) ( 1 ) [ 15 U.S.C.

§ 7 8y( c )( 1) ] ( “No objection to an order or rule of the Commission, for which review is

sought under this s ection, may be considered by the court unless it was urged before the

Commis sion or there was reasonable ground for failure to do so.”).

F o r t h e f o r e g o i n g r e a s o n s

, w e c o n c l u d e t h a t S e q u e i r a ’ s a r g u m e n t s l a c k m e r i t a n d

t h a t t h e C o m m i s s i o n d i d n o t abuse i t s discre tion i n dismiss i n g Sequeira’s application for

review

. A c c o r d i n g l y

, w e w i l l d e n y S e q u e i r a ’ s p e t i t i o n f o r r e v i e w o f t h e C o m m i s s i o n ’ s

d e c i s i o n

. S e q u e i r a ’ s m o t i o n t o s u p p l e m e n t t h e r e c o r d i s d e n i e d

.