Opinion ID: 781344
Heading Depth: 3
Heading Rank: 2

Heading: Application of section 21(f) — Statutory Exceptions

Text: 28 Vittor argues that if this court determines that the SEC's affirmance of the NASD's sanctions was an order within the meaning of section 21(e)(1), then we must decide whether the SEC's action is subject to the limits of section 21(f). That provision permits the SEC to initiate an action against violators of the NASD rules only if the NASD is unable or unwilling to do so, or an SEC action is otherwise necessary or appropriate for the public interest or for the protection of investors. 15 U.S.C. § 78u(f). The district court concluded that section 21(f) did not apply in this case. Vittor contends that the district court's analysis is contrary to well-established principles of statutory construction. 29 We agree with the district court and conclude that section 21(f) has no application here. This section applies only when the SEC initiates its own enforcement action... for violation of, or to command compliance with, the rules of a self-regulatory organization. 15 U.S.C. § 78u(f). In the present case, the SEC did not bring its own action against Vittor for alleged violations of NASD rules. Instead, pursuant to section 21(e)(1), the SEC made application to the district court for an order to compel compliance with an SEC order sustaining an NASD disciplinary action. Although Vittor contends that the district court's characterization of section 21(f) is overly technical, the SEC asserts that the plain language of the statute makes it clear that section 21(f) limits only a part of section 21(e). 30 Section 21(e) distinguishes between (i) SEC applications for orders commanding compliance with SEC orders and (ii) SEC actions to compel compliance with the rules of a national securities exchange or registered securities association. 15 U.S.C. § 78u(e). Section 21(f) limits only original SEC actions to enforce compliance with SRO rules. The limitation in section 21(f) clearly refers back only to that part of section 21(e) that concerns the rules of a national securities exchange or registered securities association, that is, the rules of an SRO. By permitting the SRO's to bring original actions to enforce their rules, section 21(f) promotes efficiency in preserving the SEC's resources. Otto v. SEC, 253 F.3d 960, 964 (7th Cir.), cert. denied, 534 U.S. 1021, 122 S.Ct. 548, 151 L.Ed.2d 425 (2001) (stating that because the SEC lacks the resources to police the entire securities industry, it relies on participants in the markets to govern themselves). Accordingly, we hold that section 21(f) does not apply to SEC orders sustaining NASD fines and restitution orders. 2 31 For the foregoing reasons, we affirm the district court's order commanding Vittor to comply with the SEC's decision affirming the NASD's sanctions against him. 32 AFFIRMED.