Federal court denies Ray 'Buckets of Money' Lucia's appeal to SEC ban

Federal court denies Ray 'Buckets of Money' Lucia's appeal to SEC ban
The adviser and radio show host had challenged the right of the SEC to use administrative law judges to hear cases such as his.
SEP 26, 2016
Raymond Lucia Sr., a former investment adviser and talk show radio host whom the SEC barred from the industry last year, lost his petition Tuesday before the U.S. Court of Appeals to review and vacate the SEC decision. “In view of the [Securities and Exchange] Commission's findings that [Mr. Lucia] repeatedly and recklessly engaged in egregious conduct without regard to his fiduciary duty to his clients, petitioners fail to show that the commission's sanction was unwarranted as a matter of policy or without justification in fact, or that it failed to consider adequately his evidence of mitigation,” according the court's ruling. “According, we deny the petition for review.” Mr. Lucia's failure to win an appeal of the SEC decision is a setback for other advisers who have been challenging the SEC's use of administrative law judges to handle disciplinary cases. Mr. Lucia and others want to have their cases heard in federal court where they claim they have more rights than in administrative proceedings. Critics of the SEC's use of administrative law judges point to the overwhelming win rate of the commission in those cases. According to the Wall Street Journal, the SEC won against 90% of defendants before its own judges in contested cases from October 2010 through March 2015. That was markedly higher than the 69% success rate the agency obtained against defendants in federal court over the same period, based on SEC data, the Journal reported. Mark A. Perry, one of Mr. Lucia's attorneys and a partner with Gibson Dunn & Crutcher, did not return a call on Tuesday afternoon to comment. “We are pleased with the court's decision,” said an SEC spokesperson. Last September, the SEC voted to uphold a decision by an in-house judge from 2013 to punish Raymond Lucia Sr. for misleading investors about the efficacy of his “buckets of money” approach to building retirement assets. The SEC said Mr. Lucia used inflation rates to “back-test” the strategy that did not reflect historical rates of inflation for the time periods to which he referred. At the time, Mr. Lucia was barred and he and his firm were ordered to pay a total of $300,000 in fines. But in a later dissent, the SEC's two Republican commissioners said their three other colleagues, who supported the SEC judge's ruling, had “engaged in 'rulemaking by opinion.'” Mr. Lucia then petitioned the Court of Appeals, but to no avail.

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