Raymond J. Lucia Companies, Inc. v. Securities & Exchange Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 13, 2016 Decided August 9, 2016

No. 15-1345

RAYMOND J. LUCIA COMPANIES, INC. AND RAYMOND J.
LUCIA,
PETITIONERS

v.

SECURITIES AND EXCHANGE COMMISSION,
RESPONDENT

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

Mark A. Perry argued the cause for petitioners. With him
on the briefs were Jonathan C. Bond, Jonathan C. Dickey, and
Marc J. Fagel.

Paul D. Clement, Jeffrey M. Harris, and Christopher G.
Michel were on the brief for amici curiae Ironbridge Global IV
Ltd. and Ironbridge Global Partners, LLC in support of
petitioners.

Kenneth B. Weckstein and Stephen A. Best were on the brief
for amicus curiae Mark Cuban in support of petitioners.
 2

Mark B. Stern, Attorney, U.S. Department of Justice, and
Dominick V. Freda, Senior Litigation Counsel, Securities and
Exchange Commission, argued the cause for respondent. With
them on the joint brief were Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, U.S. Department of Justice,
Beth S. Brinkmann, Deputy Assistant Attorney General, Mark R.
Freeman, Melissa N. Patterson, Megan Barbero, Daniel J.
Aguilar, and Tyce R. Walters, Attorneys, Michael A. Conley,
Solicitor, Securities and Exchange Commission, and Martin V.
Totaro, Attorney.

Before: ROGERS, PILLARD and WILKINS, Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: Raymond J. Lucia and Raymond
J. Lucia Companies, Inc., petition for review of the decision of
the Securities and Exchange Commission imposing sanctions for
violations of the Investment Advisers Act of 1940 and the rule
against misleading advertising. Upon granting a petition for
review of an initial decision by an administrative law judge
(“ALJ”), the Commission rejected petitioners’ challenges to the
liability and sanctions determinations and petitioners’ argument
that the administrative hearing was an unconstitutional
procedure because the administrative law judge who heard the
enforcement action was unconstitutionally appointed.
Petitioners now renew these arguments, including that the judge
was a constitutional Officer who must be appointed pursuant to
the Appointments Clause, U.S. CONST. art. II, § 2, cl. 2. For the
following reasons, we deny the petition for review.

I.

In the Securities Exchange Act of 1934, Congress
determined that transactions in securities conducted over
 3

exchanges and over-the-counter markets were “affected with a
national public interest which makes it necessary to provide for
regulation and control of such transactions and of practices and
matters related thereto.” 15 U.S.C. § 78b. To carry out the
regulation of the securities markets, Congress established the
Securities and Exchange Commission, to be composed of five
commissioners appointed by the President with the advice and
consent of the Senate. Id. § 78d(a). Over time Congress
expanded the responsibilities of the Commission, and by 1960
it was administering six statutes, see 1962 U.S.C.C.A.N. 2150,
2156, including the Investment Advisers Act of 1940, 15 U.S.C.
§ 80b-21. In 1961, pursuant the Reorganization Act of 1949,
Pub. L. No. 81-109, ch. 226, 63 Stat. 203 (now codified as
amended at 5 U.S.C. §§ 901–912), the President sent Congress
a proposal to allow the Commission to delegate some of its
responsibilities to divisions and individuals within the
Commission. See 1961 U.S.C.C.A.N. 1351, 1351–52. The
proposal was designed to provide “for greater flexibility in the
handling of the business before the Commission, permitting its
disposition at different levels so as better to promote its efficient
dispatch.” Id. at 1351. Further, this ability to delegate tasks
would “relieve the Commissioners from the necessity of dealing
with many matters of lesser importance and thus conserve their
time for the consideration of major matters of policy and
planning.” Id.

In response, Congress enacted “An Act to Authorize the
Securities and Exchange Commission to Delegate Certain
Functions,” Pub. L. No. 87-592, 76 Stat. 394, 394–95 (1962).
Congress made three main changes to the President’s proposal:
a single Commissioner’s vote was sufficient to require
Commission review, the authority to delegate did not extend to
the Commission’s rulemaking authority, and in certain instances
review was mandatory for adversely affected parties in
circumstances not at issue here. Compare 1961 U.S.C.C.A.N.
 4

at 1352, with 76 Stat. at 394–95. Except for modification of
when Commission review is mandatory, see An Act to Amend
the Securities and Exchange Act of 1934, Pub. L. No. 94-29,
§ 25, 89 Stat. 97, 163 (1975), and substitution of “administrative
law judge” for “hearing examiner, see Pub. L. No. 95-251,
§ 2(a)(4), 92 Stat. 183, 183 (1978), the current version of the
statute, codified at 15 U.S.C. § 78d-1, has not been amended in
any material respect since its enactment in 1962, see Securities
and Exchange Commission Authorization Act of 1987, Pub. L.
No. 100-181, § 308, 101 Stat. 1249, 1254–55.

Section 78d-1 has three basic parts. Subsection (a) provides
that “the Securities and Exchange Commission shall have the
authority to delegate, by published order or rule, any of its
functions to a division of the Commission, an individual
Commissioner, an [ALJ], or an employee or employee board,
including functions with respect to hearing, determining,
ordering, certifying, reporting, or otherwise acting as to any
work, business, or matter.” 15 U.S.C. § 78d-1(a). Subsection
(b) provides that the “Commission shall retain a discretionary
right to review the [delegated] action . . . upon its own initiative
or upon petition of a party to or intervenor in such action.” Id.
§ 78d-1(b). It also lists when Commission review of a petition
is mandatory. Id. Subsection (c) provides:

If the [Commission’s] right to exercise such review is
declined, or if no such review is sought within the time
stated in the rules promulgated by the Commission,
then the action of any such division of the
Commission, individual Commissioner, [ALJ],
employee, or employee board, shall, for all purposes,
including appeal or review thereof, be deemed the
action of the Commission.

Id. § 78d-1(c).
 5

The Commission has authority to pursue alleged violators
of the securities laws by filing a civil suit in the federal district
court or by instituting a civil administrative action. See 15
U.S.C. §§ 78u, 78u-2, 78u-3, 78v; see also id. §§ 77h-1, 77t(b),
80b-9. By rule, the Commission has delegated to its ALJs
authority to conduct administrative hearings, 17 C.F.R.
§ 200.30-9, and “[t]o make an initial decision in any proceeding
at which the [ALJ] presides in which a hearing is required to be
conducted in conformity with the [Administrative Procedure Act
(“APA”)] (5 U.S.C. 557),” id. § 200.30-9(a); see id. §§ 200.14,
201.111. The ALJs have authority to, among other things,
administer oaths, issue subpoenas, rule on offers of proof,
examine witnesses, rule upon motions, id. §§ 200.14, 201.111,
enter orders of default, see id. § 201.155, and punish
contemptuous conduct by excluding a contemptuous person
from a hearing, see id. § 201.180(a); on the other hand, they lack
authority to seek court enforcement of subpoenas and have no
authority to punish disobedience of discovery orders or other
orders with contempt sanctions of fine or imprisonment.

In any event, the Commission retains discretion to review
an ALJ’s initial decision either on its own initiative or upon a
petition for review filed by a party or aggrieved person. 15
U.S.C. § 78d-1(b); see also 17 C.F.R. § 201.411(b)–(c). Other
than where a petition for review triggers mandatory review, 15
U.S.C. § 78d-1(b); see also 17 C.F.R. § 201.411(b)(1), the
Commission may deny review, 17 C.F.R. § 201.411(b)(2). By
rule, the Commission has established time limits for filing a
petition for review, id. §§ 201.360(b), 201.410(b), and, when no
petition is filed, for ordering review on its own initiative, id.
§ 201.411(c). Further, by rule, the Commission has established
a procedure for finalizing its decisions. Id. § 201.360(d). If no
review of the initial decision is sought or ordered upon the
Commission’s own initiative, then the Commission will issue an
order advising that it has declined review and specifying the
 6

“date on which sanctions, if any, take effect”; notice of the order
will be published in the Commission’s docket and on its
website. Id. § 201.360(d)(2). Thus, by rule, the initial “decision
becomes final upon issuance of the order,” id., and then because
review has been declined, by statute “the action of” the ALJ, in
the initial decision, “shall . . . be deemed the action of the
Commission.” 15 U.S.C. § 78d-1(c).

Here, the Commission instituted an administrative
enforcement action against petitioners for alleged violations of
anti-fraud provisions of the Investment Advisers Act based on
how they presented their “Buckets of Money” retirement wealth-
management strategy to prospective clients.1 It ordered an ALJ
to conduct a public hearing, Raymond J. Lucia Cos., Inc.,
Exchange Act Release No. 67781, 2012 WL 3838150 (Sep. 5,
2012), and thereafter an ALJ issued an initial decision finding
liability based only on one of the four charged
misrepresentations and imposing sanctions, including a lifetime
industry bar of Raymond J. Lucia, Raymond J. Lucia Cos., Inc.,
Initial Decision Release No. 495, 2013 WL 3379719 (July 8,
2013). A month later, the ALJ issued an order on petitioners’
motion to correct manifest errors of fact. Raymond J. Lucia
Cos., Inc., Administrative Proceedings Rulings Release No. 780
(Aug. 7, 2013). The Commission, sua sponte, remanded the

1
Sections 206(1), (2), and (4) of the Investment Advisors Act
provides that an investment adviser may not (1) “employ any device,
scheme, or artifice to defraud any . . . prospective client,” (2) “engage
in any transaction, practice, or course of business which operates as a
fraud or deceit upon any . . . prospective client,” or (4) “engage in any
act, practice, or course of business which is fraudulent, deceptive, or
manipulative.” 15 U.S.C. § 80b-6(1), (2), (4). Under Commission
Rule 206(4)-1(a)(5) an investment adviser may not “publish, circulate,
or distribute any advertisement . . . [w]hich contains any untrue
statement of a material fact, or which is otherwise false or
misleading.” 17 C.F.R. § 275.206(4)-1(a)(5).
 7

case for further findings of fact on the three charges the ALJ had
not addressed. The ALJ subsequently issued a revised initial
decision. Raymond J. Lucia Cos., Inc., Initial Decision Release
No. 540, 2013 WL 6384274 (Dec. 6, 2013) (“initial decision”).
Thereafter, the Commission granted petitioners’ petition for
review and the Enforcement Division’s cross-petition for
review.

“[O]n an independent review of the record,” except as to
unchallenged factual findings, the Commission found that
petitioners committed anti-fraud violations and imposed the
same sanctions as the ALJ. Raymond J. Lucia Cos., Inc.,
Exchange Act Release No. 75837, at 3, 2015 WL 5172953
(Sept. 3, 2015) (“Decision”). The Commission also rejected
petitioners’ argument that the administrative proceeding was
unconstitutional because the presiding ALJ was not appointed
in accordance with the Appointments Clause under Article II,
Section 2, Clause 2 of the Constitution. Id. at 28–33. Relying
on Landry v. FDIC, 204 F.3d 1125 (D.C. Cir. 2000), the
Commission concluded its ALJs are employees, not Officers,
and their appointment is not covered by the Clause. Decision at
28–33.

II.

Petitioners first contend that the Commission’s decision and
order under review should be vacated because the ALJ rendering
the initial decision was a constitutional Officer who was not
appointed pursuant to the Appointments Clause. Because the
government does not maintain that the Commission’s decision
can be upheld if the presiding ALJ was unconstitutionally
appointed, we address this issue first because were petitioners to
prevail there would be no need to reach their challenges to the
liability and sanction determinations. The Commission has
acknowledged the ALJ was not appointed as the Clause requires,
 8

and the government does not argue harmless error would apply.
See Ryder v. United States, 515 U.S. 177, 186 (1995). Thus, if
the court concludes, upon considering the constitutional issue de
novo, see J.J. Cassone Bakery, Inc. v. NLRB, 554 F.3d 1041,
1044 (D.C. Cir. 2009), that Commission ALJs are Officers
within the meaning of the Appointments Clause, then the ALJ
in petitioners’ case was unconstitutionally appointed and the
court must grant the petition for review.

The Appointments Clause provides that the President:

shall nominate, and by and with the Advice and
Consent of the Senate, shall appoint . . . Officers of the
United States, whose Appointments are not herein
otherwise provided for, and which shall be established
by Law: but the Congress may by Law vest the
Appointment of such inferior Officers, as they think
proper, in the President alone, in the Courts of Law, or
in the Heads of Departments.

U.S. CONST. art. II, § 2, cl. 2. Unless provided for elsewhere in
the Constitution, “all Officers of the United States are to be
appointed in accordance with the Clause.” Buckley v. Valeo,
424 U.S. 1, 132 (1976). This includes not only executive
Officers, but judicial Officers and those of administrative
agencies. See id. at 132–33. Only those deemed to be
employees or other “‘lesser functionaries’ need not be selected
in compliance with the strict requirements of Article II.”
Freytag v. Comm’r, Internal Revenue, 501 U.S. 868, 880 (1991)
(quoting Buckley, 424 U.S. at 126 n.162). The Clause’s
limitations are not mere formalities, but have been understood
to be “among the significant structural safeguards of the
constitutional scheme.” Edmond v. United States, 520 U.S. 651,
659 (1997). The Clause addresses concerns about diffusion of
the appointment power and ensures “that those who wielded it
 9

were accountable to political force and the will of the people.”
Freytag, 501 U.S. at 883–84; see also Ryder, 515 U.S. at 182.

The Supreme Court has explained that generally an
appointee is an Officer, and not an employee who falls beyond
the reach of the Clause, if the appointee exercises “significant
authority pursuant to the laws of the United States.” Buckley,
424 U.S. at 126. In that case, the Court held that insofar as the
Federal Election Commission (“FEC”) had rulemaking
authority, primary responsibility for conducting civil litigation,
and power to determine eligibility for federal matching funds
and federal elective office, only “Officers of the United States”
duly appointed in accordance with the Appointments Clause
could exercise such powers because each represented “the
performance of a significant governmental duty exercised
pursuant to a public law”; the commissioners had not been
appointed properly and therefore could not. Buckley, 424 U.S.
at 140–41. So too, in Freytag, 501 U.S. 868, where the Court
considered the powers and duties of special trial judges, id. at
882, who as members of an Article I court could exercise the
judicial power of the United States, id. at 888–89, to be
significant and explained that an appointee is no less an Officer
because some of his duties are those of an employee. For that
reason, when evaluating whether an appointee is a constitutional
Officer, a reviewing court will look not only to the authority
exercised in a petitioner’s case but to all of that appointee’s
duties, or at least those called to the court’s attention. See
Tucker v. Comm’r, Internal Revenue, 676 F.3d 1129, 1132 (D.C.
Cir. 2012) (citing Freytag, 501 U.S. at 882); Landry, 204 F.3d
at 1131–32.

This court has elaborated on what constitutes an exercise of
“significant authority.” Once the appointee meets the threshold
requirement that the relevant position was “established by Law”
and the position’s “duties, salary, and means of appointment”
 10

are specified by statute, Landry, 204 F.3d at 1133–34 (quoting
Freytag, 501 U.S. at 881), “the main criteria for drawing the line
between inferior Officers and employees not covered by the
Clause are (1) the significance of the matters resolved by the
officials, (2) the discretion they exercise in reaching their
decisions, and (3) the finality of those decisions,” Tucker, 676
F.3d at 1133; see Landry, 204 F.3d at 1133–34. In Landry, 204
F.3d at 1134, the court held that the ALJs of the Federal Deposit
Insurance Corporation (“FDIC”) were not Officers because they
did not satisfy the third criterion; unlike the special tax judges
in Freytag, the FDIC ALJs could not issue final decisions
because their authority was limited by FDIC regulations to
recommending decisions that the FDIC Board of Directors
might issue, id. at 1133 (citing 12 C.F.R. § 308.38). This court
understood that it “was critical to the Court’s decision” in
Freytag that the special trial judge had authority to issue final
decisions in at least some cases, because it would have been
“unnecessary” for the Court to consider whether the tax judges
had final decision-making power when the judge in Freytag’s
case exercised no such power. Id. (citing Freytag, 501 U.S. at
882). Similarly, in Tucker, 676 F.3d at 1134, the court held that
an employee of the IRS Office of Appeals was not an Officer
because regulatory and other constraints — such as detailed
guidelines, consultation requirements, and supervision — meant
that Appeals employees lacked the discretion required by the
second criterion. In both cases, either due to the lack of final
decision power or discretion, the appointee could not be said to
have been delegated sovereign authority or to have the power to
bind third parties, or the government itself, for the public
benefit. See Officers of the United States Within the Meaning of
the Appointments Clause, 31 Op. O.L.C. 73, 87 (2007).

Landry, of course, did not resolve the constitutional status
of ALJs for all agencies. See Landry, 204 F.3d at 1133–34; see
also Free Enterprise Fund v. Public Co. Accounting Oversight
 11

Bd., 561 U.S. 477, 507 n.10 (2010). But to the extent petitioners
contend that the approach required by Landry is inconsistent
with Freytag or other Supreme Court precedent, this court has
rejected that argument and Landry is the law of the circuit, see
LaShawn A. v. Barry, 87 F.3d 1389, 1395 (D.C. Cir. 1996). For
the same reason, the court must reject petitioners’ view, relying
on Edmond, that the ability to “render a final decision on behalf
of the United States,” while having a bearing on the dividing
line between principal and inferior Officers, is irrelevant to the
distinction between inferior Officers and employees. Petrs. Br.
25 (quoting Edmond, 520 U.S. at 665–66). Moreover, in
Edmond, 520 U.S. at 656, the Court noted that the government
did not dispute that military court appellate judges were Officers
and addressed only what type of Officer they were; it had no
occasion to address the differences between employees and
Officers.

As to the petitioners’ contentions about Landry’s
application to Commission ALJs, the parties principally disagree
about whether Commission ALJs issue final decisions of the
Commission. Our analysis begins, and ends, there.

Petitioners emphasize the requirement in section 78d-1(c)
that the ALJ’s “action,” when not reviewed by the Commission,
“shall, for all purposes, including appeal or review thereof, be
deemed the action of the Commission.” (emphasis as added in
Petrs. Br. 36). In their view, the statute contemplates that the
ALJ’s initial decision becomes final in at least some
circumstances when Commission review is declined. “At a
minimum,” they suggest, “Congress has indisputably permitted
the [Commission] to treat unappealed ALJ decisions as final.”
Petrs. Br. 36–37.

The government acknowledges that the statute might have
permitted this approach, but emphasizes that subsection (c) of
 12

the statute cannot be looked at in isolation because the same
statutory provision on which petitioners rely also authorizes the
Commission to establish its delegation and review scheme by
rule. 15 U.S.C. § 78d-1(a)–(b). There can be no serious
question that Section 78d-1(b) reserves to the Commission “a
discretionary right to review the action of any” ALJ as it sees fit.
And the Commission promulgated rules to govern that review
pursuant to its general rulemaking authority under the security
laws. See Decision at 31 n.109 (citing 17 C.F.R.
§ 201.360(d)(2)); see also 15 U.S.C. § 78w(a)(1). For the
purposes of the Appointments Clause, the Commission’s
regulations on the scope of its ALJ’s authority are no less
controlling than the FDIC regulations to which this court looked
in Landry, 204 F.3d at 1133 (citing 12 C.F.R. §§ 308.38,
308.40(a), (c)).

So understood, the Commission could have chosen to adopt
regulations whereby an ALJ’s initial decision would be deemed
a final decision of the Commission upon the expiration of a
review period, without any additional Commission action. But
that is not what the Commission has done. Instead, by rule the
Commission, as relevant, has defined when its “right to exercise
[Section 78d-1(b)] review is declined” and has established the
process by which an initial decision can become final and
thereby “be deemed the action of the Commission,” 15 U.S.C.
§ 78d-1(c). First, it has afforded itself additional time to
determine whether it wishes to order review even when no
petition for review is filed. 17 C.F.R. § 201.411(c). Second,
upon deciding not to order review, the Commission issues an
order stating that it has decided not to review the initial decision
and setting the date when the sanctions, if any, take effect. Id.
§ 201.360(d)(2).

Although petitioners maintain that the finality order cannot
transform the ALJ’s initial decision into a mere recommendation
 13

because the “confirmatory order is a ministerial formality, akin
to a court clerk’s automatic issuance of the mandate after the
time for seeking appellate review has expired,” Petrs. Br. 36, the
Commission has explained that the order plays a more critical
role. Until the Commission determines not to order review,
within the time allowed by its rules, see e.g., 17 C.F.R.
§§ 201.360(d)(2), 201.411(c), there is no final decision that can
“be deemed the action of the Commission,” 15 U.S.C.
§ 78d-1(c). As the Commission has emphasized, the initial
decision becomes final when, and only when, the Commission
issues the finality order, and not before then. See Decision at
31. Thus, the Commission must affirmatively act — by issuing
the order — in every case. The Commission’s final action is
either in the form of a new decision after de novo review or, by
declining to grant or order review, its embrace of the ALJ’s
initial decision as its own. In either event, the Commission has
retained full decision-making powers, and the mere passage of
time is not enough to establish finality. And even when there is
not full review by the Commission, it is the act of issuing the
finality order that makes the initial decision the action of the
Commission within the meaning of the delegation statute.
Indeed, as this court observed in Jarkesy v. SEC, 803 F.3d 9,
12–13 (D.C. Cir. 2015) (citing 17 C.F.R. §§ 201.360(d)(2),
201.411(a)), in holding that exhaustion of constitutional issues
was required, the Commission alone issues final orders.

Put otherwise, the Commission’s ALJs neither have been
delegated sovereign authority to act independently of the
Commission nor, by other means established by Congress, do
they have the power to bind third parties, or the government
itself, for the public benefit. See 31 Op. OLC at 87. The
Commission’s right of discretionary review under Section
78d-1(b) and adoption of its regulatory scheme for delegation
pursuant to Section 78d-1(c) ensure that the politically
accountable Commissioners have determined that an ALJ’s
 14

initial decision is to be the final action of the Commission.

Petitioners object generally to this understanding of the
Commission’s delegation scheme, but it cannot seriously be
argued that the Commission’s regulatory scheme is not a
reasonable interpretation of the statute, specifically defining the
circumstances under which its “right to exercise . . . review is
declined,” 15 U.S.C. § 78d-1(c), and that the Commission’s
interpretation of the finality order is a reasonable interpretation
of its regulations. See Christopher SmithKline Beecham Corp.,
132 S. Ct. 156, 2165–66 (2012). Further, nothing in the
legislative history of Section 78d-1, the regulatory history of 17
C.F.R. § 201.360(d), or Commission precedent indicates
Congress or the Commission intended that the ALJ who presides
at an enforcement proceedings be delegated the sovereign power
of the Commission to make the final decision. This is consistent
with Congress’s adoption of the President’s reorganization
proposal to provide “for greater flexibility in the handling of the
business before the Commission,” and “relieve the
Commissioners from the necessity of dealing with many matters
of lesser importance and thus conserve their time for the
consideration of major matters of policy and planning.” 1961
U.S.C.C.A.N. at 1351. The history of the Commission’s finality
regulation, 17 C.F.R. § 201.360(d)(2), demonstrates that the
finality order was and remains an after-the-fact statement to the
parties that the Commission has declined to order review. See
17 C.F.R. § 201.360(d)(1) (1995); Proposed Amendments to the
Rules of Practice and Related Provisions, Exchange Act Release
No. 34-48832, 2003 WL 22827684, at *12 (Nov. 23, 2003).
And the Commission’s precedent in Alchemy Ventures, Inc.,
Release No. 70708, 2013 WL 6173809 (Oct. 17, 2013); see
Petrs. Br. 32 n.5, resolved an ambiguity, ruling that even in
cases of defaults ALJs must issue initial decisions as required by
Commission rules; it left enforceable outstanding default orders
but made clear that ALJs do not have authority to proceed
 15

without issuing initial decisions. Id. at *2–4 (citing17 C.F.R.
§ 201.360(d)).

Because the Commission has reasonably interpreted its
regulatory regime to mean that no initial decision of its ALJs is
independently final, such initial decisions are no more final than
the recommended decisions issued by FDIC ALJs. This is so
even though the FDIC’s regulations limit its ALJs to issuing
“recommended decisions” and require the FDIC to consider and
decide every case, whereas the Commission can choose not to
order or grant full review of a case. Based on the Commission’s
interpretation of its delegation scheme, the difference between
the FDIC’s recommended decisions and the Commission’s
initial decisions is “illusory.” Resp’t. Br. 28. As discussed, the
Commission can always grant review on its own initiative, and
so it must consider every initial decision, including those in
which it does not order review. 15 U.S.C. § 78d-1(b); 17 C.F.R.
§§ 201.360(d)(2), 201.411(c). It gives itself time to decide
whether to order review and must always issue a finality order
to indicate whether it has declined review. 17 C.F.R.
§§ 201.360(d)(2), 201.411(c). Petitioners offer neither reason
to understand the finality order to be merely a rubber stamp, nor
evidence that initial decisions of which the Commission does
not order full review receive no substantive consideration as part
of this process. That is, petitioners have not substantiated that
a finality order is just like a clerk automatically issuing a
mandate, Petrs. Br. 36, and, in so asserting, have ignored that
clerks have no authority to review orders or decline to issue
mandates. It is also worth noting that the differences between
the two regimes are not as stark as petitioners suggest. In either
the FDIC or Commission system, issues of law and fact can go
unreviewed; the FDIC’s regulations do not require the Board to
consider issues of fact and law unless a party raises the issue
before the Board (after having raised it before an ALJ), see 12
C.F.R. § 308.40(c)(1); see also id. § 308.39(b)(2).
 16

In a further attempt to distinguish the FDIC regime
considered in Landry, petitioners contend that even if
Commission ALJs do not issue final decisions, they still exercise
greater authority than FDIC ALJs in view of differences in the
scope of review of the ALJ’s decisions. But the Commission’s
scope of review is no more deferential than that of the FDIC
Board. It reviews an ALJ’s decision de novo and “may affirm,
reverse, modify, [or] set aside” the initial decision, “in whole or
in part,” and it “may make any findings or conclusions that in its
judgment are proper and on the basis of the record.” 17 C.F.R.
§ 201.411(a). It “ultimately controls the record for review and
decides what is in the record.” Decision at 31. It may “remand
for further proceedings,” 17 C.F.R. § 201.411(a), as it did in
petitioners’ case, “remand . . . for the taking of additional
evidence,” or “hear additional evidence” itself. Id. § 201.452.
Furthermore, if “a majority of participating Commissioners do
not agree to a disposition on the merits, the initial decision shall
be of no effect.” Id. § 201.411(f). To the same extent the
Commission may sometimes defer to the credibility
determinations of its ALJs, see, e.g., Clawson, Exchange Act
Release No. 48143, 2003 WL 21539920, at *2 (July 9, 2003), so
too may the FDIC, see Landry, 1999 WL 440608, at *23 (May
25, 1999). The FDIC and the Commission may defer to
credibility determinations where the record provides no basis for
disturbing the finding, but an agency is not required to adopt the
credibility determinations of an ALJ, see Kay v. FCC, 396 F.3d
1184, 1189 (D.C. Cir. 2005) (citing 5 U.S.C. § 557(b)). By
contrast, the Tax Court in Freytag was “required to defer” to the
special trial judge’s “factual and credibility findings unless they
were clearly erroneous,” Landry, 204 F.3d at 1133. Petitioners’
reliance on 17 C.F.R. § 201.411(b)(2)(ii)(A) is misplaced; that
rule refers to the criteria the Commission considers in deciding
whether to grant a petition for review, not the subsequent
proceedings, see 17 C.F.R. § 201.411(a), and not the
Commission’s determination of whether to order sua sponte
 17

review, see id. § 201.411(c).

Contrary to petitioners’ suggestion, the Commission’s
treatment of a Commission ALJ’s initial decision is not
inconsistent with the treatment given to initial decisions in the
APA, which provides where an agency does not exercise its
authority of review, the ALJ’s initial decision “becomes the
decision of the agency without further proceedings.” 5 U.S.C.
§ 557(b); see also U.S. Dep’t of Justice, Attorney General’s
Manual on the Administrative Procedure Act 82–83 (1947). As
discussed, an initial decision is “deemed to be the decision of the
Commission” but only after that decision has been embraced by
the Commissioners as their own. Even though the APA may
permit agencies to establish different processes, whereby an
ALJ’s initial decision can become final and binding on third
parties, the Commission was not required to do so. Congress
considered and rejected proposals to transfer final decision-
making authority from agency officials to presidentially
appointed judges in a separate administrative court with powers
similar to those generally vested in Article I courts. See H.R.
Rep. No. 79-1980, at 8 (1946), reprinted in Legislative History
of Administrative Procedure Act, at 242 (1946). It determined
hearing examiners (now ALJs) should continue to be located
within each agency and should have independence within the
Civil Service System with regard to tenure and compensation.
See Ramspeck v. Federal Trial Exam’rs Conference, 345 U.S.
128, 132 & n.2 (1953). But that independence did not mean
they were unaccountable to the agency for which they are
working. The Attorney General’s Manual on the Administrative
Procedure Act 83, explained Congress envisioned that
notwithstanding an ALJ’s initial decision, the agency could
retain “complete freedom of decision.” As a contemporaneous
interpretation, the Manual is given “considerable weight.”
Brock v. Cathedral Bluffs Shale Oil Co., 796 F.2d 533, 537
(D.C. Cir. 1986) (quoting Pacific Gas & Elec. Co. v. FPC, 506
 18

F.2d 33, 38 n.17 (D.C. Cir. 1974) (noting active role played by
the Attorney General in the formation and implementation of the
APA)). The APA provides, thus, that on appeal from or review
of the initial decision, the agency “has all the powers which it
would have in making the initial decision,” and even on
questions of fact, Kay, 396 F.3d at 1189 (quoting 5 U.S.C.
§ 557), “an agency reviewing an ALJ decision is not in a
position analogous to a court of appeals reviewing a case tried
to a district court,” id. In this way, Congress left to the agency
the flexibility to have final authority in agency proceedings
while providing Civil Service protections to ALJs in response to
concerns their actions were influenced by a desire to curry favor
with agency heads. See Ramspeck, 345 U.S. at 132 & n.3, 142.

Finally, petitioners point to nothing in the securities laws
that suggests Congress intended that Commission ALJs be
appointed as if Officers. They do point to the reference to
“officers of the Commission” in 15 U.S.C. § 77u, but there is no
indication Congress intended these officers to be synonymous
with “Officers of the United States” under the Appointments
Clause. Of course, petitioners contend that Congress was
constitutionally required to make the Commission ALJs inferior
Officers based on the duties they perform. But having failed to
demonstrate that Commission ALJs perform such duties as
would invoke that requirement, this court could not cast aside a
carefully devised scheme established after years of legislative
consideration and agency implementation. See 5 U.S.C.
§§ 3105, 3313; see also Civil Service Reform Act of 1978, Pub.
L. 95-454, 92 Stat. 1111.

III.

We turn, then, to petitioners’ challenges to the
Commission’s liability findings and its choice of sanction,
principally on the ground that punishment is being imposed for
 19

conduct that was not unlawful at the time it occurred. They
view the Enforcement Division’s “entire case” to have been that
petitioners misled investors by describing their presentation of
how their “Buckets-of-Money” strategy would have performed
historically as a “backtest” even though it was not based only on
historical data and instead utilized a mix of historical data and
assumptions. Petrs. Br. 45. In their view, the presentation set
forth all of the assumptions that went into their backtests and so
could not have been understood to have relied only on historical
data.

A.
The question for the court is whether there was substantial
evidence to support the Commission’s determination that, by
touting their investment strategy through the false promise of
“backtested” historical success, petitioners violated the antifraud
provisions of the Investment Advisers Act. See Koch v. SEC,
793 F.3d 147, 151–52 (D.C. Cir. 2015) (quoting 15 U.S.C.
§§ 78y(a)(4), 80b-13(a)); Kornman v. SEC, 592 F.3d 173, 184
(D.C. Cir. 2010). Our review is deferential. Substantial
evidence means only “such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.” Koch,
793 F.3d at 151–52 (quoting Pierce v. Underwood, 487 U.S.
552, 565 (1988)). The Commission’s “conclusions may be set
aside only if arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” Id. at 152 (quoting
Graham v. SEC, 222 F.3d 994, 999–1000 (D.C. Cir. 2000)); see
also Rapoport v. SEC, 682 F.3d 98, 103 (D.C. Cir. 2012).

The Commission found that petitioners had violated the
Investment Advisers Act, see supra note 1, as a result of factual
misrepresentations they made in their presentations at free
retirement-planning seminars. During these presentations,
petitioners advocated a “Buckets-of-Money” investment
strategy, which called for spreading investments among several
 20

types of assets that vary in degrees of risk and liquidity. The
core benefit of the strategy, petitioners claimed, was that
prospective clients could live comfortably off of their
investment income while also leaving a large inheritance.
During nearly forty seminars, petitioners used a slideshow to
illustrate how this strategy would have performed relative to
other common investment strategies. Rather than present a
purely hypothetical example about how the strategy might
perform, petitioners illustrated how the investment strategy
would have performed for a fictional couple retiring during the
historic economic downturns in the “1973/74 Grizzly Bear”
market and in 1966. Each example showed that a couple using
the “Buckets-of-Money” strategy would have increased the
value of their investments despite the market downturns and
would have done much better than those utilizing other
investment strategies.

To find violations of Sections 206(1), (2), and (4) of the
Investment Advisers Act, the Commission required evidence
from which it could find that petitioners made statements that
were misleading either because they misstated a fact or omitted
a fact necessary to clarify the statement, and that those
misstatements or omissions were material. Decision at 17; 15
U.S.C. § 80b-6(1), (2), (4). In addition, for a violation of
Section 206(1), the Commission needed evidence that those
statements were made with scienter. Decision at 17.

The Commission found that petitioners’ “Buckets-of-
Money” presentation was misleading for three reasons:

1. Petitioners misled prospective investors by stating
that they were backtesting the “Buckets-of-Money” investment
strategy. Decision at 17–18. The actual testing had not used
only historical data and instead relied on a mix of historical data
and assumptions about the inflation rate and the rate of return on
 21

one type of asset on which the strategy relied, Real Estate
Investment Trusts (“REITs”). Id. at 17–18, 23–26. Petitioners
presented their investment strategy as so effective that it would
have weathered historical periods of market volatility, and
nowhere suggested that they were presenting mere abstract
hypotheticals. In that context, stating as “backtest” results
figures that did not rely exclusively on historical data was
misleading. Id. In addition, petitioners should not have been
able to say that they backtested the “Buckets-of-Money”
investment strategy when they had failed to implement what
petitioners had described as a key part of the strategy: shifting
(or “rebucketizing”) assets from the riskiest buckets of assets to
safer buckets of assets once assets in the safest buckets were
spent. Id. at 18–19, 25. This “rebucketizing” ensured that
prospective investors would never have all of their assets in the
riskiest bucket.

2. Petitioners misled prospective investors by
presenting the results that they featured in their presentations.
Id. at 18. Petitioners represented that individuals using their
“Buckets-of-Money” investment strategy starting in 1966 or
1973 would have seen the value of their investments increase.
This result was based on flawed assumptions because petitioners
underestimated the effect of inflation and overestimated the
expected REIT returns, thereby dramatically departing from
historical reality. See id. Further, the failure to “rebucketize”
meant that the presented result was based on an artificially high
percentage of assets in stocks during the time the stock market
happened to be performing well. Id. at 18–19. Had petitioners
utilized more realistic estimates and “rebucketized,” as they
insisted their strategy required, they would have had to show
that the “Buckets-of-Money” investment strategy had run out of
assets rather than grown as advertised. Id. at 18.
 22

3. Petitioners’ stated result of the 1973 backtest was
misleading because, even using their assumptions, the result
could not be replicated and because petitioners failed to provide
any documentary support for the result they presented to
prospective clients. Id. at 17, 19. Thus, petitioners “either
fabricated the 1973 backtest result or presented it to seminar
attendees without ensuring its accuracy.” Id. at 19.

The Commission also found that these misrepresentations
were material because they would have been significant to a
reasonable investor in determining whether to adopt the
“Buckets-of-Money” investment strategy. Id. at 19 & n.63
(citing Basic Inc. v. Levinson, 485 U.S. 224, 231–32 (1988)). In
support, the Commission referenced testimony from potential
investors who were present during some of the presentations.
Further, because petitioners designed the slides and would have
been aware of the risk of misleading prospective clients as a
result of their misrepresentations, the Commission found that
petitioners acted with scienter because they had been at least
reckless in presenting the backtest slides. Id. at 19–20.

Petitioners challenge all three bases for the Commission’s
determination that the slides were misleading as well as the
materiality of the misstatement of the 1973 results and the
finding of scienter. When viewed in the context of the
presentation, as a whole, petitioners maintain that there was not
substantial evidence to support the Commission’s finding that
they misled prospective clients by stating that they had
backtested the “Buckets-of-Money” investment strategy.
Rather, they claim, the absence of any settled meaning of the
term “backtest” meant that their use of the term, standing alone,
did not necessarily imply that the “backtest” analysis would use
only historical data. Such an implication was all the more
remarkable, in petitioners’ view, given the disclaimers on their
slides stating that this particular backtest would utilize some
 23

hypothetical assumptions. Further, in their view, it was not
misleading to state they had backtested the “Buckets-of-Money”
investment strategy even if they had not “rebucketized” the
assets in the way initially described in the strategy. Although
petitioners acknowledge that they referenced “rebucketizing” in
the slides, their view is that there was no evidence that
“rebucketizing” was a necessary — as opposed to an optional
and more advanced — component of the “Buckets-of-Money”
investment strategy.

There is substantial evidence to support the Commission’s
finding that petitioners’ “Buckets-of-Money” presentation
promised to provide an historical-data-only backtest where the
analysis would account for “rebucketizing.” As the Commission
found, experts for petitioners and the government agreed that the
term backtest typically referred to the use of historical, not
assumed, data. Id. at 17. The Commission emphasized that
petitioners “introduced no expert testimony to establish industry
practice, and their own inflation and REIT experts agreed that
backtests use historical rates.” Id. at 26. The Commission
accorded little weight to a single mutual fund promotional
brochure emphasized by petitioners because, although the
brochure used the term backtest in connection with an assumed
inflation rate, two other brochures used historical rates in
connection with their backtests. Id.

Furthermore, the Commission did not rest its analysis
exclusively on petitioners’ use of the word “backtest” or the
Commission’s understanding that the term meant an historical-
data-only analysis. In response to petitioners’ argument that it
would be unfair for the Commission to apply a newly
established definition to find petitioners conduct unlawful, the
Commission explained that it was not attempting to define
“backtest” for all purposes. Id. at 25. Rather, what was
misleading was the statement to seminar attendees that
 24

petitioners had analyzed how the “Buckets-of-Money”
investment strategy would have performed in the past. Id. That
is, not only had petitioners used the word “backtest” in their
presentations, they had also introduced both historical
illustrations (1973 and 1966) by asking what would have
happened had a couple used the “Buckets-of-Money”
investment strategy at these times. To answer accurately how
the strategy would have performed historically would require the
use of historical data. Thus, it was misleading for petitioners not
to inform seminar attendees that petitioners’ backtest could not
accurately answer that question. Id. And for that reason, even
though the presentation contained disclaimers that some
assumptions would be used in the historical backtests, the
Commission concluded that petitioners had not altered “the
overall impression that [they] had performed backtests showing
how the [“Buckets-of-Money” investment] strategy would have
performed during the two historical periods.” Id. at 23.

Petitioners likewise fail to undermine the Commission’s
finding that a slide purporting to backtest the “Buckets-of-
Money” investment strategy would be understood by a
reasonable investor to include “rebucketizing” of assets. Id. at
25. Contrary to the government’s suggestion, petitioners did
argue to the Commission that “rebucketizing” was not an
essential part of the “Buckets-of-Money” investment strategy,
see Petrs. Br. to Comm’n 14–15 (2014). The Commission
rejected that argument and substantial evidence supports its
finding that “rebucketizing” was an essential part of the
“Buckets-of-Money” investment strategy so that any purported
backtest of that strategy would imply that “rebucketizing” was
taking place. Raymond J. Lucia acknowledged that an investor
should never have one-hundred percent of his assets in stocks,
and made related statements that an investor should not draw
income directly from his stock portfolio, both of which would
have been necessary over the period of the backtests absent
 25

“rebucketizing.” Decision at 14. Further, when petitioners first
introduced the “Buckets-of-Money” investment strategy in their
presentation, a slide stated that “rebucketizing” would take place
after the non-stock income buckets were exhausted as funds
were used for living expenses. Because petitioners never made
clear in their presentations that the historical analyses did not
include “rebucketizing,” and there is no evidence that the
backtest must have been understood not to include
“rebucketizing,” the Commission’s finding that “rebucketizing”
was essential is supported by substantial evidence in the record.

Petitioners also fail to show that the Commission erred in
finding that it was misleading for them to present results that
overstated how the “Buckets-of-Money” investment strategy
would have performed historically. Id. at 18. As the
Commission found, petitioners’ assumed inflation and REIT
rates were [flawed] and had the effect of dramatically
overstating the results of the historical analysis. Id. at 18–19.
For example, the use of a flat 3% inflation rate understated the
effect of inflation when the actual inflation rate reached double
digits in the late 1970s and early 1980s. Id. at 18. Also, the
failure to “rebucketize” had the effect of overstating gains. Id.
at 18–19. Petitioners attempt to justify the use of assumptions
generally, referencing the disclaimers in the slides, but nowhere
maintain that the assumptions they chose could be expected to
produce results that approximated historic performance. Id.

Petitioners take another tack in challenging the
Commission’s finding that using petitioners’ flawed
assumptions would not produce the 1973 backtest result
represented in the slides. Here, they principally maintain that
the Commission never charged the error in the 1973 backtest
result and that they therefore had no notice that the erroneous
result was under scrutiny. In fact, the charging document
provided adequate notice. Incorporating the facts underlying the
 26

alleged violations, the charging document alleged that
petitioners “failed to keep adequate records” and that the
spreadsheet records they maintained failed to “duplicate the
advertised investment strategy.” Raymond J. Lucia Cos., Inc.,
Exchange Act Release No. 67781, at 9. The Commission’s
finding that the 1973 backtest result was either “fabricated” or
inaccurate was an outgrowth of this charge as it became clear
there was no documentary proof of the presented 1973 backtest
result. Decision at 8, 19. Petitioners admitted during the
hearing that the spreadsheets they produced to substantiate the
result were not actually used and included different assumptions
than were relied upon in the 1973 backtest shown to potential
investors. Id. They also admitted that the assumptions
presented in the slides could not be used to generate
documentary proof of the 1973 result because they had used a
different set of assumptions. Id. Further, petitioners’ expert
repeated the analysis with this different set of assumptions and
still was unable to replicate the 1973 result. Id. The
Commission’s finding that it was misleading for petitioners to
present a result for which they had no support, particularly when
the result overstated the success of the “Buckets-of-Money”
investment strategy, is supported by substantial evidence.

Petitioners’ challenge to the Commission’s finding that the
misstatement about the 1973 backtest result was material is no
more persuasive. A statement is “material” so long as there is
a “substantial likelihood that the disclosure of the omitted fact
would have been viewed by the reasonable investor as having
significantly altered the ‘total mix’ of information made
available.” Basic Inc. v. Levinson, 485 U.S. 224, 231–32 (1988)
(quoting TSC Indus., Inc. v. Northway, Inc. 426 U.S. 438, 449
(1976)). Petitioners suggest that the misrepresentation could not
have been material because the 1973 result presented in the slide
understated the success of using the “Buckets-of-Money”
investment strategy. But this suggestion rests solely on the 1973
 27

backtest result spreadsheet, which petitioners admitted did not
serve as the basis for the 1973 backtest analysis shown in the
presentation. Further, petitioners’ experts provided substantial
evidence to support the Commission’s finding that the slides
overstated the 1973 backtest result. Id. at 19. The Commission
had ample grounds to conclude that the reasonable investor
would want to know that petitioners lacked documentary support
for the number presented.

Finally, petitioners challenge the Commission’s scienter
finding. Under section 206(1), which prohibits an investment
adviser from employing “any device, scheme, or artifice to
defraud any client or prospective client,” 15 U.S.C. § 80b-6(1),
the Commission must find that petitioners acted with an “intent
to deceive, manipulate, or defraud.” SEC v. Steadman, 967 F.2d
636, 641 (D.C. Cir. 1992) (quoting Ernst & Ernst v. Hochfelder,
425 U.S. 185, 194 n.12 (1976)). “[E]xtreme recklessness may
also satisfy this intent requirement.” Id. This is “not merely a
heightened form of ordinary negligence” but “an ‘extreme
departure from the standards of ordinary care, . . . which
presents a danger of misleading buyers or sellers that is either
known to the defendant or is so obvious that the actor must have
been aware of it.’” Id. at 641–42 (quoting Sundstrand Corp. v.
Sun Chemical Corp., 553 F.2d 1033, 1045 (7th Cir. 1977)).

To the extent petitioners maintain the Commission could
not have found that they acted with scienter by misleadingly
using the term “backtest” because the term did not have a settled
meaning at the time, they misunderstand the basis of the
Commission’s scienter determination. The finding of
recklessness did not focus only on petitioners’ use of the term,
but also focused on petitioners’ presentation of slides that
promised an historically accurate view of how the “Buckets-of-
Money” investment strategy would have performed during
periods of historic economic downturns. Petitioners’ effort to
 28

read ambiguity into the term “backtest” misses the key point:
Whether they referred to their examples as “historical views,”
“retrospective applications,” or “backtests,” the misleading
impression is the same. For that reason, the Commission found
that petitioners either “knew or must have known of the risk of
misleading prospective clients to believe that [petitioners] had
performed actual backtests.” Decision at 20. Because they
knew historical inflation rates were higher than their assumed
rate, that a key asset (REITs) did not perform as assumed, and
that not “rebucketizing” would lead to higher returns, petitioners
faced an obvious risk of presenting misleading results. See id.

There is no record support for petitioners’ objection that the
Commission could not have found scienter because they sought
advance approval of their slides by the Commission as well as
by two FINRA-registered broker-dealers. They offer no record
basis to undermine the Commission’s finding that there was no
evidence petitioners had flagged the backtest slides for review
or had provided the materials necessary to engage in meaningful
review. See id. at 27–28. Petitioners ignore the Commission’s
reliance on a December 12, 2003, letter from Commission staff
stating that petitioners “should not assume that [the] activities
not discussed in this letter are in full compliance with the federal
securities law.” Id. at 28. The record thus does not show that
petitioners took good-faith steps to seek advance approval of the
statements that the Commission found they must have known to
be misleading.

B.
The court’s review of petitioners’ challenge to the
Commission’s choice of sanctions is especially deferential.
Because Congress has entrusted to the Commissioners’ expertise
the responsibility to select the means of achieving the statutory
policy in relation to the appropriate remedy, their judgment
regarding sanctions is “entitled to the greatest weight.”
 29

Kornman, 592 F.3d at 186 (quoting Am. Power & Light v. SEC,
329 U.S. 90, 112 (1946)). The Commission must explain its
reasons for selecting a particular sanction but it is not required
to follow “any mechanistic formula.” See id. (citing PAZ Sec.,
Inc. v. SEC, 566 F.3d 1172, 1175 (D.C. Cir. 2009)). The court
will intervene “only if the remedy chosen is unwarranted in law
or is without justification in fact.” Id. (quoting Am. Power &
Light, 329 U.S. at 112–13).

The only sanction petitioners challenge is the imposition of
the lifetime industry bar on Raymond J. Lucia, and that
challenge is unpersuasive. The Commission adequately
explained the reasons for concluding that it was in the public
interest to bar him from associating with an investment advisor,
broker, or dealer under the Investment Advisers Act, see 15
U.S.C. § 80b-3(f). Upon applying the factors set forth in
Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), the
Commission concluded that a bar was necessary to “protect[] the
trading public from further harm,” having found that his
misconduct was egregious and recurrent, Decision at 34–35
(citation omitted). He violated a fiduciary duty he owed to his
prospective clients and did so repeatedly over the course of
dozens of seminars. Id. at 35. He acted with a “high degree of
scienter because he knowingly or recklessly misled prospective
clients for the purpose of increasing [the corporation’s] client
base and fees generated therefrom.” Id. Further, such behavior
could be expected in the future because he had violated his
fiduciary duties and failed to recognize the wrongful nature of
his conduct. Id. In the Commission’s view, the steps he had
taken — such as selling his assets in the corporation and
withdrawing its investment advisor registration — were
insufficient to show that he would not engage in similar
misconduct in the future. Id. at 35–36. He was still seeking to
serve as an on-demand public speaker, consultant, and media
personality on retirement planning and other topics. See id. at
 30

35–36 & n.132. Although acknowledging that he had stopped
presenting the fraudulent backtest slides once the Commission
informed him in 2010 of problems with the presentation and that
he did not presently threaten to associate with an investment
adviser, the Commission considered that these factors were
outweighed by his recurrent and intentional misconduct and the
“reasonable likelihood that, without a bar, [he] will again
threaten the public interest by reassociating with an investment
advisor, broker, or dealer.” Id. at 35–36.

The Commission was unpersuaded that the evidence offered
in mitigation lessened the gravity of his conduct or made it less
likely that he would engage in such conduct in the future. Id. at
36–38. In its view, neither the possible financial losses he would
suffer as a result of the permanent industry bar nor the absence
of prior misconduct during forty years of working in the industry
made his misconduct any less grave. “Here,” the Commission
concluded, “even without investor injury as an aggravating
factor, [his] misconduct was egregious and a bar is in the public
interest” inasmuch as its “public interest analysis focuses on the
welfare of investors generally and the threat one poses to
investors and the markets in the future.” Id. at 37 (internal
citation and alteration omitted). With respect to the request for
an alternative sanction of censure and monitoring, the
Commission noted that it had no obligation to impose sanctions
similar to those imposed in settled proceedings, where “the
avoidance of time-and-manpower-consuming adversary
proceedings[] justif[ied] accepting lesser remedies in
settlement,” id. at 38, and emphasized that the appropriate
remedy “depends on the facts and circumstances presented” in
each case, see id.

The record is thus contrary to petitioners’ position that the
Commission abused its discretion by failing to offer a sufficient
justification for imposing the lifetime industry bar. See
 31

Kornman, 592 F.3d at 188; see also Seghers v. SEC, 548 F.3d
129, 135–36 (D.C. Cir. 2008). Undoubtedly the lifetime bar is
a most serious sanction, see Saad v. SEC, 718 F.3d 904, 906
(D.C. Cir. 2013), and, in petitioners’ view, more serious than the
sanctions imposed for similar conduct in settled cases, see Petrs.
Br. 61. The court, however, will not intervene simply because the
Commission exercised its “discretion to impose a lesser
sanction” in other cases, see Kornman, 592 F.3d at 186–88, for
the “‘Commission is not obligated to make its sanctions
uniform,’ and the court ‘will not compare this sanction to those
imposed in previous cases,’” id. at 188 (quoting Geiger v. SEC,
363 F.3d 481, 488 (D.C. Cir. 2004)); see also Seghers, 548 F.3d
at 135. Indeed, the court has stated more broadly, that the
Commission need not choose “the least onerous of the
sanctions.” PAZ Sec., 566 F.3d at 1176. Here, the Commission
considered the proposed alternative sanctions and determined, in
its judgment, that they would not have been sufficient to protect
investors. Decision at 37–38. In view of the Commission’s
findings that he repeatedly and recklessly engaged in egregious
conduct without regard to his fiduciary duty to his clients,
petitioners fail to show that the Commission’s sanction was
unwarranted as a matter of policy or without justification in fact,
or that it failed to consider adequately his evidence of mitigation.

Accordingly, we deny the petition for review.