ACAP Financial v. Securities & Exchange Comm'n, No. 13-9592 (10th Cir. 2015)Annotate this Case
Greyfield Capital was a defunct Canadian company. Two "con-men" found a signature stamp belonging to the company's former president, and used it as an officially-sanctioned "seal" to appoint themselves corporate officers, issue millions of unregistered shares in their names. The men then took the unregistered, issued shares to create a penny stock "pump-and-dump" scheme. Regulators began looking for those who had helped facilitate the sale of Greyfield's unregistered shares. Regulators were led to petitioners ACAP and Gary Hume. ACAP was a penny stock brokerage firm in Salt Lake City, and Gary Hume was its head trader and compliance manager. Petitioners did not dispute their liability stemming from the Greyfield scheme, rather, they disputed the sanctions they received. FINRA decided to fine ACAP $100,000 and Mr. Hume $25,000, and to suspend Hume from the securities industry for six months. The Securities and Exchange Commission (SEC) reviewed and sustained these sanctions. ACAP and Hume then petitioned the Tenth Circuit to appeal the SEC's decision. After review, the Tenth Circuit could not "see how [it] might overturn the agency's decision." Accordingly, the Court affirmed the SEC's decision.