Opinion ID: 2977710
Heading Depth: 2
Heading Rank: 1

Heading: Grant of Summary Disposition

Text: Our review of an order of the Commission is governed by the Administrative Procedure Act, 5 U.S.C. § 701, et seq. See MFS Sec. Corp. v. SEC, 380 F.3d 611, 617 (2d Cir. 2004). This Court must affirm if the Commission’s findings of facts are supported by substantial evidence. Id. We uphold the Commission’s legal conclusions unless they are “‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]’” Id. (quoting 5 U.S.C. § 706(2)(A)); see also Seghers v. SEC, 548 F.3d 129, 132 (D.C. Cir. 2008).
Gibson first argues that the Commission committed reversible error by affirming summary disposition in the case against him without first holding an evidentiary hearing. SEC Rule 201.250 of the Commission’s Rules of Practice (“Rule 250”) provides that a hearing officer is entitled to “grant the motion for summary disposition if there is no genuine issue with regard to any material fact and the party making the motion is entitled to a summary disposition as a matter of law.” 17 C.F.R. § 201.250 (2009). Gibson argues that summary disposition of disciplinary cases is normally not appropriate under Rule 250, and that it was not appropriate here, because there was a genuine issue with regard to facts that mitigate his misconduct. He cites to the commentary to Rule 250, which provides as follows: Motions for disposition prior to hearing may provide particular benefits in regulatory proceedings. Enforcement or disciplinary proceedings in which a motion for disposition prior to hearing would be appropriate are likely to be less common. Typically, enforcement and disciplinary proceedings that reach litigation involve genuine disagreement between the parties as to the material facts. Where a genuine issue as to material facts clearly exists as to an issue, it would be inappropriate for a party to seek leave to file a motion for summary disposition or for a hearing No. 08-3377 Gibson v. SEC Page 7 officer to grant the motion. While partial disposition may be appropriate in some cases, a hearing will still often be necessary in order to determine a respondent’s state of mind and the need for remedial sanctions if liability is found. 17 C.F.R. § 201.250 (2009); accord In re Melvin Mullin, 61 SEC Docket 2517, 1996 WL 281717 (May 17, 1996). Gibson’s position is unconvincing for several reasons. First, the Commission has held, contrary to Gibson’s assertions, that summary disposition is not disfavored in follow-on disciplinary proceedings. See In re Conrad P. Seghers, 91 SEC Docket 1945, 2007 WL 2790633 (Sept. 26, 2007) (explaining that when a respondent seeks to mitigate his or her misconduct in a follow-on proceeding involving fraud, summary disposition would be inappropriate only in “rare circumstances”). As the Division properly notes, this Court has affirmed permanent injunctions entered on summary judgment. See, e.g., SEC v. George, 426 F.3d 786, 790-91 (6th Cir. 2005); SEC v. Waco Financial Inc., 751 F.2d 831, 833-34 (6th Cir. 1985). Second, as discussed above, Gibson agreed not to dispute the facts alleged in the original district court Complaint. The Complaint alleged that Gibson misappropriated investor funds of approximately $450,000, that he misrepresented his actions to investors, and that his conduct was repeated and ongoing. When the facts underlying Gibson’s relevant misconduct are undisputed, it stands to reason that there is no genuine issue of fact. Third, Exchange Act §§ 15(b)(6) and 15(b)(c)(4) and Advisers Act §§ 203(f) and 203(e)(4) authorize the Commission to sanction any person associated with a broker, dealer, or investment adviser who has been enjoined from “engaging in or continuing any conduct or practice in connection with the purchase or sale of any security.” 15 U.S.C. §§ 78o(b) and 80b-3. Gibson does not dispute that he was associated with a broker-dealer and an investment adviser, and that the district court enjoined him from engaging in relevant conduct. Consequently, the Commission properly determined that the statutory requirements for the imposition of sanctions were satisfied. No. 08-3377 Gibson v. SEC Page 8 The only evidence that Gibson submitted on his behalf is evidence that he claims mitigates his misconduct. As discussed above, in Gibson’s opposition to the motion for summary disposition, which he filed before the ALJ, Gibson provided his own declaration and declarations from 31 ACW investors. Gibson’s declaration attested to his prior clean disciplinary record, his cooperation with the Division’s investigation, and his prompt payment of the civil penalty and disgorgement. These attestations were not disputed by the Division, and both the ALJ and the Commission took them as true for purposes of these proceedings. It was not arbitrary or capricious for the Commission to find that they did not create a genuine issue of fact as to whether disciplinary action was warranted. See SEC v. Management Dynamics, Inc., 515 F.2d 801, 807 (2d Cir. 1975) (stating that cessation of illegal activity or disclaimer of an intent to violate the law in the future are not sufficient to justify the denial of an injunction); SEC v. Bilzerian, 29 F.3d 689, 695 (D.C. Cir. 1994) (holding that an evidentiary hearing was not required to issue a permanent injunction despite a party’s assurances that he would not violate securities laws in the future). With respect to the investor declarations submitted by Gibson, each individual declaration stated that the investor had reviewed Gibson’s answer to the complaint, that the investor ratified Gibson’s actions, and that the investor wanted Gibson to continue to serve as his or her investment adviser. Again, the ALJ and the Commission took these declarations as true and found a bar appropriate notwithstanding the evidence. We agree with the Commission’s observation that “it is difficult to see how live testimony regarding the investors’ attitude toward Gibson would affect the sanctioning determination.” (J.A. at 245.) Because the investor declarations, like Gibson’s own declaration, do not create a material issue of fact, and because Gibson proffered no additional evidence that he hoped to prove at a hearing, we hold that the Commission did not err in granting the Division’s motion for summary disposition without requiring a full evidentiary hearing. No. 08-3377 Gibson v. SEC Page 9