United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 1, 2020 Decided February 26, 2021

No. 20-1092

KIMBERLY SPRINGSTEEN-ABBOTT,

PETITIONER

v.

SECURITIES AND EXCHANGE COMMISSION,

RESPONDENT

On Petition for Review of an Order 

of the Securities & Exchange Commission

Dominic E. Draye argued the cause for petitioner. With 

him on the briefs was Steven M. Felsenstein.

Daniel Staroselsky, Senior Litigation Counsel, 

Securities and Exchange Commission, argued the cause for 

respondent. With him on the brief was John W. Avery, Deputy 

Solicitor.

Before: MILLETT and RAO, Circuit Judges, and 

SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge 

SILBERMAN.
2

SILBERMAN, Senior Circuit Judge: The Financial 

Institutions Regulatory Authority (“FINRA”) determined that 

Petitioner Kimberly Springsteen-Abbott misused investor 

funds and tried to cover it up. FINRA therefore barred 

Petitioner from the securities industry, fined her, and ordered 

her to disgorge certain misused expenses. The SEC affirmed 

the industry bar and disgorgement order. Petitioner now 

challenges the SEC’s decision, but her constitutional arguments 

are forfeited, and the others are meritless. 

I

This appeal arises from Springsteen-Abbot’s 

mismanagement of two related businesses, Commonwealth

Capital and Commonwealth Securities. Commonwealth 

Capital funds equipment leases and then bundles the leases into 

investment funds. Commonwealth Securities (a subsidiary of 

Commonwealth Capital) manages those funds and sells their

securities to investors through a network of retail brokerdealers. Petitioner is the sole shareholder of Commonwealth 

Capital. She also served as the Chair, CEO, and Chief 

Compliance Officer of both companies. 

Petitioner charged both her business and personal 

expenses to a single American Express account issued to 

Commonwealth Capital. Under what Springsteen-Abbott 

admits was an “outdated” accounting system, Petitioner Br. 5,

Petitioner had the sole responsibility for later determining 

whether the charges should be allocated to the investor funds, 

her businesses, or (if personal expenses) herself. FINRA 

received tips that expenses were being improperly allocated at 

Petitioner’s businesses, and it initiated an investigation. 

FINRA alleged that Petitioner improperly assigned 1,840 

charges to investor funds amounting to $208,954.44. 

According to FINRA’s Enforcement Department, this misuse 

violated FINRA Rule 2010, which requires FINRA members 

and associated persons (like Petitioner) to “observe high 
3

standards of commercial honor and just and equitable 

principles of trade.” FINRA’s National Adjudicatory Council

agreed, concluding that the evidence demonstrated Petitioner’s 

“purposeful pattern and practice of improperly allocating 

expenses to the Funds.” J.A. 7. FINRA based its conclusion 

on specific proof offered for 109 of the expenses as well as an 

unquantified number of control person expenses.

1

 As a result, 

FINRA barred Petitioner from the securities industry, imposed 

a fine of $50,000, and ordered disgorgement of $36,225.85 

based on 84 of the specifically proven charges. Petitioner 

appealed FINRA’s decision to the SEC. See 15 U.S.C. 

§ 78s(d)(2).

The SEC first sustained the industry bar. Reviewing the

FINRA record, the SEC agreed that, in violation of FINRA

Rule 2010, Springsteen-Abbott

routinely misallocate[ed] personal expenses, 

control person expenses, and expenses of other 

businesses to the Funds. These were not isolated 

oversights. [] Springsteen-Abbott’s use of the 

[Commonwealth Capital] American Express 

card for personal charges . . . allowed her to 

conceal her misconduct from oversight for years. 

Springsteen-Abbott demonstrated the extent of 

1 Control person expenses—essentially the expenses of 

individuals in senior or executive roles—were prohibited from being 

charged to the funds by the offering documents. J.A. 2. 

We also note that FINRA reached this conclusion after a 

remand from the SEC. Following an initial decision of the National 

Adjudicatory Council, the SEC was “unable to discharge [its] review 

function because [FINRA’s] decision [was] unclear regarding what 

conduct it found to violate FINRA Rule 2010.” J.A. 6 (citation 

omitted). Accordingly, the SEC remanded for the Adjudicatory 

Council to “clarify the basis on which it [was] upholding liability.” 

J.A. 6 (citation omitted).
4

her bad faith when she provided false business 

justifications for numerous expenses to both 

Enforcement and the Hearing Panel despite 

documentary evidence that contradicted her 

explanations.

J.A. 14.

This misconduct, the Commission explained, justified 

barring Petitioner from the securities industry. In the SEC’s 

view, were Petitioner allowed to associate with a FINRA

member firm, she “would present a risk to the integrity of the 

markets and to investors.” J.A. 19. Springsteen-Abbott, the 

Commission noted, unjustifiably enriched herself to the harm 

of fund investors, and then provided false information in an 

attempt to justify her expenses. And since the securities 

industry “presents many opportunities for abuse and 

overreaching and depends very heavily upon the integrity of its 

participants,” removing Petitioner from the industry is 

warranted to “prevent[] her from harming additional investors.” 

J.A. 19 (citations omitted).

The Commission next turned its attention to the 

disgorgement order and fine. It found that the amount of the 

disgorgement order reasonably approximated Petitioner’s illgotten gains, corresponding to 84 of the misallocated charges. 

It therefore affirmed the disgorgement order. Yet, in light of 

the other sanctions, the SEC concluded that the fine was 

excessive and set it aside. Under the then-existing FINRA 

Sanction Guidelines, the SEC explained that FINRA should 

generally not impose a fine in cases involving the “improper 

use of funds” where the Petitioner “is barred and [FINRA] has 

ordered disgorgement.” J.A. 22–23 (citing FINRA Sanction 

Guidelines at 10 (Mar. 2015 ed.)) (cleaned up).

Springsteen-Abbott then filed this petition challenging 

the SEC’s order. See 15 U.S.C. § 78y(a)(1).
5

II

Petitioner advances three arguments. First, starting from 

the (contested) premise that FINRA is a state actor,

Springsteen-Abbott asserts its adjudication violated the 

Appointments Clause as well as the Constitution’s Due Process 

guarantee. Second, Petitioner argues that her lifetime bar is 

impermissibly punitive. Then, Petitioner argues that the 

disgorgement of continuing education expenses for her 

employees was erroneous. 

Petitioner’s ambitious constitutional arguments are futile 

for a simple reason: Congress has prohibited us from 

considering issues not raised before the SEC. As Respondent 

rightly maintains, we may only entertain objections “urged 

before the Commission” unless “there was reasonable ground 

for failure to do so.” 15 U.S.C. § 78y(c)(1). Since SpringsteenAbbott failed to raise her constitutional challenges before the 

Commission, we may not consider them unless her failure was 

reasonable.

In reply, Petitioner disputes the premise, asserting that she 

actually raised her Due Process arguments below by

consistently “beg[ging] for due process” and making “many 

pleas for constitutional adjudication.” Reply Br. 5–6. But this 

is insufficient; the Petitioner must raise the substance of her

argument below. See N.Y. Rehab. Care Mgmt., LLC v. NLRB, 

506 F.3d 1070, 1076 (D.C. Cir. 2007) (“It is not enough merely 

to mention a possible argument in the most skeletal way.”). 

Petitioner’s Due Process arguments focus on supposed 

punishment for unproven allegations and inaccurate 

allegations. But before the SEC, the Petitioner raised only three 

issues: (1) The broker-dealer expense items were proper under 

the business judgment rule; (2) The finding that she acted 

unethically and in bad faith was clearly erroneous; and (3) The 

sanctions were erroneous because FINRA Rule 2010 did not 

apply, and it applied its sanctions guidance incorrectly. 
6

Petitioner therefore failed to previously raise any argument 

akin to the Due Process concerns she now presses.

2

There may have been a good argument that § 78y(c)(1) 

does not apply to constitutional challenges to a statute—i.e., the 

Petitioner’s Appointments Clause argument—or that there was 

“reasonable ground” for the Petitioner not to urge such a 

challenge before the Commission. After all, “regulatory 

agencies are not free to declare an act of Congress 

unconstitutional.” Meredith Corp. v. FCC, 809 F.2d 863, 872

(D.C. Cir. 1987) (citing Johnson v. Robison, 415 U.S. 361, 368 

(1974)).

But this argument is precluded by our opinion in Jarkesy 

v. SEC, 803 F.3d 9 (D.C. Cir. 2015). There, we confronted the 

question of whether the Petitioner was required to urge a 

constitutional non-delegation challenge to the statutory scheme 

before the Commission. Applying § 78y(c)(1), we recognized 

that “adjudication of the constitutionality of congressional 

enactments has generally been thought beyond the jurisdiction 

of administrative agencies.” Id. at 18 (quoting Thunder Basin 

Coal Co. v. Reich, 510 U.S. 200, 215 (1994)). Nevertheless, 

2 At oral argument, we repeatedly pressed Petitioner’s 

counsel further on this question, asking him to direct the Court to 

where the Due Process arguments were made before the SEC. Oral 

Arg. at 2:04–7:55 (Dec. 1, 2020). Counsel first directed us to J.A. 73, 

80, and 82, but none of these pages are even part of the argument 

section of Petitioner’s brief to the SEC. See Am. Wildlands v. 

Kempthorne, 530 F.3d 991, 1001 (D.C. Cir. 2008) (laying the factual 

foundation for an argument is generally insufficient to avoid 

forfeiture). Nor do we understand these pages to raise the substance 

of Petitioner’s Due Process arguments. Counsel then directed us to 

J.A. 247, but that page is a notice of appeal, not the substance of an 

argument made to the SEC. Counsel finally directed us to J.A. 203—

actually an argument made to the SEC—but there, Petitioner simply 

argued that FINRA applied the wrong burden of proof. This 

argument is unrelated to the Due Process contentions before us. 
7

we explained that, under § 78y(c)(1), “so long as a court can 

eventually pass upon the challenge, limits on an agency’s own 

ability to make definitive pronouncements about a statute’s 

constitutionality do not preclude requiring the challenge to go 

through the administrative route.” Id. (quoting Elgin v. Dep’t 

of Treasury, 567 U.S. 1, 17–18 (2012)). Thus, SpringsteenAbbott was required to exhaust her constitutional claims before 

the Commission. She has, moreover, not provided any 

reasonable grounds that would excuse her failure to do so. A 

constitutional argument does not categorically qualify as a 

“reasonable ground.” See Stoiber v. SEC, 161 F.3d 745, 754 

(D.C. Cir. 1998). Nor has there been an intervening change in 

law that might have excused her failure to press these

contentions below. Id.

Our opinion in Saad v. SEC, 980 F.3d 103 (D.C. Cir. 

2020) (“Saad III”)—issued after briefing but before oral 

argument in this case—decides the question of whether the 

Petitioner’s lifetime bar is impermissibly punitive. FINRA is 

generally prohibited from imposing “excessive or oppressive” 

penalties, which we have held limits FINRA to remedial 

sanctions. 15 U.S.C. § 78s(e)(2); see, e.g., Siegel v. SEC, 592 

F.3d 147, 157 (D.C. Cir. 2010). And in Saad III, we held that, 

if imposed to “protect the public,” an industry bar is 

“remedial.” 980 F.3d at 107–08. The Petitioner’s argument—

focused on the applicability of Kokesh v. SEC, 137 S. Ct. 1635 

(2017)—was squarely rejected in Saad III. The SEC’s 

remedial justification, previously described, finds adequate 

support in the record.

Springsteen-Abbott next asserts that continuing education 

expenses misallocated to the funds—rather than to her 

companies—were not “net profit,” and thus not appropriate for

remedial disgorgement after Liu v. SEC, 140 S. Ct. 1936 
8

(2020). We disagree.3 In Liu, the Supreme Court held that 

equitable disgorgement is limited to the benefit to the 

wrongdoer, or in other words, “the gains ‘made upon any 

business or investment, when both the receipts and payments 

are taken into the account.’” Id. at 1939 (quoting Providence 

Rubber Co. v. Goodyear, 76 U.S. 788, 804 (1869)). Yet the

Court also acknowledged that so-called “expenses” may be 

“wrongful gains ‘under another name.’” Id. at 1950 (quoting 

Goodyear, 76 U.S. at 803). Here, by paying for continuingeducation expenses out of the funds, rather than her whollyowned business, Petitioner enriched herself by the amount of 

the savings. After all, as Petitioner testified, “money that’s out 

of Commonwealth’s pocket” is “[o]ut of my pocket” since she 

is the sole shareholder. J.A. 22, 756.

In reply, Springsteen-Abbott challenges whether the 

continuing education expenses were improper charges in the 

first place. She argues that “there is no textual argument that 

[the fund documents] prohibit reimbursement for employees’ 

compliance education,” leaving “a wide berth” for her 

“business judgment.” Reply Br. 22–23. Thus, the SEC’s 

approval of the disgorgement order was arbitrary and 

capricious. But it was incumbent on the Petitioner to make this 

point in the argument section of her opening brief. See Citizens 

Ass’n of Georgetown v. FAA, 896 F.3d 425, 434 (D.C. Cir. 

2018) (Arguments not made until reply, even if the factual 

foundation is laid in the opening brief, are forfeited). So we, 

again, do not consider it.

* * *

It’s rather puzzling that so many cases of alleged 

forfeiture of constitutional arguments before an agency have 

3 We assume, arguendo, that remedial disgorgement is 

subject to the same limitations as equitable disgorgement that were 

described in Liu. 
9

arisen recently all across the country. See, e.g., Gonnella v. 

SEC, 954 F.3d 536, 543–46 (2d Cir. 2020); Malouf v. SEC, 933 

F.3d 1248, 1255–58 (10th Cir. 2019). These cases cause 

needless disputes at the threshold of judicial review of agency 

action. The “specialized bar” should take care to either stay up 

to date on broad appellate legal trends or consult those who do. 

See Laurence H. Silberman, From the Bench: Plain Talk on 

Appellate Advocacy, 20 LITIGATION 3 (Spring 1994).

The petition is dismissed in part and denied in part.

So ordered.