Court Opinion

ID: 199744
Source: CourtListenerOpinion
Date Created: 2011-02-07 04:36:55+00
Date Added: 2024-06-11T17:27:02.476327
License: Public Domain

[NOT FOR PUBLICATION–NOT TO BE CITED AS PRECEDENT]

         United States Court of Appeals
                       For the First Circuit

No. 00-2360

              U.S. SECURITIES AND EXCHANGE COMMISSION,

                        Plaintiff, Appellee,

                                 v.

                           SANJAY SAXENA,

                       Defendant, Appellant.

         APPEAL FROM THE UNITED STATES DISTRICT COURT

                 FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. Edward F. Harrington, U.S. District Judge]

                               Before

                       Torruella, Circuit Judge,
                    Stahl, Senior Circuit Judge,
                      and Lynch, Circuit Judge.

     Sanjay Saxena on brief pro se.
     David M. Becker, General Counsel, Jacob H. Stillman,
Solicitor, Mark Pennington, Assistant General Counsel, Michael
A. Conley, Attorney Fellow, on brief for appellee.

                         December 21, 2001
            Per Curiam. Appellant Sanjay Saxena appeals from

the   district     court's      grant    of   summary     judgment      to   the

Securities and Exchange Commission ("SEC") in this civil law

enforcement       action.       The     essential       facts    are   largely

undisputed      and     the    parties      disagree     only    as    to    the

conclusions that may be drawn from those facts.                        We have

carefully reviewed the record and briefs on appeal and

affirm the judgment below.

              First,      we    agree    with     the    district      court's

conclusion    that      Saxena's      continued     performance        under   a

consulting agreement with Thorson, Zahler & Co. ("Thorson"),

a registered investment adviser and brokerage firm, for some

nine months after entry of an administrative order barring

him from "association with any broker, dealer, municipal

securities      dealer,        investment       adviser     or    investment

company," as well as his substantial involvement in the

formation    of    two    investment        funds   and    Saxena      Capital

Management, Inc. ("SCM"), the company that served as general

partner   for     the    funds,    was      sufficient     to    establish     a

violation of the bar order.

            Further, Saxena does not dispute that he provided

free advertising for SCM and the investment funds on his

website and also provided SCM free access to his investment

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 newsletter subscriber lists for use in promoting the funds.

 And, since the solicitation of interests in the funds was

 undisputedly widespread and publicly advertised, interests

 in the funds were not, as Saxena contends, private offerings

 exempt from registration under Rule 506 of Regulation D, 17

 C.F.R. § 230.506.         See 15 U.S.C. § 77d(2); 17 C.F.R. §

 230.502(c).     Accordingly, we think the undisputed facts

 demonstrate that Saxena violated the registration provisions

 of Sections 5(a) and (c) of the Securities Act of 1933

 ("Securities    Act"),     15    U.S.C.    §§     77e(a)    and   (c),   by

 participating       in   the    offer     or    sale   of     unregistered

 securities in interstate commerce or through the mails.1

           The   undisputed        facts    also    showed     that   Saxena

 participated in preparing the offering memoranda for the

 investment funds and, in connection therewith, supplied

 false   and   misleading       information      concerning     the   funds'

 management    and    investment    strategies.         This    conduct   is

 sufficient to establish that Saxena violated the antifraud

 provisions of Section 17(a) of the Securities Act, 15 U.S.C.

 77q(a), Section 10(b) of the Securities Exchange Act of 1934

    1Interests in the investment funds constituted securities
because the undisputed facts established that they were
"investment contracts" as the Supreme Court defined that term in
SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946).

                                    -3-
("Exchange Act"), 15 U.S.C. 78j(b), Rule 10b-5 thereunder,

and Sections 206(1) and 206(2) of the Investment Advisers

Act of 1940 ("Advisers Act"), 15 U.S.C. §§ 80b-6(1) and (2).

Further,     Saxena's       failure   to    disclose   either   the   fee

arrangement under the Thorson consulting agreement or the

SEC    bar   order     in      notices      advising   his   newsletter

subscribers of their opportunity to open brokerage accounts

at Thorson, his failure to advise Thorson of the bar order,

and his failure to            terminate the consulting agreement

immediately after its entry are also sufficient to establish

violations of Section 206(4) of the Advisers Act, 15 U.S.C.

§ 80B-6(4) and Rule 206(4)-1(a)(5) thereunder.

             We find no abuse of discretion in the district

court's disgorgement order and award of a civil monetary

penalty, see SEC v. Warde, 151 F.3d 42, 49 (2d Cir. 1998);

SEC v. First City Financial Corp., 890 F.2d 1215, 1228 (D.C.

Cir.   1989),    and     Saxena's     remaining   challenges     to   the

district court's preclusion order and its denial of his

motion to transfer venue are meritless.

             Affirmed.      See Loc. R. 27(c).

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