                    FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT


 U.S. SECURITIES & EXCHANGE                       No. 17-56522
 COMMISSION,
                  Plaintiff-Appellee,               D.C. No.
                                                 2:15-cv-09420-
                     v.                             CBM-SS

 HUI FENG; LAW OFFICES OF FENG
 AND ASSOCIATES PC,                                 OPINION
             Defendants-Appellants.

        Appeal from the United States District Court
            for the Central District of California
       Consuelo B. Marshall, District Judge, Presiding

             Argued and Submitted May 16, 2019
                    Pasadena, California

                     Filed August 23, 2019

     Before: Kermit V. Lipez, * Kim McLane Wardlaw,
          and Andrew D. Hurwitz, Circuit Judges.

                    Opinion by Judge Lipez



     *
       The Honorable Kermit V. Lipez, United States Circuit Judge for
the First Circuit, sitting by designation.
2                        USSEC V. FENG

                          SUMMARY **


             Securities & Exchange Commission

   The panel affirmed the district court’s summary
judgment in favor of the U.S. Securities and Exchange
Commission (“SEC”) in its civil complaint filed against Hui
Feng and his law firm, alleging securities fraud.

    The U.S. Immigrant Investor Program, also known as the
EB-5 program, provides legal permanent residency in the
United States to foreign nationals who invest in U.S.-based
projects. Multiple foreign investors may pool their money
in the same enterprise, and these pooled investments are
made through “regional centers” which are regulated by the
U.S. Citizenship and Immigration Services.

    Feng legally represented clients through the EB-5
process, and entered into marketing agreements with
regional centers. The basis of the agreements between the
regional centers and Feng’s investors were known as private
placement memoranda (“PPMs”).

    The panel agreed with the district court that the EB-5
investments in this case constituted “securities” in the form
of investment contracts. The panel rejected Feng’s argument
that the transactions were not “securities” because his clients
did not expect profits from their investments. Specifically,
the panel held that the PPMs’ identification of the
investments as securities, the form of the investment entity

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                       USSEC V. FENG                           3

as a limited partnership, and the promise of a fixed rate of
return all indicated that the EB-5 transactions were
securities. The panel rejected Feng’s contention that the
administrative fees upended the expectation of profits. The
panel also rejected Feng’s assertion that his clients lacked an
expectation of profit because they were motivated to
participate in the EB-5 program by the promise of visas, not
by profit.

    Concerning the cause of action that Feng failed to
register as a broker in violation of Section 15(a) of the
Securities and Exchange Act of 1934, the panel agreed with
the district court’s conclusion that Feng was acting as a
broker and violated the registration requirement. The panel
held that the district court properly made its broker
determination by utilizing the totality-of-the-circumstances
approach by relying on the so-called Hansen factors. The
panel rejected Feng’s arguments that the broker registration
requirement should not apply to his circumstances.

    The panel affirmed the district court’s finding that Feng
engaged in securities fraud in violation of Section 17(a) of
the Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 based on two theories of fraud
liability: material omissions, and schemes to defraud.
Concerning material omissions, the panel held that where
Feng worked as both a broker and an immigration attorney,
he had fiduciary duties to his clients, including the obligation
to disclose conflicts of interest. Here, there was a risk that
Feng’s judgment would be swayed by the promise of a
commission from the regional center, and this presented a
conflict with Feng’s representation of a client, which he
failed to disclose to his clients, and this failure was material.
Concerning schemes to defraud, the panel affirmed the
district court’s findings that Feng defrauded the regional
4                      USSEC V. FENG

centers that refused to pay commissions to U.S.-based
attorneys not registered as brokers, and defrauded clients
who sought a reduction in their administrative fees.

    Finally, the panel held that the district court did not abuse
its discretion in entering a disgorgement order. The district
court calculated that Feng received $1.268 million for
commissions in connection with the EB-5 program, and
ordered disgorgement of the entire amount.


                         COUNSEL

Andrew B. Holmes (argued) and Matthew D. Taylor,
Holmes Taylor Scott & Jones LLP, Los Angeles, California,
for Defendant-Appellant Law Offices of Feng & Associates.

Hui Feng (argued), Law Offices of Feng & Associates,
Flushing, New York, for Defendant-Appellant Hui Feng.

Kerry J. Dingle (argued), Senior Counsel; Jeffery A. Berger,
Senior Litigation Counsel; Michael A. Conley, Solicitor;
Robert B. Stebbins, General Counsel; Securities &
Exchange Commission, Washington, D.C.; for Plaintiff-
Appellee.
                          USSEC V. FENG                                5

                             OPINION

LIPEZ, Circuit Judge:

    This appeal requires us to decide whether certain
investments made by participants in the U.S. Immigrant
Investor Program are “securities” subject to regulation by the
Securities and Exchange Commission (“SEC”) and, if so,
whether appellant Hui Feng was a securities “broker”
required to register with the SEC and whether he committed
securities fraud in connection with the transactions. 1 The
district court granted summary judgment for the SEC. We
affirm.

                                   I.

A. The EB-5 Program

    The U.S. Immigrant Investor Program, colloquially
referred to as the EB-5 program, provides legal permanent
residency in the United States to foreign nationals who
invest in U.S.-based projects.              See 8 U.S.C.
§ 1153(b)(5)(A). 2 Generally, qualified immigrants may gain
U.S. visas through direct investment of at least $1 million in
a new commercial enterprise that creates at least ten full-
time jobs for U.S. workers. Id. § 1153(b)(5)(A), (C).
Investment in a business in a “targeted employment area”

    1
       Both Hui Feng and his law firm, the Law Offices of Feng &
Associates P.C., are appellants in this matter. The parties’ arguments do
not distinguish between the two, and so, as a matter of convenience, we
refer to the appellants collectively as “Feng.”
    2
       By statute, the Immigrant Investor Program is the fifth preference
in the employment-based visa category, which gave rise to the nickname
“EB-5.” See 8 U.S.C. § 1153(b)(5)(A).
6                     USSEC V. FENG

lowers the required capital investment amount to $500,000.
Id. § 1153(b)(5)(C)(i), (ii).

    Multiple foreign investors may pool their money in the
same enterprise, provided that each invests the required
amount and “each individual investment results in the
creation of at least ten full-time positions.” 8 C.F.R.
§ 204.6(g). Pooled investments are made through “regional
centers,” which are regulated by the U.S. Citizenship and
Immigration Services (“USCIS”). The regional centers offer
specific projects to investors and manage the pooled
investments. See id. § 204.6(e), (m).

    A foreign national investing in an enterprise must file an
I-526 application with the USCIS to prove that the
investment will satisfy EB-5 program requirements. Id.
§ 204.6(a), (j)(2). Approval results in conditional permanent
resident status. Two years later, the investor may remove
the conditions on lawful permanent resident status by filing
an I-829 petition, demonstrating that the investment satisfied
the EB-5 requirements and created, or will create within a
reasonable period, ten qualifying jobs. Id. § 216.6.

B. Factual Background

     Feng and the SEC largely agree on the facts. To the
extent that they have differing views of the record, we draw
all justifiable inferences in the light most favorable to Feng.
Blankenhorn v. City of Orange, 485 F.3d 463, 470 (9th Cir.
2007).

    Feng conducts an immigration law practice in New York
City. Between 2010 and 2016, he led approximately
150 clients through the EB-5 process, substantially all of
whom were Chinese nationals who did not speak English.
Feng estimated that 80 percent of his clients found him
                        USSEC V. FENG                             7

through his website, which posted comparisons and
recommendations of available EB-5 projects. Feng holds a
law degree from Columbia University and an MBA from the
Tuck School of Business at Dartmouth, and he touted his
skill at investigating and determining the most reliable
investment opportunities.

    Feng charged his clients a $10,000 to $15,000 upfront
fee. His services included serving as a liaison between
clients and regional centers, explaining the English-language
offering materials to his clients, negotiating with regional
centers regarding administrative fees charged to the clients
by the centers, and compiling and submitting his clients’
signed offering documents to regional centers. On three
occasions, investors wired funds directly to Feng, who
transferred the funds to the regional centers.

     Feng also entered into marketing agreements with
regional centers. Through these agreements, he reserved a
number of the limited investor “spots” in certain EB-5
projects, which he then promoted on his website and tried to
fill within a set time period. If one of Feng’s clients made
the required capital contribution to one of these regional
centers, and if the USCIS approved the investor’s I-526
petition, the regional center agreed to pay Feng commissions
of $15,000 to $70,000. Although hundreds of regional
centers participate in the EB-5 program, Feng procured
investors only for ten centers, all of which agreed to pay
commissions. Feng did not disclose to his clients the
commissions he received from the regional centers unless
they specifically asked about them. 3


    3
       When the SEC’s investigation was pending, Feng revised his
retainer agreement to state that regional centers may pay fees to an
8                       USSEC V. FENG

    Payment of a commission is an EB-5 industry practice,
but many regional centers refuse to pay a commission to a
U.S.-based attorney who is not registered as a broker, to
avoid causing or aiding and abetting a violation of the broker
registration requirement in Section 15(a) of the Securities
Exchange Act of 1934. See 15 U.S.C. § 78o(a). Several
regional centers offer a discount or rebate of a portion of the
administrative fee charged to the investor if there is no
referral commission for the attorney. Feng chose neither to
register as a broker, nor to forego commissions.

    When told by some regional centers that they could only
pay commissions to overseas recruiters, Feng responded that
he had referral partners in China who were finding investors.
He entered into marketing agreements in which he promised
to relay the commissions to those individuals. He also
arranged agreements that were directly between the regional
centers and the individuals. The referral partners included
Feng’s wife, mother, and mother-in-law. Feng described
these individuals in his deposition testimony as his
“nominees,” whose role was to be “just a surrogate to receive
the money.” They did not do the work of recruiting
investors—Feng did that himself. After the regional centers
paid commissions to the individuals, they transferred the
funds to Feng. Feng asserts that the regional centers only
asked for a foreign contact to pay and did not “care” who it
was.

    In 2014, Feng also created Atlantic Business Consulting
Limited (“ABCL”), based in Hong Kong. According to
Feng, this decision was “driven in part by regional centers
informing me they needed an overseas entity to pay.” ABCL

overseas company owned by Feng upon completion of the client’s visa
approval.
                      USSEC V. FENG                         9

entered into marketing agreements with regional centers, and
its only source of revenue was EB-5 commissions. Feng did
not inform the regional centers that he solicited and referred
ABCL’s investors himself. All of Feng’s employees worked
both for his law office and for ABCL. Feng’s mother,
Xiuyuan Tan, signed agreements between ABCL and
regional centers as ABCL’s “President,” but Feng admitted
she played no role in ABCL. Feng also did not inform the
regional centers that he was ABCL’s beneficial owner, with
sole control of ABCL’s bank account. Representatives from
the regional centers testified that they would have ceased
their marketing agreements if they had known about Feng’s
relationship with the individual referral agents and with
ABCL.

    In total, regional centers paid Feng and his overseas
entities $1.268 million in commissions for investments made
by Feng’s clients. At the time of the district court judgment,
these entities were contractually entitled to an additional
$3.45 million in commissions, pending the approval of his
clients’ I-526 petitions.

    The basis of the agreements between the regional centers
and Feng’s investors was set forth in the regional centers’
offering materials, also known as private placement
memoranda (“PPMs”). Many of the PPMs referred to the
investments as “securities” and asserted that the investments
were compliant with U.S. securities laws. The regional
centers structured the investments as limited partnerships, in
which the investors became limited partners and the regional
center was the general partner. The regional centers
promised investors a fixed, annual return on investment,
which ranged across projects from 0.5 to 5 percent of the
capital contribution, and investors received Schedule K-1 tax
forms to report their investment income from the
10                       USSEC V. FENG

partnership. The partnerships all made construction loans or
otherwise financed a specified construction project. At the
end of the investment term, typically five to six years, the
regional centers promised the investors a return of their
capital contribution, subject to market risks.

    The PPMs required that investors pay an administrative
fee, which ranged across projects from $30,000 to $50,000,
in addition to the capital contribution of $1 million or
$500,000.     The PPMs expressly stated that these
administrative fees were for operating and marketing costs,
were not part of the capital contribution, and did not earn
interest.

    Approximately 20 percent of Feng’s clients asked him to
seek a reduced administrative fee from the regional centers.
In those instances, Feng negotiated with regional centers and
facilitated contracts between those regional centers and his
clients for a rebate of a portion of the administrative fee.
Feng did not disclose to these clients, however, that the
administrative fees helped to fund his commissions, nor that
the regional centers offset the clients’ administrative fee
rebate with a reduction in the commissions to which he was
contractually entitled. Indeed, Feng asked the regional
centers not to inform the clients about either fact. Feng
explained in his deposition that he wanted to create the
appearance to his clients that he was advocating on their
behalf with the regional center and also to “keep as much of
the marketing fee as possible”—that is, his commission—
and to avoid further “haggl[ing]” with clients who might ask
Feng to rebate more of the commission. 4


     4
     For example, one client testified that Feng sent him a check for
$15,000, which Feng explained as a return of charges from the regional
                         USSEC V. FENG                            11

C. Procedural Background

    The SEC filed a civil complaint against Feng and his law
firm on December 7, 2015. The first and second causes of
action allege fraud under Section 17(a) of the Securities Act
of 1933, 15 U.S.C. § 77q(a), and Section 10(b) of the
Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (“the
Exchange Act”), respectively. The third cause of action
alleges failure to register as a broker-dealer under Section
15(a) of the Exchange Act, 15 U.S.C. § 78o.

    The defendants filed a motion for judgment on the
pleadings, which the district court denied in August 2016.
The parties subsequently filed cross-motions for summary
judgment. Feng argued that the EB-5 investments were not
“securities” because the investors had no expectation of
profit—only of obtaining a green card. The SEC argued that
the undisputed evidence showed that Feng acted as a
“broker” of “securities” as a matter of law. The district court
found no genuine dispute of material fact and granted
summary judgment for the SEC on all three causes of action.
In this appeal, Feng argues that the transactions were not
“securities,” and so the district court erred by denying his
motion for summary judgment and granting the SEC’s
motion.

    We review the district court’s decision on cross-motions
for summary judgment de novo. Avery v. First Resolution
Mgmt. Corp., 568 F.3d 1018, 1021 (9th Cir. 2009).
Summary judgment is appropriate when there is no genuine
dispute of material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). We

center without disclosing that Feng had received a $70,000 commission
on the client’s $1 million investment.
12                     USSEC V. FENG

consider cross-motions “separately, giving the nonmoving
party in each instance the benefit of all reasonable
inferences.” Zabriskie v. Fed. Nat’l Mortg. Ass’n, 912 F.3d
1192, 1196 (9th Cir. 2019) (quoting ACLU of Nev. v. City of
Las Vegas, 466 F.3d 784, 790–91 (9th Cir. 2006)).

                              II.

    Feng contends that the district court erred in its threshold
determination that the EB-5 investments at issue were
“securities.” Because this finding is essential to all the
causes of action, we begin by considering whether the
district court properly made that determination as a matter of
law.

    The district court found that the EB-5 investments were
securities because they were made through investment
contracts between the regional centers and the investors.
Section 3(a)(10) of the Securities Act defines the term
“security” broadly, enumerating a long list of financial
instruments, including “any . . . investment contract.”
15 U.S.C. § 78c(a)(10). Although the Securities Act does
not define the term “investment contract,” the parties agree
that the applicable test, set forth in SEC v. W. J. Howey Co.,
requires “a contract, transaction or scheme whereby a person
invests his money in a common enterprise and is led to
expect profits solely from the efforts of the promoter or a
third party.” 328 U.S. 293, 298–99 (1946). Courts applying
Howey “conduct an objective inquiry into the character of
the instrument or transaction offered based on what the
purchasers were ‘led to expect,’” including an analysis of the
promotional materials associated with the transaction.
Warfield v. Alaniz, 569 F.3d 1015, 1021 (9th Cir. 2009)
(quoting Howey, 328 U.S. at 298–99).
                      USSEC V. FENG                         13

    It is undisputed that Feng’s clients invested money in a
common enterprise managed by a third party. Feng argues
that the transactions nonetheless were not “securities”
because the clients did not expect profits from their
investments. He asserts that his clients would have
recognized that the modest fixed return they were due from
the regional centers would not exceed the significant
administrative fees that they paid. He further maintains that
the lack of expected profit was not a concern for his clients
because their motivation for making an EB-5 investment was
to obtain U.S. visas. We find Feng’s characterization of the
EB-5 investments unpersuasive.

A. The PPMs

     The regional centers promoted and described the EB-5
investments in the PPMs. The PPMs repeatedly referred to
the investments as “securities” and explained that the
offerings were made pursuant to U.S. securities laws.
Although “the name given to an instrument is not
dispositive,” “most instruments bearing th[e] traditional
titles [associated with securities] are likely to be covered by
the statutes.” United Hous. Found., Inc. v. Forman, 421 U.S.
837, 850 (1975). Further, “the use of a traditional name such
as ‘stocks’ or ‘bonds’ [may] lead a purchaser justifiably to
assume that the federal securities laws apply.” Id. That
inference inevitably would be drawn “when the underlying
transaction embodies some of the significant characteristics
typically associated with the named instrument.” Id. at 851.

    Such characteristics are evident and undisputed here.
The EB-5 transactions were structured as investments in
limited partnerships, with the promise of a fixed annual
return on the investment, ranging from .5 to 5 percent.
Investments in limited partnerships generally constitute
investment contracts, see SEC v. Murphy, 626 F.2d 633, 640
14                     USSEC V. FENG

(9th Cir. 1980), and a return based on a fixed rate falls within
the broad definition of “profits,” SEC v. Edwards, 540 U.S.
389, 394 (2004); see also id. at 396 (“[T]he commonsense
understanding of ‘profits’ in the Howey test [is] simply
‘financial returns on . . . investments.’” (quoting Forman,
421 U.S. at 853)); Warfield, 569 F.3d at 1022 (holding that
the investors had an expectation of profit where the
promotional materials emphasized “long-term income
production potential”). The Supreme Court has reasoned
that the promise of a fixed rate of return should be viewed as
triggering an expectation of profits because the securities
laws are intended “to regulate all of the ‘countless and
variable schemes devised by those who seek the use of the
money of others on the promise of profits.’” Edwards,
540 U.S. at 396 (quoting Howey, 328 U.S. at 299). The
Court was wary that “unscrupulous marketers of
investments” might otherwise “evade the securities laws by
picking a rate of return to promise.” Id. at 394–95.

    The PPMs’ identification of the investments as
securities, the form of the investment entity as a limited
partnership, and the promise of a fixed rate of return all
indicate that the EB-5 transactions were securities.

B. The Administrative Fees

    Feng insists, however, that the promised return is
effectively nullified by the administrative fees. When an
investor’s administrative fee and capital contribution are
considered together, Feng contends, the investor could not
have expected to make any profit. The record, however,
does not support treating the administrative fee as part of the
investment. The PPMs expressly distinguish those two
categories of funds, describing the investment as the “capital
contribution,” which would be “put at risk,” or utilized by,
the regional center. By contrast, the PPMs explain that the
                      USSEC V. FENG                         15

administrative fee would be used to defray marketing and
operating expenses.

    Importantly, the separation between the capital
contribution and the administrative fee is necessary to satisfy
the EB-5 regulatory requirements. The USCIS requires that
a qualifying EB-5 investment place capital “at risk for the
purpose of generating a return on the capital placed at risk.”
8 C.F.R. § 204.6(j)(2). In other words, to be eligible for the
EB-5 program, the offering’s terms must include a possible
return on the capital contribution. Hence, even if Feng is
correct that, as a mathematical proposition, combining the
capital contribution and administrative fee would eliminate
a return on the investment, the PPMs make clear that the two
categories of funds are to be viewed separately.

    Feng himself confirmed these separate identities when
the USCIS questioned whether one of his clients met the EB-
5 requirements. In a letter to the USCIS, Feng stated that the
client’s capital contribution was separate from the
administrative fee and was therefore put “at risk for the
purpose of generating a return.” The client, Feng asserted,
“made an at-risk capital investment of $500,000 . . . . No
portion of an investor’s contribution has been or will be
applied towards legal service fees or administrative fee[s],
marketing costs or interest payment of [the regional center],
which are paid from the separate $50,000 administrative
fee.”

    Feng thus attempts to characterize the administrative
fees in two different ways to suit his own purposes. On the
one hand, he explained that the administrative fee should be
excluded from the “investment” to establish that the
investment satisfies the EB-5 requirement of a possible
return. On the other hand, he seeks to include the
administrative fee in the securities analysis to show there is
16                    USSEC V. FENG

no possibility of generating the return as required by the
Howey test. That inconsistent approach is plainly contrary
to Congress’s intent in enacting the securities laws, as it
would empower “unscrupulous marketers of investments” to
structure deals to evade the designation of a security.
Edwards, 540 U.S. at 394. Feng’s argument that the
administrative fee upends the expectation of profits has no
merit.

C. Motivation

    We likewise find unsupportable Feng’s assertion that—
whatever the form of the investment and the rate of return—
his clients nonetheless lacked an expectation of profit
because they were motivated to participate in the EB-5
program by the promise of visas, not by profit. See Warfield,
569 F.3d at 1021 (holding that the focus of Howey is the
“objective inquiry” into “what the purchasers were offered
or promised,” although the investors’ subjective intent “may
have some bearing on the issue of whether they entered into
investment contracts”). We do not doubt that the investors’
primary reason to participate in the EB-5 program was to
gain U.S. visas. But Feng oversimplifies his clients’
motivations.

    An EB-5 investor’s interest in a visa is inextricably tied
to the financial success of the regional center’s project. The
EB-5 program by design links the success of the investment
to the investor’s success in obtaining a visa. An EB-5
applicant must prove to the USCIS that an investment in fact
led to the creation of at least ten full-time jobs. 8 U.S.C.
§ 1153(b)(5)(A); 8 C.F.R. §§ 204.6, 216.6. Understanding
the importance of a successful investment, Feng marketed
his ability to evaluate the multitude of regional centers and
recommend projects that were most likely to be sustained
long enough to create the requisite jobs to qualify the
                          USSEC V. FENG                               17

investor for the EB-5 visa. The record also contains
testimony from some of Feng’s client-investors who said
that the likelihood of the regional center returning their
capital contribution was important to them or that they
sought EB-5 projects with higher rates of return. Feng’s
argument thus relies on a false dichotomy between the visa
and the success of the investment. 5

   We therefore agree with the district court that the
investments in this case constitute securities in the form of
investment contracts.

                                  III.

   Having resolved the threshold securities issue, we next
consider Feng’s challenges to the grant of summary
judgment for the SEC on each of the three causes of action
brought against him.

A. Failure to Register as a Broker

    Section 15(a)(1) of the Exchange Act makes it unlawful
for a “broker . . . to induce or attempt to induce the purchase
or sale of[] any security” without registering with the SEC.
15 U.S.C. § 78o(a)(1). The statute defines “broker” as “any




    5
      In a recent memorandum disposition, we rejected the argument that
EB-5 investments do not constitute securities where the investors’
interest was to obtain visas rather than profits. SEC v. Liu, 754 F. App’x
505, 507 (9th Cir. 2018). The facts in Liu mirror those in this case, with
a series of $500,000 EB-5 investments and accompanying $45,000
administrative fees. Id. The court held that the promise of an annual
return of only 0.25 percent was enough to establish an expectation of
profit, “[e]ven if it was not [the investors’] primary motivation.” Id.
18                     USSEC V. FENG

person engaged in the business of effecting transactions in
securities for the account of others.” Id. § 78c(a)(4)(A).

    The district court concluded that the uncontroverted
evidence establishes that Feng was acting as a broker and
violated the registration requirement. We agree.

     1. The Broker Determination

     In making its broker determination, the district court
utilized the totality-of-the-circumstances approach that other
courts have used under Section 15(a)(1), relying on a set of
factors first set forth in SEC v. Hansen, No. 83 Civ. 3692,
1984 WL 2413, at *10 (S.D.N.Y. Apr. 6, 1984). See SEC v.
Collyard, 861 F.3d 760, 766 (8th Cir. 2017); SEC v. George,
426 F.3d 786, 797 (6th Cir. 2005); see also SEC v. Imperiali,
Inc., 594 F. App’x 957, 961 (11th Cir. 2014) (per curiam)
(quoting George, 426 F.3d at 797). Courts emphasize that
the so-called Hansen factors are “nonexclusive.” Collyard,
861 F.3d at 766.

   In performing its inquiry, the district court considered
whether Feng:

        (1) is an employee of the issuer of the
        security;

        (2) received transaction-based income such
        as commissions rather than a salary;

        (3) sells or sold securities from other issuers;

        (4) was involved in negotiations between
        issuers and investors;

        (5) advertis[ed] for clients;
                          USSEC V. FENG                              19

         (6) gave advice or made valuations regarding
         the investment;

         (7) was an active finder of investors; and

         (8) regularly       participates     in    securities
         transactions.

SEC v. Feng, No. 15-09420, 2017 WL 6551107, at *7–8
(C.D. Cal. Aug. 10, 2017) (footnote omitted). 6 The district
court found that, although Feng was not an employee of the
issuer, his conduct satisfied all the other factors. Id. at *8.
He received commissions from regional centers, sought
investors and clients through his website and other online
forums, negotiated with regional centers about the terms of
the projects, and gave advice about EB-5 projects’ likelihood
of success.

    Although Feng does not contest the facts underlying
these conclusions, he objects to the factor-based analysis
generally, arguing that the factors are so vague that they
erroneously encompass individuals who are merely
providing legal advice in the EB-5 context. 7 To the contrary,

    6
       The district court’s eight factors essentially tracked the
considerations identified in Hansen. Feng, 2017 WL 6551107, at *7–8;
Hansen, 1984 WL 2413, at *10.
    7
       Feng also argues that the district court’s factors omit the
requirement that a broker must have authority or control over the
accounts of others. But the caselaw cited by Feng does not impose such
a requirement as a prerequisite for finding that someone is a broker. See
SEC v. Kramer, 778 F. Supp. 2d 1320, 1339–40 (M.D. Fla. 2011)
(discussing authority over an account as one of several factors); SEC v.
M & A West, Inc., No. C-01-3376 VRW, 2005 WL 1514101, at *9 (N.D.
Cal. June 20, 2005) (same); cf. SEC v. Mapp, 240 F. Supp. 3d 569, 592
20                        USSEC V. FENG

the application of the Hansen factors reveals that much of
the work Feng performed for his clients, rather than being
traditional legal work, aligns with the indicia of broker
activity identified by those factors.

    For example, Feng asserts that the factor “received
transaction-based income such as commissions rather than a
salary” is unclear and could improperly include an attorney’s
contingent fee. However, Feng charged his clients a
noncontingent, upfront fee. And it is undisputed that Feng
and his nominees received $1.268 million in commissions
from the regional centers—not his legal clients—for
recruiting investors to the regional centers’ EB-5 projects.
On these facts, the “commissions” factor does not threaten
to mislabel traditional legal services as broker activity.

    Similarly, Feng suggests that “involve[ment] in
negotiations between issuers and investors” should not
include his legal work explaining to clients aspects of legal
compliance and regional center communications. Feng
ignores, however, the evidence that he communicated
extensively with the regional centers, posing numerous
questions about the terms of the projects and negotiating the
amount of the administrative fees.

    In addition, Feng contends that the factor “gave advice
or made valuations regarding the investment” should not
include legal advice about the merits of the various EB-5
projects. He claims that he was advising his clients about
how to obtain legal permanent residency status, not about


(E.D. Tex. 2017) (discussing but not deciding whether control over the
account of others is an element or a nondispositive factor). Further,
assuming that control is a pertinent factor, it is present here in the
multiple instances in which client funds passed through Feng’s accounts.
                       USSEC V. FENG                          21

how to make money. The record, however, indicates that
Feng’s services included investment advice. He reviewed
and promoted certain EB-5 projects based on their likelihood
of success under the EB-5 requirements, with particular
attention to the projects’ likely ability to create the requisite
number of jobs over time to qualify the investor for an EB-5
visa, as well as the likelihood the projects could return the
investors’ capital contributions. This work goes beyond the
traditional work of a lawyer.

   Finally, Feng suggests that the factor “active finder of
investors” improperly conflates seeking legal clients with
seeking investors. This argument, too, is meritless. Feng
sought a particular kind of client—one who would become
an investor with a regional center with which he had a
marketing agreement and a reserved investor slot. Feng’s
150 clients invested more than $65 million. In this EB-5
context, his legal clients and the regional center investors
were, in fact, one and the same.

    2. Feng’s Additional Arguments

     Feng goes beyond the Hansen analysis to argue more
generally that the broker registration requirement should not
apply to his circumstances. First, he asserts that the
requirement should apply only to individuals who trade
securities on an exchange and not to those involved in
transactions between private parties—deals commonly
referred to as “over-the-counter.” It is well established,
however, that “[t]he 1934 [Exchange] Act was intended
principally to protect investors against manipulation of stock
prices through regulation of transactions upon securities
exchanges and in over-the-counter markets.” Ernst & Ernst
v. Hochfelder, 425 U.S. 185, 195 (1976) (emphasis added)
(citing S. Rep. No. 792, at 1–5 (1934)). Although the
Exchange Act exempts brokers “whose business is
22                    USSEC V. FENG

exclusively intrastate and who do[] not make use of any
facility of a national securities exchange,” Feng’s business
was not “exclusively intrastate.” See 15 U.S.C. § 78o(a)(1).

    Second, Feng argues that the broker registration
requirement is unnecessary in his circumstances because
registered-broker duties duplicate the fiduciary duties that
apply to the attorney-client relationship. Feng analogizes to
the registration exemption for lawyers under the Investment
Advisers Act of 1940, which excludes from the definition of
an investment adviser “any lawyer, accountant, engineer, or
teacher whose performance of such services is solely
incidental to the practice of his profession.” 15 U.S.C.
§ 80b-2(a)(11)(B). Feng asserts—without citation—that the
Investment Advisers Act exempts attorneys because of their
heightened fiduciary duty to clients, and he urges us to apply
“this rationale” to create an attorney exception to the broker
registration requirement in the Exchange Act.

    This argument fails for multiple reasons. As we have
already explained, even if such an exemption existed, the
record belies any claim that Feng’s activities were “solely
incidental to the practice of [law].” Moreover, if an
attorney’s fiduciary duty were the rationale for the
exemption under the Investment Advisers Act, the incidental
nature of the investment-related work would seem irrelevant
because the fiduciary duty presumably would cover any
work on behalf of clients. Feng essentially asks us to
perform a legislative act by adding an exemption to one
statute on the basis of a different statute for which Congress
expressly provided an exemption. Self-evidently, we cannot
do that.

   In a last-ditch attempt to justify his failure to register,
Feng argues that imposing the broker registration
requirement on U.S.-based attorneys would “force” them
                          USSEC V. FENG                             23

“not to help these people.” This argument poses a false
choice. Attorneys who provide only legal advice to clients
about the EB-5 program are not required to register.
Attorneys who act as brokers in the EB-5 context may
legally do so only if they register with the SEC.

    3. Conclusion

    Given the undisputed facts in the record, we agree with
the district court that Feng, as a matter of law, was “engaged
in the business of effecting transactions in securities for the
account of others” and thus was required to register with the
SEC as a broker. 15 U.S.C. §§ 78c(4)(A), 78o(a)(1). 8

B. The Fraud Determinations

    Feng argues that the district court erroneously found that
he committed securities fraud in violation of Section 17 of
the Securities Act and Section 10(b) of the Exchange Act, as
implemented through Rule 10b-5. The district court’s
determinations were based on two theories of fraud liability:
material omissions and schemes to defraud. We review each
in turn.




    8
       Feng also appeals the denial of his motion for judgment on the
pleadings, arguing that the terms “security” and “broker” in Section
15(a) of the Exchange Act are unconstitutionally vague. A word is not
vague when it has a “settled legal meaning.” United States v. Williams,
553 U.S. 285, 306 (2008). Section 15(a) was enacted 80 years ago, and
it has been applied countless times by the courts. There was no error in
the district court’s denial of the motion for judgment on the pleadings.
24                        USSEC V. FENG

     1. Material Omissions (Section 17(a)(2) and Rule
        10b-5(b))

    The antifraud provisions of the Securities Act, Section
17(a)(2), and the Exchange Act, Section 10(b), developed
through Rule 10b-5(b), “forbid making a material
misstatement or omission in connection with the offer or sale
of a security by means of interstate commerce.” SEC v. Dain
Rauscher, Inc., 254 F.3d 852, 856 (9th Cir. 2001). Under
these provisions, it is unlawful for any person, in the offer or
sale of securities, “to obtain money or property by means of
any untrue statement of a material fact or any omission to
state a material fact necessary in order to make the
statements made, in light of the circumstances under which
they were made, not misleading.” 15 U.S.C. § 77q(a)(2).
The text of Rule 10b-5 largely mirrors the text of Section
17(a). 9 Although there are differences in the state of mind
requirements for Rule 10b-5(b) and Section 17(a)(2), a
showing of intentional or knowing conduct satisfies both.
See Aaron v. SEC, 446 U.S. 680, 695–97 (1980) (holding
that scienter is an element of Section 10(b), Rule 10b-5, and
Section 17(a)(1), but not Section 17(a)(2) or (3)).

    A fiduciary duty to disclose certain information renders
an omission of that information misleading. See United
States v. Laurienti, 611 F.3d 530, 541 (9th Cir. 2010). In
Laurienti, the court addressed a broker’s liability under Rule
10b-5(b) for failure to disclose commissions to his clients.
The court noted that, while the broker/client relationship
     9
      Section 17(a) of the Securities Act prohibits fraud in the sale of
securities. Rule 10b-5, adopted by the SEC pursuant to its authority
under Section 10(b) of the Exchange Act, incorporates the operative
language of Section 17(a) explicitly and also extends the prohibition to
fraud committed in the purchase of securities. See Ernst & Ernst,
425 U.S. at 212 n.32.
                       USSEC V. FENG                         25

does not itself impose a fiduciary duty, circumstances may
create “a relationship of trust and confidence.” Id. at 540.
Often, a broker has a fiduciary duty when he has
discretionary authority over a client’s account, “but we have
recognized that particular factual circumstances may serve
to create a fiduciary duty between a broker and his customer
even in the absence of a discretionary account.” Id. (quoting
United States v. Skelly, 442 F.3d 94, 98 (2d Cir. 2006)). The
court held that, however the duty arises, “if a broker and a
client have a trust relationship, . . . then the broker has an
obligation to disclose all facts material to that relationship.”
Id. at 541.

    Here, as we have determined, Feng worked as both a
broker and an immigration attorney.            Indeed, Feng
emphasizes his role as an attorney and acknowledges that, as
such, he had fiduciary duties to his clients. Those duties
included the obligation to disclose conflicts of interest. See
N.Y. Rules of Prof’l Conduct (22 NYCRR § 1200.0) 1.4
(duty to communicate any information needed by the client
to give informed consent), 1.7 (duty to disclose a conflict),
1.8 (duty to disclose business relationships).

    Feng’s argument that there is no conflict because his
clients were not harmed applies the wrong standard. The
conflict of interest rule addresses the risk of harm to clients,
asking whether a “reasonable lawyer would conclude . . .
there is a significant risk that the lawyer’s professional
judgment on behalf of a client will be adversely affected by
the lawyer’s own financial, business, property or other
personal interests.” N.Y. Rules of Prof’l Conduct 1.7(a). In
these transactions, there was a risk that Feng’s judgment
would be swayed by the promise of commissions—that, for
example, he would prefer a regional center that paid a higher
commission but had a slightly lower likelihood of success
26                    USSEC V. FENG

over a regional center that offered a lower commission but
had a better opportunity for the client.

    Indeed, when Feng was asked in his deposition whether
the commission from the regional center and his
representation of a client presented a conflict, he
acknowledged that it did:

       Yes. I see it as sort of like a conflict because
       we’re in between, between regional center
       and the client. I’m aware of getting legal fees
       from the client, but also, even though we are
       not issuer’s counsel, we are definitely not
       regional center’s counsel. But regional
       centers pay us after the 526 getting approved.
       Even though we realize there’s such a
       conflict, but our interest is first and foremost
       with the clients.

His assertion that he shared his clients’ goal of obtaining a
green card does not eliminate the risk of the commission’s
influence on his professional judgment. Further, the rules
provide that only the client, fully informed of both the
conflict and the risks stemming from the conflict, may make
a judgment about whether to accept representation
notwithstanding the conflict. N.Y. Rules of Prof’l Conduct
1.4, 1.7.

    “[E]ven in a trust relationship,” the duty is “to disclose
only material facts.” See Laurienti, 611 F.3d at 541.
Generally, an omission is material “if there is ‘a substantial
likelihood that the disclosure of the omitted fact would have
been viewed by the reasonable investor as having
significantly altered the “total mix” of information made
available.’” SEC v. Phan, 500 F.3d 895, 908 (9th Cir. 2007)
(quoting Basic Inc. v. Levinson, 485 U.S. 224, 231–32
                      USSEC V. FENG                        27

(1988)). Here, the record includes statements of individual
investors who said that if they had known about Feng’s
commissions, they would have attempted to negotiate their
administrative fees. Feng also testified that he concealed his
commissions to avoid anticipated client requests for rebates.
He said that he thought disclosure of his commissions would
encourage the clients to ask for more reductions in their
administrative fees, and he did not want to open the door to
negotiations that would lower his clients’ costs but decrease
his payout. We thus agree with the district court that Feng’s
failure to disclose his conflict of interest was material. See
TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 450 (1976)
(holding that materiality may be resolved at summary
judgment “if the established omissions are so obviously
important to an investor[] that reasonable minds cannot
differ on the question of materiality” (internal quotation
marks omitted)).

    Finally, Feng’s testimony establishes intent to deceive.
Feng stated that he did not want to tell clients about his
commissions from the regional centers because it would be
costly. Feng’s brief similarly describes his choice not to
disclose as a “business decision.”

   2. Schemes to Defraud (Section 17(a)(1) and (3) and
      Rule 10b-5(a) and (c))

    The securities fraud provisions also prohibit any person,
in the offer or sale of securities, “to employ any device,
scheme, or artifice to defraud” or “to engage in any
transaction, practice, or course of business which operates or
would operate as a fraud or deceit upon the purchaser.”
15 U.S.C. § 77q(a)(1), (3); see also 17 C.F.R. § 240.10b-
5(a), (c). The state of mind requirement varies among these
provisions, but a showing of intentional or knowing conduct
clears all thresholds. See Aaron, 446 U.S. at 695–97.
28                    USSEC V. FENG

    The district court found that Feng defrauded the regional
centers that refused to pay commissions to U.S.-based
attorneys not registered as brokers. Feng evaded this
restriction by informing the regional centers that he was
affiliated with foreign referral agents and companies,
holding himself out to the regional centers as a middleman.
Feng furthered this scheme by setting up ABCL in China to
receive commission payments, while maintaining control of
both ABCL’s bank account and operations. Feng performed
the recruitment services himself and received the
commissions that regional centers believed they were paying
to the affiliated recruiters. Feng recruited his mother to sign
documents as ABCL’s president, even though she had no
actual role in the company. Representatives from the
regional centers testified they would have ceased this
arrangement if they knew Feng’s relationship with either the
agents or ABCL.

    The district court also found that Feng engaged in a
scheme to defraud clients who sought a reduction in their
administrative fees. Generally, as noted, regional centers
were willing to rebate a portion of the administrative fee that
they charged investors if the regional center could also
reduce the commission it paid for the recruitment of that
investor. When a client asked Feng to negotiate with the
regional center to reduce his administrative fee, Feng
arranged with the regional center to lower the administrative
fee by reducing the commission. He took measures to
conceal this arrangement from his clients, however, because
he wanted to “keep as much of the marketing fee as possible”
and avoid further negotiation with clients, while also
creating the appearance to his clients that he was prevailing
on their behalf with the regional centers. Feng asked the
regional centers to rebate a portion of the administrative fee
                      USSEC V. FENG                        29

but not to disclose that the funds were reallocated from a
commission.

    Feng challenges on two grounds the district court’s
finding that his conduct violated the Securities and Exchange
Acts. First, Feng asserts that the scheme-to-defraud
allegations under Rule 10b-5(a) and (c) improperly duplicate
the Rule 10b-5(b) material omission claim. We see no
duplication. The district court addressed the fraud against
the regional centers only as a scheme to defraud, not as a
material omission. With regard to the fraud against the
clients, the district court focused on Feng’s failure to
disclose his conflict of interest to his clients as material
omissions and, separately, on his efforts to conceal the
source of the rebates as a scheme to defraud.

    Second, Feng argues that his establishment of overseas
entities and occasional arrangement of rebates for clients
were not unlawful. But, deceptive conduct that is not
“inherently unlawful” may form the basis of a scheme to
defraud. SEC v. Wey, 246 F. Supp. 3d 894, 918 (S.D.N.Y.
2017). In addition, Feng’s attempt to analogize the rebate
scheme to a store proprietor giving a customer a discount is
inapt. The fraudulent conduct was his scheme to make the
rebate appear to come from his advocacy on behalf of the
client, while concealing the relationship between the
reduction and his undisclosed commission.

   We accordingly affirm the district court’s finding that
Feng engaged in securities fraud in violation of Section 17(a)
and Section 10(b).

                             IV.

    Finally, Feng challenges the district court’s
disgorgement order. The district court calculated that Feng
30                     USSEC V. FENG

received $1.268 million for commissions in connection with
the EB-5 program and ordered disgorgement of the entire
amount. Feng contests the disgorgement of fees paid to his
overseas entities, suggesting that some of the fees were used
to cover expenses. He does not dispute that he controlled
those overseas entities.

    We review the court’s imposition of disgorgement for
abuse of discretion. SEC v. JT Wallenbrock & Assocs.,
440 F.3d 1109, 1113 (9th Cir. 2006). A disgorgement
calculation “should include ‘all gains flowing from the
illegal activities,’” id. at 1114 (quoting SEC v. Cross Fin.
Servs., 908 F. Supp. 718, 734 (C.D. Cal. 1995), and “requires
only a ‘reasonable approximation of profits causally
connected to the violation,’” id. at 1113–14 (quoting SEC v.
First Pac. Bancorp, 142 F.3d 1186, 1192 n. 6 (9th Cir.
1998)).

    Feng used his overseas entities—ABCL and his other
nominees—to advance his scheme to defraud the regional
centers. The money paid by regional centers to Feng’s
overseas entities is therefore exactly the focus of the fraud
against the regional centers, such that the district court could
find a “causal[] connect[ion]” through which the funds
“flow[] from the illegal activities.” Id. at 1114. Feng should
not have been collecting these commissions in the first place,
and it would be unjust to permit him to retain some of the ill-
gotten funds to cover his expenses. See id. (“[I]t would be
unjust to permit the defendants to offset against the investor
dollars they received the expenses of running the very
business they created to defraud those investors into giving
the defendants the money in the first place.”). We
accordingly find no abuse of discretion in the disgorgement
order.

     AFFIRMED.
