I reported a few weeks ago on the victory that my clients, Mark Robare and Jack Jones, achieved in the administrative proceeding that the SEC initiated against them last year. Against all odds, they convinced Judge Grimes that not only had they not committed the fraud claimed by the SEC, but, in Judge Grimes’ words, it was “difficult to imagine them trying to defraud anyone, let alone their investment clients.”
The only problem is that Judge Grimes’ decision was not final, and would not become final for 21 days, three long weeks in which we waited to see whether or not the Division of Enforcement would file a petition to review the decision, or whether the Commission itself would call the decision for review.
Today was Day 21, the last possible day for either of these things to happen. At 4:50 pm EDT, I received an email from Enforcement. Guess what? They were appealing. Shocking. This was not the appeal brief, mind you, just the notice of appeal. Sometimes such things are all of two pages long, including caption and signature block. Here, it took Enforcement 27 pages – 27! – to describe all the findings that they claim Judge Grimes managed to get wrong.
So, now, under the rules, the five Commissioners who comprise the SEC, i.e., the same five people who authorized the issuance of the complaint against Mark and Jack in the first place, now get to decide whether they can live with the fact that Judge Grimes disagreed with their view of the facts. There are lots of statistics available to show what happens when respondents who lose administrative proceedings appeal to the SEC. (Not surprisingly, they don’t do very well; in fact, often the SEC will ratchet up the sanctions imposed by the ALJ.) There are very few statistics, however, to shed light on what happens when Enforcement loses and then appeals to the Commissioners. This is for the simple reason that Enforcement, basically, never loses, and thus never has to appeal.
I will keep you apprised of further developments. Mark and Jack will keep fighting the good fight, and, as before, will aggressively defend any and all accusations that they committed fraud on their clients. I am confident that the Commissioners, once they see the evidence in the record, will agree with Judge Grimes, and dismiss these charges, once and for all.