Court Opinion

ID: 3183920
Source: CourtListenerOpinion
Date Created: 2016-03-09 16:04:31.53572+00
Date Added: 2024-06-11T14:28:53.832519
License: Public Domain

15-447-ag
Tomlinson v. S.E.C.

                            UNITED STATES COURT OF APPEALS
                               FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 9th day of March, two thousand sixteen.

PRESENT:        JOSÉ A. CABRANES,
                BARRINGTON D. PARKER,
                GERARD E. LYNCH,
                             Circuit Judges.

STEVEN R. TOMLINSON,

                       Petitioner,                       No. 15-447-ag

                       v.

UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,

                       Respondent.

FOR PETITIONER:                                      Steven R. Tomlinson, pro se, Painted Post,
                                                     N.Y.

FOR RESPONDENT:                                      Anne K. Small, General Counsel (Michael
                                                     A. Conley, John W. Avery, Benjamin L.
                                                     Schiffrin, Paul G. Alvarez, on the brief), for
                                                     Securities and Exchange Commission,
                                                     Washington, D.C.
        Petition for review of an order of the Securities and Exchange Commission.

        UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the petition for review is DENIED and the order of the
Securities and Exchange Commission is AFFIRMED.

         Pursuant to Section 25(a)(1) of the Securities Exchange Act, 15 U.S.C. § 78y(a)(1), Petitioner
Steven R. Tomlinson (“Tomlinson”), proceeding pro se, seeks review of an order of the Securities
and Exchange Commission (“SEC”) sustaining disciplinary action taken against him by the Financial
Industry Regulatory Authority (“FINRA”). Tomlinson allegedly obtained confidential, nonpublic
customer information from his former employer and improperly disclosed the information to his
new employer in violation of National Association of Securities Dealers (“NASD”) Conduct Rule
2110.1 FINRA sanctioned Tomlinson by imposing a ninety-day suspension and assessing a $10,000
fine, which was not imposed due to inability to pay. App. 40. On December 11, 2014, the SEC
sustained the sanctions. App. 59.

         On appeal from the SEC’s order sustaining FINRA’s sanctions, Tomlinson argues, inter alia,
that the Court should set aside the SEC’s order because the SEC’s review of FINRA’s disciplinary
action was deficient. Specifically, Tomlinson argues that the SEC failed to obtain documents crucial
to its review—including the written recommendations of FINRA’s National Adjudicatory Council
(“NAC”) and a NAC “presentment document,” information regarding other data breaches at his
former employer,2 and copies of his former employer’s client agreements that may have permitted
disclosure of customer information—and failed to take into account a settlement agreement entered
into between Tomlinson, his former employer, and his new employer. Tomlinson further argues that
FINRA’s disciplinary action arose from a vindictive and retaliatory complaint filed by his former
employer. We assume the parties’ familiarity with the underlying facts, the procedural history of the
case, and the issues on appeal.

         This Court “will affirm the SEC’s findings of fact if supported by substantial evidence,” and
“will set aside the SEC’s actions, findings, or conclusions of law only if they are arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law.” Mathis v. S.E.C., 671 F.3d 210,

    1 NASD Conduct Rule 2110 required that “[a] member, in the conduct of its business, shall observe high

standards of commercial honor and just and equitable principles of trade.” After FINRA initiated this action
against Tomlinson, the rule was superseded by FINRA Rule 2010, which is substantively the same as NASD
Conduct Rule 2110. See Order Approving FINRA’s Adoption of Certain FINRA Rules in Consolidated
Rulebook, 73 Fed. Reg. 57,174 (Oct. 1, 2008).
    2Tomlinson also requests that certain related testimony and documentary evidence be stricken from the
record.

                                                     2
215–16 (2d Cir. 2012) (internal quotation marks omitted); see also McCarthy v. S.E.C., 406 F.3d 179,
188 (2d Cir. 2005) (“An appeals court reviews the SEC’s affirmance of . . . sanctions for abuse of
discretion, and will only overturn sanctions if they are unwarranted in law or without justification in
fact.” (brackets and internal quotation marks omitted)). In the circumstances presented here, an
abuse of discretion typically “will involve either a sanction palpably disproportionate to the violation
or a failure to support the sanction chosen with a meaningful statement of findings and conclusions,
and the reasons or basis therefor, on all the material issues of fact, law, or discretion presented on
the record.” McCarthy, 406 F.3d at 188 (internal quotation marks omitted).

        Having reviewed the record, we conclude that the SEC did not abuse its discretion in
sustaining FINRA’s sanctions against Tomlinson. First, the SEC’s findings were supported by
substantial evidence. As set forth more fully in the SEC’s well-reasoned order and opinion, see App.
41–60, Tomlinson admitted to facts necessary to support a violation of NASD Conduct Rule 2110
due to his unauthorized disclosure to a third party of confidential, nonpublic customer information,
see 17 C.F.R. § 248.10, regarding more than 2,000 customers. Tomlinson’s argument that the SEC
should have obtained certain additional documents to aid its review does not alter this result,
notwithstanding his speculation as to the contents of those documents. Second, in the circumstances
presented here, the sanctions sustained by the SEC were not disproportionate to Tomlinson’s
violation, which involved various aggravating factors, see App. 55–59, and the SEC’s findings
adequately supported those sanctions.

                                           CONCLUSION

       We have considered Tomlinson’s remaining arguments and find them to be without merit.
Accordingly, the petition for review is DENIED, and the December 11, 2014, order of the SEC is
AFFIRMED.

                                                        FOR THE COURT:
                                                        Catherine O’Hagan Wolfe, Clerk

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