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Steven ALTMAN, Plaintiff-Appellant, v. UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Mary L. Schapiro, Chairman, Elizabeth M. Murphy, Secretary, Defendants-Appellees

United States Court of Appeals for the Second Circuit2012-06-12No. Docket No. 11-2074-cv
687 F.3d 44

Summary

Holding. The court affirmed the district court's dismissal, holding that Section 25(a) of the Securities Exchange Act requires a person challenging a final SEC order to seek review in the appropriate Court of Appeals rather than in district court.

Steven Altman, a New York attorney, challenged an SEC lifetime ban in district court, seeking to stay administrative proceedings and vacate the sanction. The SEC had banned him for engaging in unethical conduct while representing a witness in SEC proceedings, including attempting to obtain financial compensation for his client in exchange for evading a subpoena or providing false testimony. Altman argued the district court had subject matter jurisdiction to review the SEC's action, contending that Section 25(a) of the Securities Exchange Act did not require him to seek review exclusively in the Court of Appeals.

The district court dismissed the complaint for lack of subject matter jurisdiction, finding that Section 25(a) created a comprehensive remedial scheme requiring challenges to final SEC orders to be brought in the appropriate Court of Appeals rather than in district court. Altman appealed, arguing that the statutory language did not preclude district court review and citing Supreme Court precedent suggesting exceptions to exhaustion requirements. The appellate court rejected these arguments, upholding the district court's jurisdictional ruling.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether Section 25(a) of the Securities Exchange Act provides exclusive jurisdiction to courts of appeals for review of final SEC orders
  • Whether the district court had subject matter jurisdiction to enjoin SEC administrative proceedings
  • Whether exceptions to exhaustion requirements apply to SEC enforcement actions

Procedural posture

The plaintiff appealed a district court order dismissing his complaint for lack of subject matter jurisdiction.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

PER CURIAM:

Plaintiff-Appellant Steven Altman, an attorney admitted to practice in New York, appeals from an order of the district court (Holwell, /.) dismissing his complaint for lack of subject matter jurisdiction because Section 25(a) of the Securities Exchange Act of 1934 provides a comprehensive remedial scheme that required Altman to appeal an SEC debarment order to a court of appeals. See Altman v. SEC, 768 F.Supp.2d 554, 558-62 (S.D.N.Y.2011). Altman filed the complaint in the district court against the United States Securities and Exchange Commission (“SEC” or the “Commission”) seeking injunctive relief in the form of an order staying the SEC administrative proceedings against him and compelling the SEC to vacate its decision sanctioning him with a lifetime ban from practicing before the Commission. At the time his complaint was filed, the SEC had banned Altman because he had “engaged in unethical and improper professional conduct while representing [a] prospective witness” in SEC administrative proceedings, to wit: seeking a financial pay package for his client in exchange for having his client either (1) evade being subpoenaed to appear before the SEC or (2) in the event his client testified, purposely not cooperate or falsely testify to relevant facts. Finding that Altman’s action violated its own rules and the New York Rules of Professional Conduct, the SEC issued a lifetime ban preventing him from ever appearing or practicing again before the SEC, pursuant to Rule 102(e)(l)(ii) of the Commission’s Rules of Practice, 17 C.F.R. § 201.102(e)(l)(ii), and Section 4C of the Securities Exchange Act of 1934, 15 U.S.C. § 78d-3(a)(2). In the complaint, Altman contends that the actions of the Commission deprived him of equal protection and due process and that the Commission acted without constitutional or statutory authority in sanctioning him based on violations of New York’s disciplinary rules. Section 25(a) of the Exchange Act, however, provides that a “person aggrieved” by a final SEC order obtains “review of the order in the United States Court of Appeals for the circuit in which he resides or has his principal place of business, or for the District of Columbia Circuit.” 15 U.S.C. § 78y(a)(l) (emphasis added). Review provisions such as this generally preclude de novo review in the district courts, requiring litigants to bring challenges “in the Court of Appeals or not at all.” City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 336, 78 S.Ct. 1209, 2 L.Ed.2d 1345 (1958); see also Touche Ross & Co. v. SEC, 609 F.2d 570, 574 (2d Cir.1979).

Altman argues that the plain language of Section 25(a) does not preclude review in the district court. He also argues that our decision in Touche Ross, 609 F.2d 570, supports his position that he need not exhaust administrative remedies or bring an action in a court of appeals. He contends that the Supreme Court decisions in Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 114 S.Ct. 771, 127 L.Ed.2d 29 (1994), and Free Enterprise Fund v. Pub. Co. Accounting Oversight Bd., — U.S. —, 130 S.Ct. 3138, 177 L.Ed.2d 706 (2010), supply the district court with subject matter jurisdiction.

The district court disposed of each of these arguments, holding that Section 25(a) does, under this Circuit’s precedent, supply the jurisdictional route that Altman must follow to challenge the SEC action in this case. It also correctly held that the exception identified in Touche Ross did not apply, and that none of the factors in Thunder Basin/Free Enterprise militated in favor of district court jurisdiction. See Touche Ross, 609 F.2d at 574 (concluding that, in situations where a litigant challenges a final Commission decision, the litigant must first exhaust administrative remedies); Free Enterprise, 130 S.Ct. at 3150 (discussing factors that indicate whether non-exhaustion constitutes a bar).

Having considered the various arguments Altman presents in the instant appeal, we affirm the order of the district court for the reasons set forth in Judge Holwell’s thorough and well-reasoned opinion. See Altman v. SEC, 768 F.Supp.2d 554, 558-62 (S.D.N.Y.2011).

. Altman has since challenged the SEC’s order in the Court of Appeals for the D.C. Circuit. There he raised essentially the same arguments as those made to the district court here. The D.C. Circuit has now rejected the arguments and affirmed the lifetime ban. See Altman v. SEC, 666 F.3d 1322 (D.C.Cir.2011).