Court Opinion

ID: 4124914
Source: CourtListenerOpinion
Date Created: 2017-02-10 01:30:22.633878+00
Date Added: 2024-06-11T14:37:33.478112
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 SHAREMASTER,                                      No. 13-73199
                                Petitioner,

                      v.

 U.S. SECURITIES & EXCHANGE                           OPINION
 COMMISSION,
                       Respondent.

          On Petition for Review of an Order of the
            Securities & Exchange Commission

                   Argued February 3, 2016
                  Submitted February 2, 2017
                     Pasadena, California

                      Filed February 2, 2017

    Before: Consuelo M. Callahan, and N. Randy Smith,
     Circuit Judges, and Jed S. Rakoff,* District Judge.

                  Opinion by Judge Callahan;
          Partial Concurrence and Partial Dissent by
                      Judge N.R. Smith

    *
      The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
2                      SHAREMASTER V. SEC

                            SUMMARY*

    Securities and Exchange Commission / Financial
             Industry Regulatory Authority

    The panel granted the pro se petition for review by
Sharemaster, a registered broker dealer, and held that the
Securities and Exchange Commission’s decision – that a
$1000 penalty that the Financial Industry Regulatory
Authority (“FINRA”) imposed on Sharemaster was not a
“live” sanction capable of redress – was unreasonable and
inconsistent with applicable law.

    FINRA rejected Sharemaster’s annual report and
suspended Sharemaster’s FINRA membership because
Sharemaster’s report did not comply with the SEC’s Rule
17a-5(d)’s requirement that broker-dealers annually file a
balance sheet and income statement certified by a public
accounting firm registered with the Public Company
Accounting Oversight Board.         FINRA also ordered
Sharemaster to pay $1,785 in costs. The SEC dismissed
Sharemaster’s application for review.

    The panel held that the SEC’s interpretation of Securities
Exchange Act Section 19(d)(2) to include a live-sanction
requirement was entitled to deference under Chevron U.S.A.,
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984). The panel further held that the SEC unreasonably
decided that the disciplinary sanction imposed by FINRA on
Sharemaster was no longer live. The panel concluded that the

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                   SHAREMASTER V. SEC                       3

disciplinary sanction imposed by FINRA remained live based
on a $1000 fine, and Sharemaster’s challenge to FINRA’s
final disciplinary sanction was subject to review by the SEC.
The panel remanded for the SEC to determine whether, if
Sharemaster prevails on the merits of its argument regarding
the applicability of a registered-accountant requirement, the
SEC may direct FINRA to reinstate Sharemaster nunc pro
tunc.

    Judge N.R. Smith dissented in part because the majority
resolved the case on grounds not raised by the parties and not
supported by the record. He did, however, agree with the
majority’s conclusion that the SEC’s interpretation of
Securities Exchange Act Section 19(d)(2), concerning a live-
sanction requirement, was entitled to Chevron deference.
Judge N.R. Smith would hold that there is substantial
evidence to support the SEC’s finding that no part of the
$1,785 in costs was a sanction, and he would deny the
petition for review.

                        COUNSEL

Howard Feigenbaum (argued), Hemet, California, pro se
Petitioner.

Nicholas Bronni (argued), Senior Counsel; William K.
Shirey, Assistant General Counsel; Jacob H. Stillman,
Solicitor; Anne K. Small, General Counsel; Securities and
Exchange Commission, Washington, D.C.; for Respondent.
4                  SHAREMASTER V. SEC

                          OPINION

CALLAHAN, Circuit Judge:

     Securities Exchange Act Section 19(d)(2) authorizes the
Securities and Exchange Commission (the Commission) to
review any “final disciplinary sanction” imposed by a
registered securities industry self-regulatory organization,
including the Financial Industry Regulatory Authority
(FINRA). 15 U.S.C. § 78s(d)(2). This case requires us to
decide whether the Commission’s review authority under
Section 19(d)(2) is limited to final disciplinary sanctions that
remain “live.” The Commission interpreted Section 19(d)(2)
to include a live-sanction requirement in dismissing petitioner
Sharemaster’s application for review of a disciplinary
sanction imposed by FINRA. We hold that Commission’s
interpretation of Section 19(d)(2) is entitled to deference
under Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984). However, we conclude
that the Commission’s decision that a $1,000 penalty that
FINRA imposed on Sharemaster is not a “live” sanction
capable of redress is unreasonable and inconsistent with
applicable law. We therefore grant Sharemaster’s pro se
petition for review.

                               I.

A. FINRA and the Commission’s regulatory framework

   FINRA is a securities industry self-regulatory
organization (SRO) registered with the Commission under
Section 15A of the Securities Exchange Act (the Exchange
Act), 15 U.S.C. § 78o-3. As a condition of its registration,
FINRA is required to have in place rules regulating the
                    SHAREMASTER V. SEC                         5

conduct of its broker-dealer members and other participants.
Id. § 78o-3(b)(6)–(8). These rules must provide for the
enforcement of federal securities laws and the Commission’s
rules, including the imposition of disciplinary sanctions. See
id. § 78o-3(b)(7); id. 78o-3(k)(2)(C). FINRA’s Rules provide
for a variety of sanctions that FINRA may impose on its
members and other participants for violating securities laws,
including censures, fines, suspensions, expulsions, or “any
other fitting sanction.” FINRA Rule 8310.1

    Disciplinary proceedings before FINRA are placed on
either an ordinary or expedited track. See FINRA Rules
9370, 9550–9559. Both tracks involve similar procedural
steps, but FINRA endeavors to handle expedited disciplinary
proceedings more quickly. See FINRA Rules 9559, 9290.
Additionally, although most sanctions imposed in an ordinary
FINRA disciplinary proceeding are automatically stayed
pending the Commission’s review, sanctions imposed in an
expedited proceeding are not. See FINRA Rules 9370(a),
9559(r). However, an aggrieved party may request a stay
from the Commission, which the Commission must decide on
an expedited basis “consistent with the Commission’s other
responsibilities.” 17 C.F.R. § 201.401(d).

    Among the provisions enforced by FINRA are Exchange
Act Section 17(e)(1)(A), 15 U.S.C. § 78q(e)(1)(A), and
Commission Rule 17a-5(d), 17 C.F.R. § 240.17a-5(d). The
provisions, which FINRA enforced against Sharemaster here,
require some registered broker-dealers to “annually file . . . a
balance sheet and income statement certified by” a public
accounting firm registered with the Public Company

     1
        FINRA’s rules are available at http://finra.complinet.com
/en/display/display_main.html?rbid=2403&element_id=3889.
6                  SHAREMASTER V. SEC

Accounting Oversight Board (PCAOB).                15 U.S.C.
§ 78q(e)(1)(A).

    Once FINRA’s internal disciplinary process is complete,
an aggrieved party may file an application for review with the
Commission. Exchange Act Section 19(d)(2) authorizes the
Commission to review “any final disciplinary sanction” or
denial of access that, like the sanction at issue here, Section
19(d)(1) requires FINRA to report to the Commission. Id.
§ 78s(d)(1), (2).

    While Section 19(d) addresses what FINRA actions “shall
be subject to review,” Section 19(e)—entitled “Disposition of
review; cancellation, reduction, or remission of sanction”—
governs the scope of the Commission’s remedial authority.
In deciding an application for review of a final disciplinary
sanction, Section 19(e)(1) requires the Commission to declare
whether FINRA correctly found a violation of applicable
rules or, if not, to set aside the sanction. Id. § 78s(e)(1)(A),
(B). If the Commission finds a violation, it may “affirm the
sanction imposed . . . , modify the sanction . . . , or remand
. . . for further proceedings.”            Id. § 78s(e)(1)(A).
Additionally, if the Commission finds that the sanction
“imposes any burden on competition not necessary or
appropriate in furtherance of the purposes of this chapter or
is excessive or oppressive, [the Commission] may cancel,
reduce, or require the remission of such sanction.” Id.
§ 78s(e)(2).

    Section 19(f)—entitled “Dismissal of review
proceeding”—addresses the Commission’s review of “denials
of access” imposed by FINRA and other SROs. It directs the
Commission to dismiss an unmeritorious challenge to an
action denying access to FINRA or, in the case of a
                         SHAREMASTER V. SEC                               7

meritorious challenge, set aside FINRA’s action and grant the
access that FINRA denied. Id. § 78s(f).

B. Background

   1. Sharemaster’s business and 2009 annual report

    Sharemaster is a registered securities broker-dealer and
FINRA member that is wholly owned and operated by
Howard Feigenbaum. Sharemaster’s alleged annual income
is modest at around $10,000. Its business is limited to acting
as an agent for investment and insurance companies in the
sale of mutual funds and variable insurance products. It does
not hold any customer funds or securities. In preparing an
annual audit report for 2009, Sharemaster learned that review
of the report by a PCAOB-registered accountant may be
required under 17 C.F.R. § 240.17a-5(f)(1). Sharemaster
found that a PCAOB-registered accountant would charge
significantly more to prepare the required annual report than
the certified public accountant that Sharemaster regularly
used—$2,800 instead of the usual $585 charge. According to
Sharemaster, this increased cost would inflict a significant
financial hardship on its small business. After consulting
with the Commission, Sharemaster learned that 17 C.F.R.
§ 240.17a-5(e)(1)(i)(A) provides for an exemption from the
PCAOB requirement for certain securities brokers and
dealers.2 Believing that it qualified for this exemption as an

   2
       The exemption provides in relevant part:

          The broker dealer is not required to engage an
          independent public accountant to provide the reports
          . . . if, since the date of the registration of the broker or
          dealer under section 15 of the Act (15 U.S.C. 78o) or of
8                     SHAREMASTER V. SEC

agent that does not hold customer funds or securities,
Sharemaster filed an annual audit report using a certified
accountant who was not registered with the PCAOB.

    2. FINRA’s disciplinary sanction on Sharemaster

    In May of 2010, FINRA’s Department of Member
Regulation rejected Sharemaster’s annual report and
suspended Sharemaster’s FINRA membership because the
report did not comply with Rule 17 a-5(d)’s PCAOB
requirement. Sharemaster filed a request for a hearing before
a FINRA hearing panel, which was held on June 24, 2010.
On October 6, 2010, the hearing panel found that
Sharemaster’s report did not comply with Rule 17 a-5(d)’s
PCAOB requirement and thus rejected it. The panel
sanctioned Sharemaster for the violation, ordering:

        Sharemaster is suspended until it files the
        requisite annual report. At the end of six
        months, the suspension will convert to an
        expulsion if [Sharemaster] has at that time not
        filed a properly audited annual report for

        the previous annual reports filed under paragraph (d) of
        this section:

        (A) The securities business of the broker or dealer has
        been limited to acting as broker (agent) for the issuer in
        soliciting subscriptions for securities of the issuer, the
        broker has promptly transmitted to the issuer all funds
        and promptly delivered to the subscriber all securities
        received in connection with the transaction, and the
        broker has not otherwise held funds or securities for or
        owed money or securities to customers.

17 C.F.R. § 240.17a-5(e)(1)(i)(A).
                   SHAREMASTER V. SEC                       9

       2009. [Sharemaster] is also ordered to pay
       costs of $1,785.00, which includes an
       administrative fee of $750.00 and the cost of
       the hearing transcript.

The $1,785 sum that FINRA ordered Sharemaster to pay
evidently included a $1,000 penalty for not timely complying
with Rule 17 a-5(d) or, in the Commission’s words, a “late
fee.” Costs associated with the hearing amounted to $750
and the cost of the hearing transcript presumably accounts for
the remaining $35.

   3. The Commission’s review of FINRA’s final
      disciplinary sanction

     On October 29, 2010, Sharemaster filed an application for
Commission review of FINRA’s final disciplinary sanction.
Because the sanction was imposed in an expedited
disciplinary proceeding, it was not automatically stayed.
Sharemaster states that the absence of an automatic stay
presented it with a Hobson’s choice: comply immediately or
risk going bankrupt waiting for the Commission to decide the
motion to stay. Accordingly, three days after seeking review,
Sharemaster filed an annual report reviewed by a more costly,
PCAOB-registered accountant. While FINRA’s order
imposing the sanction stated that the suspension would be
lifted upon filing of “the requisite annual report,” FINRA did
not lift the suspension until January 24, 2011, almost three
months later.

   The Commission then requested supplemental briefing
from Sharemaster and FINRA on “what impact, if any,
Sharemaster’s subsequent compliance and FINRA’s lifting
of the suspension would have on the Commission’s
10                  SHAREMASTER V. SEC

consideration” of Sharemaster’s application for review. Both
FINRA and Sharemaster asserted that Sharemaster’s
compliance with the PCAOB requirement and the lifting of
the suspension did not foreclose the Commission’s review
under Section 19(d)(2). According to FINRA, “costs that had
been assessed against—but not yet paid by—Sharemaster
were sufficient to preserve statutory jurisdiction.” In its brief,
Sharemaster also argued, among other things, that the
Commission had a statutory duty to review FINRA’s failure
to immediately lift the suspension after Sharemaster filed a
compliant report, as the delay violated the terms of FINRA’s
sanction order and caused financial harm to Sharemaster.

    On October 14, 2011, the Commission dismissed
Sharemaster’s application for review, finding that it “lacked
jurisdiction over this matter pursuant to Section 19(d) of the
Exchange Act” because the suspension was no longer in
effect. Sharemaster, Exchange Act Release No. 65570, 2011
WL 4889100 (Oct. 14, 2011). Sharemaster thereafter sought
review by the Ninth Circuit. However, at the Commission’s
request, we remanded the matter on May 7, 2012.

    On remand, the Commission ordered additional briefing.
This time, FINRA changed its position and argued that the
Commission lacked review authority under Section 19(d)(2).
Sharemaster renewed its argument that the Commission had
authority to review FINRA’s sanction, as well as FINRA’s
failure to timely lift the suspension upon submission of a
compliant report. On August 29, 2013, the Commission
withdrew its earlier order and dismissed Sharemaster’s
application for review. Sharemaster, Exchange Act Release
No. 70290, 2013 WL 4647204 (Aug. 29, 2013). The
Commission again concluded that it lacked “statutory
jurisdiction” under Section 19(d) to consider FINRA’s “final
                   SHAREMASTER V. SEC                     11

disciplinary sanction” because there was no longer a “live
sanction for [it] to act upon” after FINRA lifted the
suspension. Id. at *3.

    In reaching this conclusion, the Commission first found
the term “final disciplinary sanction” to be ambiguous
because no “provision of the Exchange Act defines that term
or expressly addresses whether a coercive sanction must be
in force at the time of Commission review.” Id. The
Commission found that the term’s ambiguity becomes more
apparent when Section 19(d) is read in conjunction with
Section 19(e), which suggests that a sanction must remain in
place at the time of review for the Commission to “act upon”:

       For instance, in describing “any proceeding to
       review a final disciplinary sanction,” Section
       19(e)(1) provides that there must be, among
       other things, “opportunity for the presentation
       of supporting reasons to affirm, modify, or set
       aside the sanction.” Moreover, Section
       19(e)(1)(A) provides that if an SRO acted
       appropriately, the Commission “shall so
       declare and, as appropriate, affirm the
       sanction imposed by the [SRO], modify the
       sanction . . . , or remand to the [SRO] for
       further proceedings.” And similarly, Section
       19(e)(1)(B) provides that if an SRO did not
       act appropriately, the Commission “shall, by
       order, set aside the sanction imposed by the
       [SRO] and, if appropriate, remand to the
       [SRO] for further proceedings.”

Id. at *4 (footnotes omitted).
12                    SHAREMASTER V. SEC

    After finding Section 19(d)(2) unclear on whether a
sanction must remain in place in order to be subject to the
Commission’s review, the Commission “conclude[d] that the
better approach is to construe Sections 19(d) and (e) as
imposing such a requirement.” Id. The Commission
provided several policy considerations in support of its
interpretation. First, it reasoned that because “coercive
sanctions operate like judicial civil contempt sanctions . . .
they ought to be treated similarly.” Id. Courts have generally
resisted reviewing such sanctions after “a contemnor has
complied and the sanction has lifted.” Id. Second, a contrary
reading of the statute would require “the Commission to issue
effectively advisory opinions . . . with no direct, real world
effect.” Id. at *4 & n.28. Third, requiring the Commission
to review a disciplinary sanction after a party has achieved
compliance “could waste limited Commission resources and
possibly come at the expense of parties with genuine, urgent,
and ongoing disputes.” Id. at *4. Finally, “requiring a live
sanction ensures meaningful review because the parties will
have a substantial and concrete interest in the outcome of the
proceedings.” Id. at *5.

    The Commission next addressed Sharemaster’s
contention that FINRA’s failure to promptly lift the
suspension after Sharemaster filed a compliant report
constituted a “denial of access” subject to review by the
Commission. Id. at *5 & n.32. In a footnote, the
Commission suggested that FINRA wrongly delayed lifting
the suspension.3 Nonetheless, the Commission found that it

     3
      The Commission noted that “[t]he plain text of the FINRA hearing
panel order provided that, ‘Sharemaster is suspended until it files the
requisite annual report.’’’ Id. at *5 n.31 (emphasis added). It observed
that FINRA did “not explain how the language quoted above could have
                       SHAREMASTER V. SEC                              13

“still lack[ed] jurisdiction because the suspension has lifted
and . . . there is nothing to ‘affirm, modify, or set aside.’” Id.
at *5. The Commission declined to consider the extended
suspension a “denial of access” under Section 19(d) for
purposes of determining its statutory authority to review
FINRA’s action. It reasoned that “the extended suspension
was inextricably intertwined with the October 6 FINRA
hearing panel order and, as a result, it is appropriately
considered a final disciplinary sanction and not a denial of
access.” Id. at *5 n.32.

    Finally, the Commission rejected numerous arguments by
Sharemaster that FINRA’s disciplinary sanction remained
subject to review even though Sharemaster had submitted a
compliant report and FINRA had lifted the suspension. See
id. at *5–6. Concluding that no final disciplinary sanction
remained in place to act upon, the Commission dismissed
Sharemaster’s application for review. Id. at *6.

   On September 9, 2013, Sharemaster timely filed this pro
se petition for review. We have jurisdiction pursuant to
Section 25(a)(1) of the Exchange Act, 15 U.S.C. § 78y(a)(1).4

reasonably notified Sharemaster that the suspension would not lift until
FINRA conducted and completed . . . a review” of the report. Id.
    4
      Mr. Feigenbaum may proceed pro se because he is Sharemaster’s
sole proprietor. See, e.g., Holdings AVV v. PDVSA Petroleo S.A., 506
F.3d 350, 354 n.4 (4th Cir. 2007) (“[A] sole proprietorship has no legal
existence apart from its owner, and . . . an individual owner may represent
his sole proprietorship in a pro se capacity.”); Lattanzio v. COMTA,
481 F.3d 137, 140 (2d Cir. 2007) (same).
14                     SHAREMASTER V. SEC

                                    II.

    Sharemaster challenges the Commission’s decision
dismissing its application for review on two grounds. First,
Sharemaster argues that the Commission’s “live-sanction”
requirement is inconsistent with Section 19(d)(2), which
directs the Commission to review any final disciplinary
sanction imposed by FINRA. Second, Sharemaster contends
that, even if a live-sanction requirement is read into the
statute, the Commission unreasonably applied the
requirement in dismissing Sharemaster’s application for
review. We disagree with Sharemaster’s first argument, but
agree with its second.

A. The Commission’s interpretation of Section 19(d)(2)
   is entitled to Chevron deference.

    Sharemaster’s first argument requires us to decide
whether the Commission’s interpretation of Section 19(d)(2)
warrants deference under the familiar two-step analysis set
forth in Chevron, 467 U.S. 837.5

    At step one of the Chevron framework, we must
“determine ‘whether Congress has directly spoken to the
precise question at issue. If the intent of Congress is clear,
that is the end of the matter; for the court, as well as the

     5
       The preconditions to application of the Chevron framework are
satisfied. Congress vested the Commission with general authority to
administer the Exchange Act and oversee SROs through rulemaking and
formal adjudication. See, e.g., 15 U.S.C. § 78s(d)(2). The Commission
set forth its interpretation of Section 19(d)(2) through a formal exercise of
its adjudicative authority. See City of Arlington, Tex. v. FCC, 133 S. Ct.
1863, 1871–73 (2013); I.N.S. v. Aguirre-Aguirre, 526 U.S. 415, 425
(1999).
                        SHAREMASTER V. SEC                            15

agency, must give effect to the unambiguously expressed
intent of Congress.’” City of Arlington, Tex. v. FCC, 133 S.
Ct. 1863, 1868 (2013) (quoting Chevron, 467 U.S. at
842–43). Our analysis begins “with the text of the statute.”
Yokeno v. Sekiguchi, 754 F.3d 649, 653 (9th Cir. 2014). “The
plainness or ambiguity of statutory language is determined by
reference to the language itself, the specific context in which
that language is used, and the broader context of the statute as
a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341
(1997).

    Looking to the Exchange Act, we conclude that Congress
did not speak to the precise question presented: whether the
Commission is authorized only to review final disciplinary
sanctions that remain live. Section 19(d)(2) authorizes the
Commission to review “any final disciplinary sanction” or
denial of “access to services” imposed by registered SROs,
but the Exchange Act does not define these terms. 15 U.S.C.
§ 78s(d)(1)–(2). While the Commission has by regulation
defined “final disciplinary action,” 17 C.F.R. § 240.19d-
1(c)(1), the regulation also is silent on whether a sanction
must remain in effect in order to be subject to review.6

   6
       The regulation provides:

          [A] “final disciplinary action” shall mean the
          imposition of any final disciplinary sanction pursuant to
          section 6(b)(6), 15A(b)(7), or 17A(b)(3)(G) of the Act
          or other action of a self-regulatory organization which,
          after notice and opportunity for hearing, results in any
          final disposition of charges of:

              (i) One or more violations of—

                   (A) The rules of such organization;
16                    SHAREMASTER V. SEC

    Section 19(d)(2)’s broader statutory context does not
resolve the ambiguity created by this silence. As the
Commission explained, other parts of the statute lend some
support to the view that, in order to be subject to review by
the Commission, a final disciplinary sanction imposed by an
SRO must remain in place. Specifically, Section 19(e)(1)
directs the Commission, in disposing of an application for
review, to issue a declaratory judgment and, “as appropriate,”
“affirm,” “modify,” or “set aside” the sanction, or “remand”
to the SRO for further proceedings. 15 U.S.C. § 78s(e)(1).
This provision suggests but, as the Commission concedes,
does not unambiguously confirm that Congress intended that
there remain a sanction in place for the Commission to
affirm, modify, or set aside.

    The legislative history is similarly inconclusive. While
the legislative history suggests that the term “disciplinary
sanction” was intended to be “broadly defined,” it is also
silent on whether such a sanction must remain live in order to
be subject to the Commission’s review. See S. Comm. on
Banking, Housing & Urban Affairs, Securities Acts
Amendments of 1975, Accompanying S. 249, S. Rep. No. 94-
75, at 24 (1975).

                  (B) The provisions of the Act or rules
                  thereunder; . . .

17 C.F.R. § 240.19d-1(c)(1). Neither party has mentioned this regulation.
The regulation might be interpreted to support the view that a “final
disciplinary action” subject to review under Section 19(d)(2) includes a
finding of “one or more violations” even where a coercive sanction was
not imposed. However, the regulation does not compel such an
interpretation.
                    SHAREMASTER V. SEC                        17

     Because the statute is “silent or ambiguous with respect
to the specific issue” addressed by the Commission—whether
the Commission has a statutory duty to review a “final
disciplinary sanction” that is moot or, in the Commission’s
words, no longer “live”—we find that the first step of
Chevron is satisfied and we move on to step two. See
Chevron, 467 U.S. at 843.

    Step two of the Chevron framework requires us to
determine “whether the agency’s [interpretation] is based on
a permissible construction of the statute.” Id. If the agency’s
interpretation is not in conflict with the statute and represents
a “reasonable policy choice for the agency to make,” we must
defer to it. Nat’l Cable & Telecomms. Ass’n v. Brand X
Internet Servs., 545 U.S. 967, 986 (2005).

    For the same reasons that we found the statute ambiguous,
we conclude that the Commission’s interpretation of Section
19(d)(2) to require a sanction to remain in place in order to be
subject to review is permissible. Again, the Exchange Act is
silent on this issue and Section 19(e)(1) can be read to require
that a disciplinary sanction remain in place for the
Commission to act upon.

    The Commission’s asserted policy considerations
supporting its interpretation of the scope of its authority are
reasonable. As mentioned, the Commission justified a live-
sanction requirement by analogizing to doctrines applicable
to Article III courts. The Commission explained that its live-
sanction requirement finds support in the rule that voluntary
compliance with a civil contempt order generally precludes
appellate review. See SEC v. Hickey, 322 F.3d 1123, 1128
(9th Cir. 2003) (recognizing that “the purging of the contempt
ordinarily renders the controversy moot”). The Commission
18                 SHAREMASTER V. SEC

also explained that a live-sanction requirement furthers its
interest in avoiding unwarranted advisory opinions and
thereby conserving its limited resources. Analogizing to
Article III standing doctrine, the Commission further
explained that requiring a live sanction would help “ensure[]
meaningful review because the parties will have a substantial
and concrete interest in the outcome of the proceedings.”
Sharemaster, 2013 WL 4647204, at *5. These policy
considerations are without doubt reasonable.

    Indeed, if an SRO such as FINRA imposed a disciplinary
sanction but then fully retracted the sanction by, for example,
setting aside a suspension and returning any fine levied, it
would make little sense for the Commission to proceed with
review. This common-sense observation highlights the
reasonableness of the Commission’s view that it need not
review moot sanctions. In fact, it is reasonable for the
Commission to assume that Congress legislated against the
backdrop of mootness and standing doctrines in defining the
scope of the Commission’s quasi-judicial review authority.
See City of Arlington, 133 S. Ct. at 1868 (noting that
Congress should be presumed to legislate with stable
background rules in mind). While these doctrines apply to
Article III courts, analogous doctrines are also well
established in the context of quasi-judicial agency
adjudications. See, e.g., Or. Cedar Prods. Co., 119 IBLA 89,
92 (1991) (“[T]he [Interior Board of Land Appeals] decides
actual controversies and avoids giving opinions on moot
questions or abstract propositions.”).

   We hold that the Commission’s interpretation of Section
19(d)(2) as only permitting review of “live” disciplinary
sanctions is permissible under the statute and based on
                   SHAREMASTER V. SEC                       19

reasonable policy considerations. We therefore defer to the
Commission’s interpretation.

B. The Commission unreasonably decided that the
   disciplinary sanction imposed by FINRA on
   Sharemaster was no longer live.

     Our inquiry does not end with our conclusion that the
Commission’s interpretation of Section 19(d)(2) is entitled to
Chevron deference. The question remains whether the
Commission’s application of its live-sanction requirement to
dismiss Sharemaster’s application for review was reasonable
and consistent with applicable law. Whether framed as going
to the scope of the Commission’s review authority or the
application of its delegated authority,“the underlying question
[is] the same”: Did the Commission unreasonably refuse to
review Sharemaster’s case? See City of Arlington, 133 S. Ct.
at 1870. We find that it did.

    Before the Commission, Sharemaster offered numerous
reasons why the disciplinary sanction FINRA imposed
remained “live” after Sharemaster submitted a compliant
report and FINRA lifted the suspension. One such reason
was that Sharemaster was still stuck with a $1,000 penalty for
not timely filing a compliant annual report. In its order, the
Commission offered two reasons why this financial loss did
not preserve FINRA’s review authority after the suspension
was lifted.

   First, the Commission suggested that the entire $1,785
sum may have represented the “cost” of pursuing a hearing
before FINRA, rather than a disciplinary fine. Sharemaster,
2013 WL 4647204, at *6 n.37. However, the Commission’s
own dismissal order and briefing before this court undermine
20                    SHAREMASTER V. SEC

this position. In its dismissal order, the Commission stated
only that $1,000 of the $1,785 that FINRA ordered
Sharemaster to pay “appears to be another example of costs
assessed as part of the FINRA proceedings.” Id. (emphasis
added). In its answering brief on appeal, the Commission
conceded that this $1,000 sum was “apparently [a] late fee.”7
We agree. FINRA’s decision plainly suggests that FINRA
imposed a $1,000 penalty on Sharemaster, in addition to
taxing a $750 “administrative fee” and a $35 transcript fee.

    Second, the Commission stated in its dismissal order that,
“even if this amount did not represent an assessment of costs,
we would still . . . lack the power to order FINRA to repay
Sharemaster.” Id. at *6 n.37. The Commission did not
explain why this is so, but referenced footnote 36 of its order.
That footnote, in turn, references two Commission decisions
that offer no support for the Commission’s position. The first
decision held in relevant part that the Commission is “not
authorized . . . to award [monetary] damages.” Beatrice J.
Feins, Exchange Act Release No. 33374, 1993WL 538913,
at *3 n.14 (Dec. 23, 1993). This decision does not support
the Commission’s position because Sharemaster does not
seek damages. The second Commission decision stated that
“Exchange Act Section 19 does not appear to authorize the
setting aside of [an SRO’s] Fees assessment or authorize
‘remission’ of the Fees” charged in connection with a hearing
before an SRO. Marshall Fin., Inc., Exchange Act Release
No. 50343, 2004 WL 2026518, at *2–3 & n.21 (Sept. 10,

     7
       In response to our request for supplemental briefs, the Commission
was unable to improve on its assertion that the amount “includes an
administrative fee of $750.00 and the cost of the hearing transcript” and
that a “[n]o further breakdown was provided.” Sept. 29 2016 Letter Brief
at 2.
                      SHAREMASTER V. SEC                             21

2004). This decision does not lend the Commission support
because, in addition to charging $785 in administrative fees
associated with the hearing, FINRA imposed a $1,000 fine on
Sharemaster possibly for failing to timely file a compliant
annual report.

    The imposition of a fine is a “disciplinary sanction” under
both FINRA’s rules and the Commission’s precedent. See
FINRA Rule 8310 (listing “fine” as a disciplinary sanction);
17 C.F.R. § 240.19d-1(c)(2) (acknowledging that a sanction
may “consist[] of a fine”); Tague Sec. Corp., Exchange Act
Release No. 18510, 47 SEC 743, 1982 WL 32205, at *2 (Feb.
25, 1982) (listing “expulsion, suspension, fine or censure” as
final disciplinary sanctions). Calling the $1,000 a “late fee”
is of no moment.8 Regardless of its label, it appears to be a
penalty imposed for not timely filing an annual report
prepared by a PCAOB-registered accountant. It is not part of
the separately ledgered “administrative fee” that FINRA
taxed to Sharemaster for pursuing an administrative appeal.
The fine became a “final” disciplinary sanction when
Sharemaster exhausted remedies before FINRA. The
sanction remained “live” even after the suspension lifted
because the fine was not canceled and the money was not
remitted to Sharemaster.

   Unlike the sunk transactional costs of pursuing an
administrative appeal, if Sharemaster prevails on the merits

    8
      Such an argument reads “like the caption ‘This is not a pipe’ below
Magritte’s famous painting of a pipe.” Cuero v. Cate, — F.3d —, 2016
WL 3563660, at *4 n.9 (9th Cir. June 30, 2016). Of course, Magritte’s
painting was not a pipe but only a painting of one, whereas a $1,000
penalty for not complying with applicable rules is nothing other than a
fine.
22                     SHAREMASTER V. SEC

of his argument (that he was not required to use a PCAOB-
registered accountant), the Commission would be compelled
to set aside the $1,000 fine because Sharemaster, in fact,
timely complied with securities laws. The Commission’s
view that it lacks authority to order FINRA to “repay” the
$1,000 conflicts with the Exchange Act. The Commission
has authority to “act upon” a monetary sanction pursuant to
Section 19(d)(2) and 19(e). Section 19(e)(1) provides that the
Commission must “set aside” such a sanction if it was
incorrectly levied. 15 U.S.C. § 78s(e)(1). Moreover, Section
19(e)(2) makes clear that the Commission has authority to
“cancel, reduce, or require the remission of such sanction,”
even if the fine was correctly levied. Id. § 78s(e)(2)
(emphasis added).9

    Given that the Commission is empowered to “undo what
has already been done,” the monetary sanction is not moot.
Nw. Res. Info. Ctr. v. Nat’l Marine Fisheries Serv., 56 F.3d
1060, 1069 (9th Cir. 1995). The fact that $1,000 might be
characterized as a less-than-substantial amount is without
consequence. “As long as the parties have a concrete interest,
however small, in the outcome of the litigation, the case is not
moot.” Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 669
(2016). Moreover, this amount of money is substantial to
Sharemaster’s small business.

     9
      The dissent engages in extensive independent research to bolster its
conclusion that the $1,000 charge—“this mystery document” (dissent at
page 30)—is most likely not a sanction. Perhaps on remand, the
Commission will make such a showing, which it has so far failed to do.
We hold only that on this record, the Commission has not shown that this
controversy is moot.
                     SHAREMASTER V. SEC                          23

    The government contends, and our dissenting colleague
would hold, that Sharemaster waived any argument based on
the $1,000 fine by not raising it in its briefs. Ordinarily, we
will not consider “matters on appeal that are not specifically
and distinctly argued in appellant’s opening brief.” United
States v. Ullah, 976 F.2d 509, 514 (9th Cir. 1992). The
general waiver rule applies even to non-lawyers like
Sharemaster who proceed pro se in the face of a complicated
statutory scheme. See Wilcox v. Comm’r, 848 F.2d 1007,
1008 n.2 (9th Cir. 1988). However, we make an exception to
the general rule (1) for “good cause shown” or “if a failure to
do so would result in manifest injustice,” (2) “when [the
issue] is raised in the appellee’s brief,” or (3) “if the failure to
raise the issue properly did not prejudice the defense of the
opposing party.” Ullah, 976 F.2d at 514 (internal citation and
quotation marks omitted); see also United States v. Salman,
792 F.3d 1087, 1090 (9th Cir. 2015), cert. granted in part,
136 S. Ct. 899, 193 L. Ed. 2d. 788 (2016), and aff’d, 137 S.
Ct. 420 (2016).

    The second and third exceptions apply here. Sharemaster
raised the argument in front of the Commission, and the
Commission addressed the merits of Sharemaster’s argument
in its decision below and again in its answering brief on
appeal. At oral argument, Sharemaster stated that it did not
intend to waive this issue. See Hall v. City of Los Angeles,
697 F.3d 1059, 1072 (9th Cir. 2012) (finding no prejudice
where parties had opportunity to brief the issue); Ibarra-
Flores v. Gonzales, 439 F.3d 614, 619 n.4 (9th Cir. 2006)
(considering an issue not raised in an opening brief where an
opponent had an opportunity to address the issue at oral
argument). In addition, to ensure that our consideration
would not prejudice either side, we requested and received
supplemental briefs on this issue. We further note that it was
24                  SHAREMASTER V. SEC

the government that called the $1,000 a “late fee” in its brief;
these words were not put in its mouth by Sharemaster.

    Sharemaster makes several additional arguments in
support of the view that the disciplinary sanction remains a
live injury capable of being redressed. For example,
Sharemaster contends that the Commission has authority to
retroactively shorten Sharemaster’s suspension and direct
FINRA to reinstate Sharemaster to membership nunc pro
tunc, which Sharemaster alleges would allow it to collect
commissions that would have been paid it if not for the
suspension. Sharemaster also argues that, even if the sanction
is no longer live, it is capable of repetition but evading review
and thus should qualify for an exception to the live-sanction
requirement. We need not reach these arguments or
Sharemaster’s due process claim because we conclude that
the disciplinary sanction imposed by FINRA remained live
based on the $1,000 fine. Accordingly, Sharemaster’s
challenge to FINRA’s final disciplinary sanction is subject to
review by the Commission pursuant to Section 19(d)(2). We
leave it to the Commission to determine on remand whether,
if Sharemaster prevails on the merits of its argument
regarding the applicability of the PCAOB-registered-
accountant requirement, the Commission may direct FINRA
to reinstate Sharemaster nunc pro tunc.

                              III.

    We hold that the Commission’s interpretation of Section
19(d)(2) as limiting its review authority to final disciplinary
sanctions that remain live is entitled to Chevron deference.
However, we hold that the Commission unreasonably decided
that the monetary penalty that FINRA imposed on
                       SHAREMASTER V. SEC                     25

Sharemaster was not a sanction and thus not a live
disciplinary sanction.

   Sharemaster’s pro se petition for review is GRANTED.
Each side shall bear its own costs of this appeal.

N.R. SMITH, Circuit Judge, concurring in part and dissenting
in part:

     Because the majority resolves this case on grounds not
raised by the parties and not supported by the record, I must
dissent. That said, the majority correctly concludes that the
Securities and Exchange Commission’s interpretation of
Securities Exchange Act Section 19(d)(2)—that the
Commission’s review authority under that section is limited
to final disciplinary sanctions that remain “live”—is entitled
to Chevron deference.1 However, the majority thereafter
speculates as to the nature of costs assessed against
Sharemaster in order to invent a live sanction and preserve
the Commission’s review authority. It is that part of the
decision I cannot join.

                                    I.

    Sharemaster sought the Commission’s review of a
Financial Industry Regulatory Authority (FINRA) order
suspending it from FINRA membership for failure to file a
compliant annual financial report. Under the Commission’s
interpretation of Section 19(d)(2), its review of the FINRA

   1
       Thus, I concur in Part II.A of the majority opinion.
26                 SHAREMASTER V. SEC

order was limited to final disciplinary sanctions that remained
live. The only disciplinary sanction described in the FINRA
order was a suspension. After concluding that Sharemaster
was in violation of the Exchange Act, the FINRA order
states—“Accordingly, Sharemaster is suspended until it files
a[] [compliant annual report].” The FINRA order did not
separately impose any fines on Sharemaster. Indeed, the word
“fine” is not used anywhere in the FINRA order. Sharemaster
subsequently opted to comply with the FINRA order by filing
a compliant annual report, and FINRA lifted the suspension.
Therefore, the only sanction imposed by the FINRA order
was no longer live and, applying the Commission’s
interpretation of Section 19(d)(2), the Commission is without
jurisdiction. Case closed.

     But no: Determined to find a live sanction, the majority
invents one. The majority notes that the FINRA order also
required Sharemaster to pay hearing costs. The majority
speculates that the $1,785 ordered by FINRA included “a
$1,000 penalty.” Maj. Op. 9. It then concludes that this
“penalty” (which it also labels as a “fine”) amounts to a live
sanction that preserves the Commission’s jurisdiction to
review the FINRA order. Maj. Op. 19–22. Without persuasive
argument by the parties on this second issue (thus, left only
to speculation), the majority presses on to address and decide
it, sua sponte adopting a position neither raised before us by
the parties nor supported by the record.

                              II.

                              A.

    As an initial point, Sharemaster clearly did not raise the
issue on which the majority rests its decision. The only
                      SHAREMASTER V. SEC                             27

sanction referred to by Sharemaster (or FINRA or the
Commission) was the suspension. It is undisputed that
Sharemaster did not argue (in either its opening or reply
brief)2 that FINRA sanctioned it with a $1,000 fine. Even in
the face of persistent, leading prompts from the majority at
oral argument, Sharemaster did not pursue this position. Our
precedent is well established regarding such circumstances.
“[O]n appeal, arguments not raised by a party in its opening
brief are deemed waived.” Smith v. Marsh, 194 F.3d 1045,
1052 (9th Cir. 1999). This waiver rule—which the majority
acknowledges applies to pro se litigants, such as Sharemaster,
just as it applies to parties represented by counsel, Maj. Op.
23—should have ended our inquiry. See Wilcox v. Comm’r of
Internal Revenue, 848 F.2d 1007, 1008 n.2 (9th Cir. 1988).
The majority essentially admitted as much when, in response
to the Commission’s waiver arguments at oral argument, the
majority acknowledged that the Commission was in a
difficult position, because, if Sharemaster “were not pro se,
we would be holding [it] quite strictly to th[ose] kinds of
waiver rules.”

   However, the majority was undeterred. Though the issue
seemed to be waived, the majority resurrected it by ordering

    2
         In its answering brief, the Commission pointed out that
Sharemaster’s opening brief did not argue that FINRA’s imposition of
costs preserved the Commission’s review jurisdiction. Put on notice that
this argument was absent, Sharemaster still did not attempt to belatedly
raise it in its reply brief.

     In an exchange that highlights the majority’s sua sponte approach to
deciding this case, Sharemaster never attempted to argue that FINRA had
sanctioned it by imposing a fine until, at oral argument, this panel
explained such argument to Sharemaster and asked, “you’re not waiving
that, are you?”
28                 SHAREMASTER V. SEC

supplemental briefing, saving Sharemaster from an adverse
ruling on the issue of waiver. See United States v. Salman,
792 F.3d 1087, 1090 (9th Cir. 2015), cert. granted in part,
136 S. Ct. 899 (2016), and aff’d, 137 S. Ct. 420 (2016);
United States v. Ullah, 976 F.2d 509, 514 (9th Cir. 1992).
Disappointing to the majority, the additional briefing did not
provide any persuasive arguments to strengthen the
majority’s conclusion as to the merits.

                             B.

    We owe deference to the Commission’s finding that no
part of the $1,785 FINRA-imposed costs was a sanction. “If
the evidence is open to more than one interpretation, we must
uphold the Commission’s findings.” Alderman v. S.E.C.,
104 F.3d 285, 288 (9th Cir. 1997). The Commission’s
findings are conclusive, if supported by substantial evidence.
15 U.S.C. § 78y(a)(4); Davy v. S.E.C., 792 F.2d 1418, 1421
(9th Cir. 1986). “Substantial evidence is . . . such relevant
evidence as a reasonable mind might accept as adequate to
support a conclusion.” Davy, 792 F.2d at 1421 (quoting
Richardson v. Perales, 402 U.S. 389, 401 (1971)) (quotation
marks omitted). In reviewing the Commission’s order to
determine if its findings are supported by substantial
evidence, we must “examine the [record] evidence with a
‘deferential eye.’” Ponce v. S.E.C., 345 F.3d 722, 728 (9th
Cir. 2003) (quoting Alderman, 104 F.3d at 288).

    As noted, the only sanction the FINRA order imposed
was Sharemaster’s suspension. The order described the
$1,785 charge as a “cost.” And nowhere did the FINRA order
describe any portion of this amount as a “fine,” “late fee,”
“penalty,” or “sanction.” The only reference in the record to
the possibility of any financial penalty is found in a single
                   SHAREMASTER V. SEC                        29

footnote in the Commission’s order dismissing the
proceedings below. This footnote explained that
(1) Sharemaster contended (in the proceedings before the
Commission) that “FINRA assessed and received payment of
a $1,000 fine against Sharemaster,” and (2) the only support
Sharemaster provided for this argument was an unspecified
document, listing a $1,000 “late fee” against Sharemaster.
However, noting that Sharemaster failed to explain the
relevance of its cited document, the Commission indicated
that there was insufficient evidence in the record to support
this argument. Instead, it rejected Sharemaster’s position and
found that the $1,000 charge reflected in the document
“appears to be another example of costs.”

    The FINRA order provided that Sharemaster was
“ordered to pay costs of $1,785.00, which include[d] an
administrative fee of $750.00 and the cost of the hearing
transcript.” By identifying only two items that make up the
hearing costs (an administrative fee and a transcript cost) and
expressly stating that the administrative fee was $750, the
plain language of the order leaves no room for argument that
the balance of the hearing costs ($1,035) was attributable to
anything but the cost of the transcript.

    Examining the record with a deferential eye, as we are
required to do, there is clearly substantial evidence to support
the Commission’s finding that no part of the $1,785 in costs
was a sanction. Therefore, the finding that FINRA did not
impose any penalty other than the suspension is conclusive,
and we should give it deference.

   Relying solely on the single reference in the
Commission’s order to a $1,000 late fee, the majority
speculates that the $1,785 in costs ordered by FINRA
30                      SHAREMASTER V. SEC

consisted of a $750 hearing cost, a $1,000 “penalty” or “late
fee,” and a $35 hearing-transcript cost. Maj. Op. 19–20.
Despite the majority’s false bravado that the FINRA order
“plainly” imposed a $1,000 penalty on Sharemaster, Maj. Op.
19–20, this conclusion is not supported by the record. The
majority claims that the Commission has described some
portion of the $1,785 costs as a “late fee.” This is incorrect.
The Commission’s order below does no more than note that
Sharemaster cited to a document listing a $1,000 late fee.3
Here on appeal, Sharemaster failed to provide this mystery
document, to explain its relevance, or even to refer to it.
Thus, compared to the Commission, we find ourselves at a
disadvantage to ascertain the nature of the supposed $1,000
charge. We do not know whether this charge should be
categorized as a fine. We do not know whether this $1,000
was part of the $1,785 costs imposed by FINRA or whether
the $1,000 was ever paid. Further, if this charge were a late
fee, we do not know why the late fee was assessed. We
should, then, give deference to the Commission’s finding that
the $1,785 in costs did not include any type of penalty,
because that finding is supported by substantial evidence.

    In addition, if the cost of the transcript were anything
other than $35, the majority’s breakdown of the costs and its
argument that FINRA imposed a $1,000 fine cannot be
correct. The majority’s “presumption” that the “cost of the
hearing transcript” was $35 has no basis in the record. That

     3
      The only reference the Commission made in its appellate briefing to
a “late fee” was (1) to cite the footnote in which the Commission below
rejected Sharemaster’s late-fee argument and (2) to argue that Sharemaster
waived this argument by failing to raise it on appeal. The Commission’s
use of the term “late fee” in its briefing was clearly only a reference to the
argument Sharemaster made below and not a concession that Sharemaster
was actually charged a late fee.
                       SHAREMASTER V. SEC                             31

figure is entirely absent from the record and briefing, and
there is no evidence to support the conclusion that the
transcript could have cost so little. The record does not reveal
the precise length of the transcript; however, citations in the
record establish that the transcript was, at a minimum, 148
pages. That quantity, at the cost presumed by the majority,
would come out to just over $00.04 per page. While those
involved in appealing this order may wish they could order
transcripts at such a price, there is no basis to support it. For
example, FINRA’s website lists the transcript cost for
hearings in one of its offices as $4.50 per page. Dispute
Resolution Regional Offices and Hearing Locations,
finra.org, http://www.finra.org/arbitration-and-mediation/
southeast-regional-office-guide (last visited January 4, 2017).
Our own court authorizes a rate of $3.65 per page.4 28 U.S.C.
§ 753(f) (providing that the United States Judicial Conference
limits the transcript rates federal courts may charge); Federal
Court Reporting Program, Maximum Transcript Rates,
http://www.uscourts.gov/services-forms/federal-court-
reporting-program (last visited January 4, 2017) (providing
transcript rate limits); Ninth Cir. R. 10-3.1(e) (incorporating
rates established by United States Judicial Conference).
Unless the hearing transcript were only eight to ten pages
(which is far from true), a necessary premise to the majority’s
argument (that the transcript cost was $35) simply fails.
Considering a realistic cost of the transcript, the majority’s
position cannot be reconciled with the record.

    This conclusion is bolstered by reviewing decisions from
other disciplinary actions in which FINRA ordered the
respondent to pay hearing costs and expressly stated that the

    4
      In fact, our court actually authorizes rates ranging up to $7.25 per
page for expedited orders.
32                 SHAREMASTER V. SEC

balance of the hearing costs (after the administrative fee)
made up the transcript costs. See Denise M. Olson,
Disciplinary Proceeding No. 2010023349601, 2013 WL
2146648, at *6 (FINRA Hearing Panel Jan. 4, 2013)
(imposing “costs in the amount of $1909.71, which includes
an administrative fee of $750 and hearing transcript costs of
$1,159.71”); Dame Cisse, Disciplinary Proceeding No.
2009019297801, 2012 WL 1906576, at *6 (FINRA Hearing
Panel Apr. 2, 2012) (“costs in the amount of $1659.15, which
includes an administrative fee of $750 and hearing transcript
costs of $909.15”); Howard Braff, Disciplinary Proceeding
No. 2007011937001, 2010 WL 5129561, at *5 (FINRA
Hearing Panel May 19, 2010) (“costs in the amount of
$1,856.80, which includes an administrative fee of $750 and
hearing transcript costs of $1,106.80”); Richard A. Neaton,
Disciplinary Proceeding No. 2007009082902, 2009 WL
2777331, at *8 (FINRA Hearing Panel June 5, 2009)
(“assessed costs in the total amount of $1861.30, consisting
of a $750 administrative fee and an $1111.30 transcript fee”);
CMG Institutional Trading, LLC, Disciplinary Proceeding
No. 2006006890801, 2008 WL 5385253, at *13 (FINRA
Hearing Panel Oct. 14, 2008) (assessed hearing costs of
“$2,573.44, consisting of a $750 administrative fee and a
$1,823.44 transcript fee”); Avidan Danny Fishman,
Disciplinary Proceeding No. 2007008812801, 2008 WL
5385255, at *7 (FINRA Hearing Panel Sept. 18, 2008)
(“ordered to pay Hearing costs of $2,057.13, which includes
a $750 administrative fee and a $1,307.13 transcript fee”);
John M. E. Saad, Disciplinary Proceeding No.
2006006705601, 2008 WL 5385256, at *5 (FINRA Hearing
Panel Aug. 19, 2008) (“assessed Hearing costs in the total
amount of $2,080, consisting of a $750 administrative fee and
a $1,330 transcript fee”).
                   SHAREMASTER V. SEC                        33

    Reviewing the record with a deferential eye, as we are
required to do, there is clearly substantial evidence to support
the Commission’s finding that no part of the $1,785 in costs
was a sanction.

                              III.

    Judges are not advocates. Thus, when an aggrieved party
seeks review from our court, we require the party to
“specifically and distinctly” explain what issues require our
review. Miller v. Fairchild Indus., Inc., 797 F.2d 727, 738
(9th Cir. 1986). The majority’s opinion ignores this
fundamental policy and, instead, attempts to save
Sharemaster’s case by basing its decision on an issue
Sharemaster did not raise. The record before this court cannot
justify granting Sharemaster’s petition, and this case should
be closed.