SEC Sings You're Gonna Have To Serve Somebody With A Proper Brief
January 26, 2015
Imagine that you're broke and can't afford a fabulous but high-priced regulatory lawyer like me and you need to submit a brief in response to some absolutely outrageous allegations made against you by the Securities and Exchange Commission ("SEC"). The first step you should take is to read -- quite carefully -- the exact SEC Rule of Practice that governs how a brief is to be prepared and submitted. You didn't know that the rules got so nitty gritty? Yeah, they get highly focused. In any event, take a few minutes and read the following Rule. There will not be any pop quiz at the end of this exercise, so, just take your time and enjoy the amazing world of legalese:
Rule 450. Briefs Filed with the Commission.
(a) Briefing Schedule Order. Other than review ordered pursuant to Rule 431, if review of a determination is mandated by statute, rule, or judicial order or the Commission determines to grant review as a matter of discretion, the Commission shall issue a briefing schedule order directing the party or parties to file opening briefs and specifying particular issues, if any, as to which briefing should be limited or directed. Unless otherwise provided, opening briefs shall be filed within 30 days of the date of the briefing schedule order. Opposition briefs shall be filed within 30 days after the date opening briefs are due. Reply briefs shall be filed within 14 days after the date opposition briefs are due. No briefs in addition to those specified in the briefing schedule order may be filed except with leave of the Commission. The briefing schedule order shall be issued:
(1) at the time the Commission orders review on its own initiative pursuant to Rules 411 or 421, or orders interlocutory review on its own motion pursuant to Rule 400(a); or
(2) within 21 days, or such longer time as provided by the Commission, after: (i) the last day permitted for filing a petition for review pursuant to Rule 410(b) or a brief in opposition to a petition for review pursuant to Rule 410(d);
(ii) receipt by the Commission of an index to the record of a determination of a self-regulatory organization filed pursuant to Rule 420(d);
(iii) receipt by the Commission of an index to the record of a determination by the Board filed pursuant to Rule 440(d);
(iv) receipt by the Commission of the mandate of a court of appeals with respect to a judicial remand; or
(v) certification of a ruling for interlocutory review pursuant to Rule 400(c).
(b) Contents of Briefs. Briefs shall be confined to the particular matters at issue. Each exception to the findings or conclusions being reviewed shall be stated succinctly. Exceptions shall be supported by citation to the relevant portions of the record, including references to the specific pages relied upon, and by concise argument including citation of such statutes, decisions and other authorities as may be relevant. If the exception relates to the admission or exclusion of evidence, the substance of the evidence admitted or excluded shall be set forth in the brief, in an appendix thereto, or by citation to the record. Reply briefs shall be confined to matters in opposition briefs of other parties.
(c) Length Limitation. Except with leave of the Commission, opening and opposition briefs shall not exceed 14,000 words and reply briefs shall not exceed 7,000 words, exclusive of pages containing the table of contents, table of authorities, and any addendum that consists solely of copies of applicable cases, pertinent legislative provisions or rules, and exhibits. The number of words shall include pleadings incorporated by reference. Motions to file briefs in excess of these limitations are disfavored.
(d) Certificate of Compliance. An opening or opposition brief that does not exceed 30 pages in length, exclusive of pages containing the table of contents, table of authorities, and any addendum that consists solely of copies of applicable cases, pertinent legislative provisions, or rules and exhibits, but inclusive of pleadings incorporated by reference, is presumptively considered to contain no more than 14,000 words. A reply brief that does not exceed 15 pages in length, exclusive of pages containing the table of contents, table of authorities, and any addendum that consists solely of copies of applicable cases, pertinent legislative provisions, or rules and exhibits, but inclusive of pleadings incorporated by reference, is presumptively considered to contain no more than 7,000 words. Any brief that exceeds these page limits must include a certificate by the party's representative, or an unrepresented party, stating that the brief complies with the length limitation set forth in Rule 450(c) and stating the number of words in the brief. The person preparing the certificate may rely on the word count of the word-processing system used to prepare the brief
WTF, you say? Well, now you know why I get the big bucks. If you found yourself sobbing uncontrollably as you tried to figure out the "when, what, and how" of the filing rules, don't feel too bad about it: welcome to my world! Here . . . take a tissue, wipe your eyes.
You're Gonna Have To Serve Somebody (With A Proper Brief)
Now that you are an expert and fully familiar with the SEC's
rule about how to submit a brief, let's consider the mess that has arisen in
this case: In the Matter of John Thomas Capital Management Group Llc D/B/A
Patriot28 LLLC and George R. Jarkesy, Jr. (Order Directing Additional
Submission, Securities and Exchange Commission, '33 Act Release No. 97 03; '34 Act
Release No. 74100; '40 Act IA Act Release No. 4002; '40 Act IC Act Release No.; and Admin. Proc.
File No. 3-15255 / January 20, 2015
A Consolidated Opening Brief
On January 13, 2015, Respondents John Thomas Capital and
Jarkesy, Jr. filed their consolidated opening brief in the above SEC
proceeding. It seems that the SEC wasn't quite happy with the format and
content of that submission and in a somewhat unusual move - a reprimand, of
sorts - the Respondents have been referred to SEC Rule of Practice 450(b). You'll note that I have conveniently highlighted that section in an ever-popular hue of yellow. Pointedly, the SEC notes that:
It appears that the sections of the opening brief enumerating respondents' exceptions to the initial decision's evidentiary rulings (Br. at 36-38), factual findings (id. at 39-45), and legal conclusions (id. at 46-47) do not contain any citations to portions of the record or to legal authorities. For example, the discussion accompanying each of the challenged factual findings consists essentially of the boilerplate assertion that the finding in question mischaracterizes the evidence, relies on unreliable evidence, and ignores contradictory evidence. In each instance, the only citation provided is to the page of the initial decision that recites that finding; no reference is made to the "relevant portions of the record, including . . . the specific pages relied upon" by respondents, as required by Rule 450(b). The discussion accompanying each of the challenged legal conclusions is just as conclusory: It repeatedly asserts that the law judge mischaracterized the evidence, ignored contrary evidence, and misapplied the law, but without a single citation to record evidence or to any statute, regulation, or court or Commission decision.
Accordingly, it is
Bill Singer's CommentORDERED that respondents shall, by no later than February 3, 2015, file a submission setting forth, in a two-column format, the citations supporting each of the exceptions asserted in pages 36 to 47 of their opening brief. The first column shall reproduce verbatim each exception as stated in the opening brief. The second column shall contain citations, without discussion or commentary, to "relevant portions of the record, including references to the specific pages relied upon," and relevant "statutes, decisions, and other authorities" supporting that exception.10 The citations shall identify precisely-i.e., by page or Bates number or other similar designation-where the information can be found in the referenced materials and may, if respondents choose,be accompanied by parentheticals with pertinent quotations.
It is further ORDERED that the submission be accompanied by a certificate stating the total number of words in the second column of the submission.
Might be a rock'n' roll addict prancing on the stageMight have money and drugs at your commands, women in a cageYou may be a business man or some high degree thiefThey may call you Doctor or they may call you Chief.But you're gonna have to serve somebody, yes indeedYou're gonna have to serve somebody,Well, it may be the devil or it may be the LordBut you're gonna have to serve somebody.