Peter W. Schellenbach does not dispute a finding of the Securities and Exchange Commission that he wrote bad checks and falsified reports to create the illusion that his Chicago securities firm, Brook Investments, Inc. ("Brook"), was solvent. However, Schellenbach contends that his punishment--including a $50,000 fine, censure, and lifetime ban on his acting in any principal, supervisory or managerial capacity with any member-firm of the National Association of Securities Dealers ("NASD")--is too severe. He also suggests that he wouldn't have been prosecuted in the first instance but for a plot among "rogue" NASD staff members who sought to make themselves look good at his expense. Under petitioner's theory, the NASD reneged on a promise not to prosecute his violations of the securities laws only after staff members learned that the FBI was interested in the case. Schellenbach's punishment must be affirmed, however, because he has no proof of any such conspiracy, and because, even if he did have proof, the intent of NASD staff members is irrelevant; the SEC, not the NASD, imposed the sanctions petitioner appeals.
This Court has jurisdiction to hear appeals of final SEC orders under Section 25(a)(1) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78y(a)(1). Because the SEC lacks the resources to police the entire securities industry, it relies on participants in the markets to govern themselves.
Jurisdiction: U.S. Court of Appeals, Seventh Circuit
Related Categories: Civil Remedies
, Constitutional Law
, Government / Politics