Three years after the U.S. Securities and Exchange Commission barred Ray Lucia Sr. from the securities industry, the ex-investment adviser and radio talk show host is still seeking to overturn that decision. Last week, he filed a petition asking the U.S. Court of Appeals for the D.C. Circuit to hear his case again.
It was just last August that the appeals court heard his petition but refused to review and vacate the SEC ruling. His latest petition was submitted en banc, which could allow all 11 members of the appeals court to refuse to hear the case or decide to do so and issue a vote.
Lucia, who once touted a “buckets of money” investment strategy for retirement was barred after an SEC administrative law judge found that the ex-investment adviser misled investors about the strategy’s approach to growing retirement assets. According to the regulator, the inflation rates Lucia employed to “back-test” his strategy failed to factor in the historical inflation rates during the time periods that were supposedly relevant.
Not only was Lucia barred from the securities industry, but also he and his firm had to pay a $300K in fine. Then, last year, SEC commissioners upheld the ALJ’s ruling but their vote on it was split according to party lines, with the two Republican commissioners submitting dissents.
Lucia’s latest petition contends that when refusing to hear his case last year, the Court of Appeals had referred to a precedent that was incorrect. The ruling then had said that in considering the SEC’s finding that Lucia had taken part in “egregious conduct” on a repeated basis and ignored his fiduciary obligation to clients, the court found that petitioners did not succeed in demonstrating that the regulator’s action was “unwarranted” as a policy matter, or “without justification in fact,” or that the regulator did not adequately evaluate his “evidence of mitigation.”
Lucia is one of a number of individuals who have challenged whether the SEC has the right to have its administrative law judges preside over disciplinary cases. Critics have said that the Commission wins much more when an ALJ is the one issuing a ruling.
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Talk-show radio host and adviser Ray Lucia Sr. still fighting SEC bar in appeals court, InvestmentNews, September 26, 2016
Read the SEC Order (PDF)