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The federal appeals court in Washington, D.C., vacated the U.S. Securities and Exchange Commission’s lifetime ban for an investment broker Friday, but to a dissenting judge’s disappointment, did not completely clear him of liability.

The U.S. Court of Appeals for the D.C. Circuit ruled 2-1 that Francis Lorenzo, whose boss ordered him to send emails to investors that contained misleading information, did not technically “make” false statements about an investment by sending the emails. However, the opinion written by Judge Sri Srinivasan said Lorenzo still played an “active role in perpetrating the fraud.”

Judge Brett Kavanaugh, who dissented from the ruling by Srinivasan and Judge Thomas Griffith, wrote the majority’s opinion amounted to “legal jujitsu.”

“The majority opinion emphatically holds that Lorenzo did not ‘make’ the statements in the emails,” Kavanaugh wrote. “At the same time, however, the majority opinion emphatically holds that Lorenzo nonetheless willfully engaged in a scheme to defraud solely because of the statements made by his boss. That combined holding makes little sense (at least to me) under the facts of this particular case.”

Lorenzo’s attorney said the ruling was still a win for his client. That’s because the court vacated the SEC’s punishments, which included a lifetime ban from the industry and a $15,000 fine, and remanded the case to the SEC to reconsider.

“We are very pleased with the appellate court’s ruling vacating the SEC’s sanctions on Mr. Lorenzo,” said Meyers & Heim partner Robert Heim. “We are hopeful that the SEC will follow the reasoning of the dissent and dismiss this case outright at this stage.”

SEC spokesman Ryan White declined to comment. The remand process at the SEC usually takes between one and two months.

In 2013, the SEC charged Lorenzo, his boss, Gregg Lorenzo (no relation to the plaintiff) and their investment firm, Charles Vista, with violations of three securities-fraud provisions under the Securities Act and the Securities Exchange Act. The SEC accused the brokers of lying to investors about a clean-energy company value, citing the emails Gregg Lorenzo instructed Francis Lorenzo to send.

Gregg Lorenzo and the firm settled with the SEC, but Francis Lorenzo challenged the charges. After an in-house trial, an administrative law judge ruled Lorenzo recklessly sent the false emails. The full commission sustained the ALJ’s decision on appeal. The SEC ruled Lorenzo “knew each of [the emails’ key statements] was false and/or misleading when he sent them.”

In the opinion Friday, the court agreed Lorenzo committed two of the three violations the SEC charged him with, including “employ[ing] any device, scheme or artifice to defraud” when selling a security and “us[ing] or employ[ing] … any manipulative or deceptive device or contrivance” in violation of the SEC’s rules.

“Lorenzo, acting with scienter (i.e., an intent to deceive or defraud, or extreme recklessness to that effect), produced email messages containing three false statements about a pending offering, sent the messages directly to potential investors, and encouraged them to contact him personally with any questions,” the opinion said.

The court vacated the third charge, that Lorenzo “made” false statements, under the Supreme Court’s 2011 Janus opinion. That decision said only those with authority over a statement, including its content and when and how it’s disseminated, can be considered the “maker” of the statement. Because Lorenzo sent the email on instruction from his boss, and copy and pasted the contents from his boss’s email, he could not be the “maker,” the court said.

Kavanaugh, on the other hand, argued that making false statements was central to the entire case against Lorenzo, so if he had not done that, he could not be liable. Kavanaugh wrote the administrative law judge’s factual findings were “favorable” to Lorenzo, that the judge’s decision at that level “contraven[ed] basic due process,” and that on appeal, the SEC should have dismissed the case.

Kavanaugh wrote that instead, the commission pulled a “Houdini-like move” and found Lorenzo had willfully sent the emails and was responsible for their contents. The judge bemoaned his colleagues’ deference to the SEC’s conclusions on liability.

“The good news is that the majority opinion vacates the lifetime suspension,” Kavanaugh wrote. “The bad news is that the majority opinion—invoking a standard of deference that, as applied here, seems akin to a standard of ‘hold your nose to avoid the stink’—upholds much of the SEC’s decision on liability.”

The federal appeals court in Washington, D.C., vacated the U.S. Securities and Exchange Commission’s lifetime ban for an investment broker Friday, but to a dissenting judge’s disappointment, did not completely clear him of liability.

The U.S. Court of Appeals for the D.C. Circuit ruled 2-1 that Francis Lorenzo, whose boss ordered him to send emails to investors that contained misleading information, did not technically “make” false statements about an investment by sending the emails. However, the opinion written by Judge Sri Srinivasan said Lorenzo still played an “active role in perpetrating the fraud.”

Judge Brett Kavanaugh, who dissented from the ruling by Srinivasan and Judge Thomas Griffith, wrote the majority’s opinion amounted to “legal jujitsu.”

“The majority opinion emphatically holds that Lorenzo did not ‘make’ the statements in the emails,” Kavanaugh wrote. “At the same time, however, the majority opinion emphatically holds that Lorenzo nonetheless willfully engaged in a scheme to defraud solely because of the statements made by his boss. That combined holding makes little sense (at least to me) under the facts of this particular case.”

Lorenzo’s attorney said the ruling was still a win for his client. That’s because the court vacated the SEC’s punishments, which included a lifetime ban from the industry and a $15,000 fine, and remanded the case to the SEC to reconsider.

“We are very pleased with the appellate court’s ruling vacating the SEC’s sanctions on Mr. Lorenzo,” said Meyers & Heim partner Robert Heim. “We are hopeful that the SEC will follow the reasoning of the dissent and dismiss this case outright at this stage.”

SEC spokesman Ryan White declined to comment. The remand process at the SEC usually takes between one and two months.

In 2013, the SEC charged Lorenzo, his boss, Gregg Lorenzo (no relation to the plaintiff) and their investment firm, Charles Vista, with violations of three securities-fraud provisions under the Securities Act and the Securities Exchange Act. The SEC accused the brokers of lying to investors about a clean-energy company value, citing the emails Gregg Lorenzo instructed Francis Lorenzo to send.

Gregg Lorenzo and the firm settled with the SEC, but Francis Lorenzo challenged the charges. After an in-house trial, an administrative law judge ruled Lorenzo recklessly sent the false emails. The full commission sustained the ALJ’s decision on appeal. The SEC ruled Lorenzo “knew each of [the emails’ key statements] was false and/or misleading when he sent them.”

In the opinion Friday, the court agreed Lorenzo committed two of the three violations the SEC charged him with, including “employ[ing] any device, scheme or artifice to defraud” when selling a security and “us[ing] or employ[ing] … any manipulative or deceptive device or contrivance” in violation of the SEC’s rules.

“Lorenzo, acting with scienter (i.e., an intent to deceive or defraud, or extreme recklessness to that effect), produced email messages containing three false statements about a pending offering, sent the messages directly to potential investors, and encouraged them to contact him personally with any questions,” the opinion said.

The court vacated the third charge, that Lorenzo “made” false statements, under the Supreme Court’s 2011 Janus opinion. That decision said only those with authority over a statement, including its content and when and how it’s disseminated, can be considered the “maker” of the statement. Because Lorenzo sent the email on instruction from his boss, and copy and pasted the contents from his boss’s email, he could not be the “maker,” the court said.

Kavanaugh, on the other hand, argued that making false statements was central to the entire case against Lorenzo, so if he had not done that, he could not be liable. Kavanaugh wrote the administrative law judge’s factual findings were “favorable” to Lorenzo, that the judge’s decision at that level “contraven[ed] basic due process,” and that on appeal, the SEC should have dismissed the case.

Kavanaugh wrote that instead, the commission pulled a “Houdini-like move” and found Lorenzo had willfully sent the emails and was responsible for their contents. The judge bemoaned his colleagues’ deference to the SEC’s conclusions on liability.

“The good news is that the majority opinion vacates the lifetime suspension,” Kavanaugh wrote. “The bad news is that the majority opinion—invoking a standard of deference that, as applied here, seems akin to a standard of ‘hold your nose to avoid the stink’—upholds much of the SEC’s decision on liability.”