Opinion ID: 783758
Heading Depth: 2
Heading Rank: 4

Heading: The cease and desist order and Ponce's permanent bar

Text: 97 Lastly, Ponce contests the propriety of the permanent bar that the SEC imposed on him, as well as the cease and desist order that it issued against him. We uphold both sanctions, having already upheld the SEC's underlying factual findings that form the basis of the sanctions. 98 We review the SEC's imposition of sanctions for an abuse of discretion. Sorrell, 679 F.2d at 1327. Moreover, our circuit has stated that [b]ecause `the relation of remedy to policy is peculiarly a matter for administrative competence,' we will not disturb SEC sanctions unless they are unwarranted in law or without justification in fact. Hinkle Northwest, Inc. v. SEC, 641 F.2d 1304, 1310 (9th Cir.1981) (citation omitted); see also Vernazza v. SEC, 327 F.3d 851, 862 (9th Cir.2003) (We will find a Commission sanction to be an abuse of discretion only if we find that such a sanction is unreasonable or that it is unwarranted in law or without justification in fact.) (internal quotation marks and citations omitted). 99 The SEC did not abuse its discretion by entering a cease and desist order against Ponce. Section 21C of the Exchange Act authorizes the SEC to issue a cease and desist order to any person that is violating, has violated, or is about to violate any provision of this chapter, or any rule or regulation thereunder. 15 U.S.C. § 78u-3 (1996). The SEC issued a cease and desist order against Ponce because it found that Ponce violated the anti-fraud, record keeping, and reporting requirements of the federal securities laws. Ponce does not provide us with any grounds for setting aside the cease and desist order, aside from launching a general challenge to the evidentiary basis of the securities laws he was found to have violated. Because we are upholding the SEC's determination that Ponce violated these laws, we reject Ponce's argument to this effect. 100 Similarly, the SEC's imposition of a permanent bar 16 against Ponce is proper. The SEC's authority to impose such a bar arises under both Section 21C of the Exchange Act, as well as Rule 102(e)(1) of the SEC Rules of Practice. Ponce has not advanced any novel arguments as to why the SEC's chosen sanction is improper. Because we hold that both the SEC's findings that Ponce violated federal securities laws, as well as SEC Rules of Practice, are supported by substantial evidence and are not arbitrary or capricious, the SEC's sanction of permanently barring Ponce from appearing before the Commission is likewise proper. 101 Although the permanence of the bar can be seen as harsh, it is not our decision to make at this level of review. Our inquiry is necessarily limited to assessing whether the SEC abused its discretion in imposing such a sanction. See Vernazza, 327 F.3d at 858 (Our task is to assure that the sanction is supported by the law and facts, not to revisit the sanction anew or impose our independent judgment on the merits of the sanction.). In doing so, we note that the conduct underlying Ponce's violations of both the laws and the Rules of Practice spanned the course of four years, and there is no evidence that Ponce would have ceased to engage in such behavior, as demonstrated by his breach of the Rules of Practice as late as 1990, were it not for AAC's demise. It was rational for the SEC to conclude that Ponce could persist in violating federal securities laws, perhaps no longer in his duties for AAC, but possibly on behalf of another company. It is within the SEC's province to make such a judgment call and utilize Section 21C as a preventative measure. See KMPG, LLP v. SEC, 289 F.3d 109, 122 (D.C.Cir.2002) (Section 21C authorizes the entry of a cease-and-desist order to prohibit ` any future violation of the same provision' found to have been violated in the instant case.') (quoting 15 U.S.C. § 78u-3) (emphasis in original). 102 In sum, the SEC did not abuse its discretion in fashioning its cease and desist order, and permanent bar, against Ponce. III 103 For the foregoing reasons, we hold that there is substantial evidence to uphold the SEC's decision that Ponce violated the anti-fraud provisions of the federal securities laws, aided and abetted AAC's violation of the reporting and record keeping requirements, and violated SEC Rules of Practice. The SEC's findings that Ponce violated Exchange Act Section 10(b), 13(a) and 13(b)(2) and accompanying regulations were supported by substantial evidence such that a reasonable mind would accept its conclusion. In addition, there is ample evidence that Ponce also engaged in improper professional conduct, in contravention of SEC Rule of Practice 102(e)(1)(ii). Moreover, the SEC's conclusions were not arbitrary, capricious, nor otherwise not in accordance with law. The decision of the SEC is therefore AFFIRMED and the petition for review is DENIED.