Rizek v. SEC
United States Court of Appeals for the First Circuit
215 F.3d 157 (2000)
- Written by Kelly Simon, JD
Facts
The Securities and Exchange Commission (SEC) (plaintiff) brought an action against Al Rizek (defendant), a vice president of PaineWebber Incorporated of Puerto Rico. Rizek churned the investment accounts of five customers, making excessive and rapid trades. While generating significant commissions for himself, Rizek pursued, on behalf of five clients, a high-risk strategy of trading US Treasury bonds to take advantage of short-term fluctuations in the market. Rizek’s strategy was incongruous with the stated purpose of these five clients, who were relatively unsophisticated investors and had articulated their desires for safe, cautious investment strategies. While Rizek’s actions resulted in the loss of approximately $195,000 across the five accounts, he generated $125,000 of commissions for himself. The SEC’s sanction order included a permanent bar against Rizek. Rizek petitioned the court for review of the SEC order, challenging the permanent bar by arguing that a lesser penalty would equally serve the public interest. Rizek did not challenge the finding that he had excessively traded the accounts of the five customers.
Rule of Law
Issue
Holding and Reasoning (Lynch, J.)
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