Lexplug logoLexplug

Securities and Exchange Commission v. Blinder, Robinson & Co., Inc. And Meyer Blinder

Court of Appeals for the Tenth Circuit
855 F.2d 677, 1988 U.S. App. LEXIS 11511 (1988)
ELI5:

Sections

Rule of Law:

A court order enjoining future violations of the law may only be vacated upon a clear showing of a grievous wrong evoked by new and unforeseen conditions. Additionally, the Securities and Exchange Commission's civil enforcement authority does not violate the constitutional separation of powers because the President retains sufficient control over the Commission through appointment and removal powers.


Facts:

  • Blinder, Robinson & Co. was a nationwide securities broker-dealer led by Meyer Blinder, its principal shareholder and president.
  • Meyer Blinder orchestrated a sales program that disseminated deliberately deceptive misinformation to investors with an intent to deceive.
  • Due to these deceptive practices, the firm and Meyer Blinder became subject to permanent injunctions prohibiting them from violating securities laws.
  • Following the imposition of these restrictions, Blinder, Robinson & Co. experienced financial growth and supported various philanthropies.
  • The firm replaced most key management personnel, but Meyer Blinder remained in control as president and chief executive officer.
  • Meyer Blinder characterized his previous fraudulent actions merely as a failure to seek a formal legal opinion, rather than acknowledging his intentional deception.
  • The firm claimed that future violations were unlikely due to changes in personnel and procedures.

Procedural Posture:

  • The SEC sued Blinder, Robinson & Co. and Meyer Blinder in the U.S. District Court for the District of Colorado.
  • The District Court found the defendants liable for deceptive practices and issued injunctions against them.
  • The U.S. Court of Appeals for the Tenth Circuit affirmed the District Court's decision.
  • Blinder filed a separate lawsuit against the SEC seeking declaratory relief, which was denied by the District Court and affirmed by the Tenth Circuit.
  • Blinder filed a Motion to Vacate the Injunction in the U.S. District Court for the District of Colorado.
  • The District Court denied the Motion to Vacate.
  • Blinder filed a motion for reconsideration raising constitutional arguments, which the District Court denied.
  • Blinder appealed the denial of the motion to vacate and the motion for reconsideration to the U.S. Court of Appeals for the Tenth Circuit.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does a district court abuse its discretion by refusing to vacate a securities injunction when the defendant fails to show unforeseen conditions, and does the SEC's power to bring civil enforcement actions violate the Article II separation of powers doctrine?


Opinions:

Majority - Circuit Judge Brorby

No, the district court did not abuse its discretion in maintaining the injunction, and the SEC's authority is constitutional. Regarding the injunction, the court affirmed that the strict standard set forth in United States v. Swift & Co. applies. To modify or vacate an existing injunction, a party must show that the decree has turned into an instrument of wrong due to new and unforeseen conditions. The court rejected the appellants' argument for a more flexible standard, noting that the firm's financial success and philanthropy were irrelevant to the public interest in preventing securities fraud. Furthermore, because Meyer Blinder remained in control and failed to acknowledge the intentional nature of his past deceit—viewing it only as a procedural mistake—the court found no assurance that violations would not recur. regarding the constitutional claim, the court held that the SEC's power to bring civil actions does not violate the separation of powers. Although the President cannot remove commissioners at will, he retains the power to appoint them, select the chairman, and remove them for cause (inefficiency, neglect, or malfeasance). Under the Supreme Court's reasoning in Humphrey's Executor and Morrison v. Olson, these powers provide the President sufficient control to ensure the laws are faithfully executed.



Analysis:

This decision reinforces the high durability of permanent injunctions in securities cases. By adhering to the rigid Swift standard rather than the more flexible United Shoe standard, the Tenth Circuit signals that administrative rehabilitation, such as changing lower-level management or giving to charity, is insufficient to lift a court order if the primary bad actor remains in power. The court emphasized that a lack of contrition—specifically characterizing intentional fraud as merely a mistake of counsel—weighs heavily against lifting sanctions. Constitutionally, this case is significant for affirming the SEC's independent structure post-Morrison v. Olson, clarifying that 'for cause' removal protections for commissioners do not infringe upon the President's Article II duty to execute the laws.

G

Gunnerbot

AI-powered case assistant

Loaded: Securities and Exchange Commission v. Blinder, Robinson & Co., Inc. And Meyer Blinder (1988)

Try: "What was the holding?" or "Explain the dissent"