concurring:
The SEC decision revoking Nassar’s registration issued prior to Ernst.1 This court remands for reconsideration in the light of Ernst. I agree.
The pertinent consideration is not unrelated to the ruling in Collins Securities Corp. v. SEC, No. 75-2200, 183 U.S.App. D.C. 301, 562 F.2d 820 (1977), that an order revoking such registration must be based on “clear and convincing evidence.” While that question is not involved in this case,2 it identifies the care needed as a condition for revocation.
Even assuming that a scienter is needed for revocation of registration, that does not mean that what is required is the kind of subjective deceit that Ernst held to be required in an action for damages. As the Commission points out, a broker-dealer may be guilty of intentional misconduct if he deliberately commits certain acts even if he doesn’t know they are forbidden by the Act or regulations. In other words, there is no requirement of specific intent that includes a specific element of knowledge of the per*795tinent rule of law.3 A broker-dealer is under an obligation to learn the rule of law.
A difficult question is raised by the statement in the Commission’s opinion that Nas-sar was engaged in grossly reckless conduct4 and in failure to do any reasonable checking of assertions made to him by Hausner (J.A. 120).
Hanly v. SEC, 415 F.2d 589 (2d Cir. 1969), develops that standards for a securities dealer are strict, because, inter alia, “he implicitly represents that he has an adequate basis for the opinion he renders” and “[b]y his recommendation he implies that a reasonable investigation has been made . .” Id. at 596-97. See also Hiller v. SEC, 429 F.2d 856 (2d Cir. 1970).
In Ernst, the court explicitly refrained from deciding whether recklessness might be a basis of scienter for a damages action. 425 U.S. at 194 n. 12, 96 S.Ct. 1375. However, when we come to the SEC’s control over the broker-dealers, we are dealing with a group that is under intense regulatory control and scrutiny. The Commission serves an important public interest in imposing and monitoring its controls. This function often involves evidence that requires sophisticated and sensitive appraisal. As we pointed out in Collins Securities, supra, in explaining why we refrained from the requirement used in deportation eases that the evidence be “unequivocal”—
In the present case we have an administrative agency with a charter for protection of the public, and the function of evaluating with sophisticated sensitivity the conduct of those operating in a regulated industry. Two elements appear relevant to the standard we should impose here: (1) the type case (fraud); (2) the heavy sanction (deprivation of livelihood). Given those elements, typical of many SEC cases, and given the type of circumstantial proof on which the SEC most often must rely, it appears to us that the “clear and convincing evidence” standard is the proper standard here; it will require the SEC to reach a degree of persuasion much higher than “mere preponderance of the evidence,” but still somewhat less than “clear, unequivocal and convincing” or “beyond a reasonable doubt.” We think that the insertion of the word “unequivocal,” used by the Supreme Court in deportation-type cases, *796would require the SEC to meet a standard of proof in alleged market fraud cases which, given the circumstantial nature of the proof almost inevitably necessarily relied upon, would cause the regulatory agency to fail in its proof in any except the most exceptionally blatant case.5
It may be that the SEC will conclude that scienter for purposes of this kind of discipline must include intentional violation of a duty specifically imposed by a Commission rule or regulation, and also, and perhaps necessarily, include conduct amounting to gross recklessness when the Commission has imposed a duty to make a careful check.
The agency’s power to cope with broker-dealer recklessness can be expressed in terms of fraud,6 and even formally structured in fraud on the ground that the broker-dealer makes an implied representation that he has checked,7 which would be false if indeed he has not. But that is not a wholly satisfactory analysis, although it has been used in some instances, for I would suppose that the Commission has the power to discipline a broker-dealer who has not checked as required, even though misrepresentation might be negatived by advising his customers that he has not checked.
The law embraces a finding of fault in omissions, as in failure to perform a duty, and in failure to make a statement where silence is tantamount to concealment.
The concept that recklessness may serve as a surrogate for subjective intent is not new to the law. Indeed even for purposes of defining murder, recklessness may take the place of subjective intent.8
The fact that a further reflection and refinement is called for at this time should not set the Commission back in its objective of furthering the public interest. This is likely an instance where more ground may be covered with a slow start. While the Commission may resist many efforts to clasp Ernst, it can not free itself completely of the Court’s concerns. Refinement of doctrine is not a scruple, it is a necessity. Set in sound perspective, however, Ernst should not impede the Commission’s efforts to protect the public.
. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976).
. The SEC did state in fn. 68 (J.A. 132), see note 4 of this opinion, infra, that this proceeding is governed by the standard of preponderance of evidence. However, it also stated that in any event there was clear and convincing *795evidence. On remand, it should apply the clear-and-convincing standard.
. Scienter does not mean specific intent in the sense of knowing that the conduct is prohibited by law:
It has been uniformly held that “willfully” in this context means intentionally committing the act which constitutes the violation. There is no requirement that the actor also be aware that he is violating one of the Rules or Acts.
Gearhart & Otis v. SEC, 121 U.S.App.D.C. 186, 191, 348 F.2d 798, 802 (1965) (citation omitted).
. The only evaluation directed by the SEC specifically to petitioners’ case consisted of the following:
Nassar’s case is by no means on all fours with Spangler’s. There are distinctions.68 Nassar did not have some of the warnings that Spangler had. Nor does he have Spangler’s prior history of misconduct.
68 But the case against the Nassar respondents has been well established by “the reliable, probative, and substantial evidence” that the Administrative Procedure Act requires. 5 U.S.C. § 556(d). They say that this evidence is not “clear and convincing.” We think it is. But the important thing is that the “clear and convincing” standard is inapplicable. A preponderance of the evidence is sufficient. See M. V. Gray Investments, Inc., 44 S.E.C. 567, 575 (1971); Norman Pollisky, 43 S.E.C. 852, 861 (1968).
But these distinctions are outweighed by the similarities between the two cases. Like Span-gler, Nassar was wholly indifferent to the boundaries that separate fact from fiction, naively credulous, and prone to embroider on the falsehoods with which Hausner fed him. In Nassar’s case, as in Spangler’s, we deal with a high-pressure sales effort that lasted for a long time, was unsupported by any semblance of an adequate foundation, and was characterized by grossly reckless price predictions.
Hence we are unable to take a sanguine view as to the prospect of Nassar’s future honesty. To permit one so prone to irrational euphoria and blatant exaggeration to continue to meddle with other people’s money would be contrary to the public interest. Like the administrative judge, we conclude that Nassar and his firm must be excluded from the securities business. SEC Opinion in Proceeding 3-1950 at 22 (Feb. 12, 1976), J.A. 132 (footnotes other than No. 68 omitted).
. Collins Security Corp. v. SEC, No. 75-2200, 183 U.S.App.D.C. at 305, 562 F.2d at 824 (1977).
. Counsel for the Commission puts this cast on the matter, invoking the SEC doctrine that predictions of a specific and substantial increase in price of a speculative security within a short time are “inherently fraudulent and cannot be justified.” SEC Br. at 15-16, citing SEC opinions. The SEC considers this to be “a hallmark of fraud,” Alexander Reid & Co., Inc., 40 S.E.C. 986, 991 (1962). The Sixth Circuit has said that such representations bear “the badge or mark of fraud.” Henderson v. United States, 202 F.2d 400, 404 (6th Cir. 1953).
. Hanly v. SEC, 415 F.2d 589, 596-97 (2d Cir. 1969).
. United States v. Dixon, 135 U.S.App.D.C. 401, 404-05, 419 F.2d 288, 291-92 (1969) (Lev-enthal, J., concurring).