                    FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ALVIN W. GEBHART, JR.; DONNA T.           
GEBHART,
                                                  No. 08-74943
                      Petitioners,
                v.                                 SEC No.
                                                  CRD1005905
SECURITIES AND EXCHANGE
                                                    OPINION
COMMISSION,
                     Respondent.
                                          
          On Petition for Review of an Order of the
            Securities & Exchange Commission

                 Submitted December 1, 2009*
                     Pasadena, California

                     Filed February 17, 2010

    Before: Harry Pregerson, Michael Daly Hawkins and
            Raymond C. Fisher, Circuit Judges.

                    Opinion by Judge Fisher




  *The panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).

                                2483
2486                      GEBHART v. SEC
                              COUNSEL

Charles F. Goria, Goria, Weber & Jarvis, San Diego, Califor-
nia, for the petitioners.

David M. Becker, Mark D. Cahn, Jacob H. Stillman, Randall
W. Quinn, William K. Shirey, Securities and Exchange Com-
mission, Washington, D.C., for the respondent.


                              OPINION

FISHER, Circuit Judge:

   Alvin W. and Donna T. Gebhart petition for review of an
order by the Securities and Exchange Commission (SEC) sus-
taining a disciplinary action by the National Association of
Securities Dealers (NASD).1 The NASD found that the Geb-
harts, securities salespersons, committed securities fraud in
violation of section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 by making false statements to clients in
connection with the sale of promissory notes used to finance
the conversion of mobile home parks to resident ownership.
The SEC upheld the NASD’s disciplinary action, concluding
that the Gebharts acted with scienter because they made “rep-
resentations to their clients despite not knowing whether they
were true or false.” We hold that the SEC applied the correct
scienter standard and that substantial evidence supports the
SEC’s conclusion that the Gebharts acted with scienter. We
therefore deny the petition for review.

                         I.   BACKGROUND

  Alvin Gebhart has been in the securities industry since 1983.2
  1
    The NASD is now the Financial Industry Regulatory Authority
(FINRA).
  2
    In May 1983, Gebhart registered with the NASD as an investment
company products and variable contracts representative (“IC representa-
                           GEBHART v. SEC                           2487
In 1994, he began working at Mutual of New York (MONY)
in San Diego, where he sold annuities and mutual funds.
While at MONY, Gebhart met Jack Archer, a fellow MONY
salesperson. In 1995, Archer told Gebhart about a business
venture, Community Service Group (CSG), run by James
Scovie. CSG was in the business of converting mobile home
parks to resident ownership. CSG purchased parks from the
owners and then assisted residents in purchasing them. In late
1996, Scovie and another person, David Mounier, created
MHP Conversions, LLC (MHP) to facilitate the conversion
process. MHP issued promissory notes that were sold to indi-
vidual investors to raise funds for CSG’s purchase of the
parks. The MHP notes had one-year terms with fixed interest
rates of 18 percent for new investments and 14 percent for
reinvested funds. Each note stated that it would “ultimately be
secured by a deed of trust” on the particular park to be pur-
chased with the funds, but that “[u]ntil such time as said deed
of trust is recorded, the sole asset of [the issuer] will be a deed
of trust for the property known as Eastern Trailer Park.”

  Archer told Gebhart about the MHP program and asked
Gebhart whether any of his clients were interested in invest-

tive”) with the Prudential Insurance Company of America. In January
1996, he became associated with Mutual Service Corporation (MSC), a
NASD member, as an IC representative. In December 1997, he passed the
Series 7 general securities representative qualifying examination and
became associated with MSC as a general securities representative.
  Donna Gebhart registered with the NASD through Pacific Mutual as an
IC representative on February 13, 1996. On February 14, 1996, she
became associated with MSC as an IC representative. In April 1998, she
passed the Series 7 qualifying examination and became associated with
MSC as a general securities representative.
   In August 2000, MSC terminated the Gebharts’ registrations. The Geb-
harts subsequently registered as general securities principals, general
securities representatives and IC representatives with Sentra Securities
Corporation, another NASD member. They were associated with Sentra at
the time of the NASD disciplinary proceedings that are the subject of this
case.
2488                   GEBHART v. SEC
ing. Gebhart arranged for Archer to make a presentation of
the MHP program to three of his clients, all of whom made
investments in the program. Archer earned a sales commis-
sion, and paid half of the commission to Gebhart.

   In early 1996, Gebhart moved from MONY to another
financial services firm, Mutual Service Corporation (MSC), a
broker-dealer and member of the NASD. His wife, Donna
Gebhart, joined him at MSC and the two opened and operated
a MSC branch in Rancho Bernardo, California, where they
sold insurance and annuities and provided financial planning
services to clients. In October 1996, Archer approached the
Gebharts about selling MHP notes to their MSC clients. The
Gebharts met with Archer for about 40 minutes. Archer told
them that the MHP program had been approved by the com-
pliance officer at Archer’s firm, MONY. This was not true,
however. Archer also told the Gebharts “that the parks were
in good shape and he always assured us that they had a lot of
equity in them. He said they [were] 45 to 55 percent lever-
aged.”

   The Gebharts conducted no independent investigation into
the MHP program, either in 1996 or over the next four years,
during which time they sold MHP notes to their clients. They
failed to obtain any financial statements for CSG or MHP,
ascertain who were the owners, officers or shareholders of
CSG or MHP, determine what compensation would be paid
to CSG or MHP or their officers, verify that trust deeds secur-
ing the notes were being recorded or obtain copies of recorded
trust deeds. They visited two of the mobile home parks sub-
ject to the notes, but those visits do not appear to have served
any useful purpose. When Archer would approach the Geb-
harts with the opportunity for clients to invest in a new park
conversion, they conducted no independent analysis of the
park in question. Rather, “[i]t was always our understanding
that they wouldn’t have done a conversion on a park that
wasn’t — had good cash flow and that would be a deal worth
them doing.” Although the Gebharts believed that their cli-
                       GEBHART v. SEC                        2489
ents’ loans would be secured by second trust deeds, they did
not inquire why they were not first trust deeds or who held the
first trust deeds. In lieu of an independent investigation, the
Gebharts relied on Archer’s representations. As Alvin Geb-
hart explained:

    Throughout our four-year relationship, Mr. Archer
    continually stressed the strength of this program.
    Even in February [2000] when he spoke to Mr. Dave
    Mounier, the other principal [in MHP], he indicated
    that the parks were deep with equity. Donna and I
    had continuously interviewed Mr. Archer about the
    economics of this program. Initially, we were
    assured that the parks were financed only to 55% of
    value. Moreover, the monthly rents paid by the
    homeowners supplied working capital to Community
    Service Group. Indeed, we were assured that Com-
    munity Service Group would not even consider a
    conversion of a park unless it had sufficient rents to
    pay all costs and interest to the Noteholders.

Donna Gebhart confirmed that she and her husband had sim-
ply relied on Archer’s representations about the MHP pro-
gram:

    [Archer] basically explained the program [at the
    October 1996 meeting]. I don’t remember all of the
    details, but he went over it and I just wanted to be
    sure that — I wanted to make sure that these notes
    or trust deeds were secured and he assured us many
    times that they were always secured . . . . I remember
    he sort of went through the program. I don’t remem-
    ber word-for-word what the man said, but he came
    to us and he was a pension administrator, a Pacific
    Life former manager, and we always looked at him
    as being probably further up in the — obviously
    more experienced in stuff than we had.
2490                       GEBHART v. SEC
   Between the Gebharts’ meeting with Archer in October
1996 and CSG’s collapse in 2000, the Gebharts sold nearly
$2.4 million in MHP promissory notes to 45 of their clients,
earning about $105,000 in commission fees.3 The sales were
based on several statements by the Gebharts that, it later
became clear, were false. The Gebharts told their clients that
the MHP notes were a proven investment that offered sub-
stantial returns and were secured by recorded deeds of trust.
They said that in the worst case scenario their clients would
be part owners of the mobile home parks and would be able
to recover their investments. In fact, the trust deeds were not
recorded and the parks were significantly overencumbered.
The Gebharts failed to disclose that their statements were
based on information provided by Archer rather than their
own, independent investigation.

   CSG and MHP collapsed in the middle of 2000. In May,
Scovie sent a letter to MHP noteholders explaining that an ill-
ness was forcing his absence from MHP and CSG. He dis-
closed that few of the deeds of trust purportedly securing the
notes were recorded. In fact, there were approximately
$3,670,000 in outstanding promissory notes, of which only
$605,000 were secured by recorded deeds of trust. Gebhart
admitted that “none of our clients’ notes were recorded,” and
that the mobile home parks turned out to be “substantially
overencumbered.” At the time of MHP’s collapse, the Geb-
harts’ clients had over $1.5 million invested in outstanding
MHP notes.4 MSC terminated the Gebharts’ employment in
August 2000.

  As a result of these events, in 2002 the NASD’s Depart-
ment of Enforcement filed a complaint against the Gebharts
  3
     The Gebharts also invested thousands of dollars of their own funds in
the notes between 1996 and 1999.
   4
     The Gebharts’ clients pursued a number of remedies, with the apparent
support of the Gebharts, and were eventually able to recover about 84 per-
cent of their investments.
                            GEBHART v. SEC                           2491
for securities fraud.5 The NASD asserted that the Gebharts
had made materially false and misleading statements to their
clients, in violation of section 10(b) of the Securities
Exchange Act of 1934, SEC Rule 10b-5 and NASD Conduct
Rule 2120.6 A NASD hearing panel found that the Gebharts
had acted in good faith and therefore rejected the fraud
charges, but the NASD National Adjudicatory Council (NAC)
reversed. The NAC found that the Gebharts had committed
fraud, imposed a lifetime bar on Alvin Gebhart and imposed
a one-year suspension and a $15,000 fine on Donna Gebhart.
The SEC upheld the NASD decision in 2006.

   The Gebharts petitioned for review of the SEC decision.
We vacated and remanded in an unpublished decision, Geb-
hart v. SEC, 255 Fed. App’x 254, 2007 WL 4144635 (9th Cir.
Nov. 21, 2007), out of concern that the Commission had
applied a purely objective scienter standard that disregarded
the Gebharts’ actual state of mind. We remanded for reconsid-
eration of the question of scienter and instructed the SEC to
give careful consideration to the Gebharts’ claims that, not-
withstanding their objectively unreasonable conduct, they had
acted in good faith.

   On remand, the SEC once again determined that the Geb-
harts had acted with scienter and reaffirmed the NASD deci-
sion. The Gebharts have again petitioned for review. We have
jurisdiction under 15 U.S.C. § 78y(a)(1), and deny the peti-
tion.
  5
     In addition to the fraud claims, the NASD complaint alleged that the
Gebharts had offered and sold unregistered securities, in violation of
NASD Conduct Rule 2110, and engaged in private securities transactions,
in violation of Conduct Rules 2110 and 3040. The NASD found that the
Gebharts had indeed violated these provisions and the SEC affirmed the
NASD’s findings. The Gebharts do not contest those findings in this
appeal. Only the fraud charges are at issue here.
   6
     NASD Conduct Rule 2120 provides: “No member shall effect any
transaction in, or induce the purchase or sale of, any security by means of
any manipulative, deceptive or other fraudulent device or contrivance.”
2492                       GEBHART v. SEC
                            II.   SCIENTER

  The Gebharts challenge the SEC’s finding of scienter on
two bases. First, they contend that the SEC applied an errone-
ous legal standard for scienter. Second, they contend that the
SEC’s finding of scienter is not supported by substantial evi-
dence. We reject their contentions.

                                   A.

   The first question is whether the SEC applied the correct
scienter requirement applicable to a claimed violation of sec-
tion 10(b) and Rule 10b-5. We review de novo the SEC’s con-
clusions of law.7

   Section 10(b) of the Securities Exchange Act of 1934
states, in relevant part:

      It shall be unlawful for any person, directly or indi-
      rectly, by the use of any means or instrumentality of
      interstate commerce or of the mails, or of any facility
      of any national securities exchange . . . [t]o use or
      employ, in connection with the purchase or sale of
      any security registered on a national securities
      exchange or any security not so registered, . . . any
      manipulative or deceptive device or contrivance in
      contravention of such rules and regulations as the
      Commission may prescribe as necessary or appropri-
      ate in the public interest or for the protection of
      investors.

15 U.S.C. § 78j. SEC Rule 10b-5, which implements section
10(b), provides that it is unlawful “[t]o employ any device,
  7
   “The Commission’s conclusions of law are to be set aside if arbitrary,
capricious, or otherwise not in accordance with law.” Ponce v. SEC, 345
F.3d 722, 728 (9th Cir. 2003) (quoting Rutherford v. SEC, 842 F.2d 214,
215 (9th Cir. 1988)) (internal quotation marks omitted).
                             GEBHART v. SEC                              2493
scheme, or artifice to defraud.” 17 C.F.R. § 240.10b-5(a). It
also declares it unlawful “[t]o make any untrue statement of
a material fact or to omit to state a material fact necessary in
order to make the statements made, in the light of the circum-
stances under which they were made, not misleading.” Id.
§ 240.10b-5(b).

   [1] To establish a violation of section 10(b) and Rule 10b-
5, the SEC is required to “show that there has been a misstate-
ment or omission of material fact, made with scienter.” Ponce
v. SEC, 345 F.3d 722, 729 (9th Cir. 2003) (quoting SEC v.
Fehn, 97 F.3d 1276, 1289 (9th Cir. 1996)) (internal quotation
marks omitted); see also SEC v. Rana Research, Inc., 8 F.3d
1358, 1364 (9th Cir. 1993) (discussing the elements the SEC
must prove to establish a misrepresentation violating Rule
10b-5).8 “The plaintiffs may establish scienter by proving
either actual knowledge or recklessness.” In re Software Tool-
works Inc., 50 F.3d 615, 626 (9th Cir. 1994); see Ponce, 345
F.3d at 729 (“[S]cienter may be established by demonstrating
that the defendant acted recklessly.” (citing Hollinger v. Titan
Capital Corp., 914 F.2d 1564, 1568-69 (9th Cir. 1990) (en
banc))).

   Scienter may be established, therefore, by showing that the
defendants knew their statements were false, or by showing
that defendants were reckless as to the truth or falsity of their
  8
    The elements of a section 10(b) or Rule 10b-5 claim vary depending
on the identities of the parties and the nature of the relief sought. In a pri-
vate securities fraud action, the plaintiff generally must prove five ele-
ments: (1) a material misrepresentation or omission of fact; (2) scienter;
(3) a connection with the purchase or sale of a security; (4) transaction and
loss causation; and (5) economic loss. Zucco Partners, LLC v. Digimarc
Corp., 552 F.3d 981, 990 (9th Cir. 2009). Our focus here is on the ele-
ments that the SEC must establish. The fourth and fifth elements of a pri-
vate claim are therefore inapplicable. In this case, moreover, only the
scienter element is at issue. The Gebharts do not dispute that their state-
ments were material or in connection with the sale of securities, and, for
the reason given in Part III, they have not preserved their claim that their
statements were not false.
2494                        GEBHART v. SEC
statements. See Ponce, 345 F.3d at 729-30 (scienter is estab-
lished where defendants make “statements that they know, or
are reckless in not knowing, are false”); In re Vantive Corp.
Sec. Litig., 283 F.3d 1079, 1085 (9th Cir. 2002) (scienter is
established where “the defendant made false or misleading
statements either intentionally or with deliberate reckless-
ness”), abrogation on other grounds recognized by South
Ferry LP, No. 2 v. Killinger, 542 F.3d 776, 784 (9th Cir.
2008); United States v. Farris, 614 F.2d 634, 638 (9th Cir.
1979) (“[T]he reckless disregard for truth or falsity is suffi-
cient to sustain a finding of securities fraud.”).9

   This familiar definition of scienter in a securities fraud case
based on a misrepresentation is recognized not only in this
circuit but in others as well. In SEC v. Lyttle, 538 F.3d 601,
603 (7th Cir. 2008), for example, Judge Posner explained that
to establish scienter the SEC was required to show that “the
defendants either knew that the representations they made to
investors were false or were reckless in disregarding a sub-
stantial risk that they were false.” See also South Cherry
Street, LLC v. Hennessee Group LLC, 573 F.3d 98, 109 (2d
Cir. 2009) (“This Court has also long held that the scienter
element can be satisfied by a strong showing of reckless disre-
gard for the truth.”); Levinson v. Basic Inc., 786 F.2d 741, 749
(6th Cir. 1986) (“Scienter, a traditional element of a section
10(b) and Rule 10b-5 action, can be proven by a showing that
the defendants issued false or misleading . . . statements with
knowledge that those statements were false or misleading, or
with reckless disregard as to their false or misleading charac-
ter.”) (citation omitted), vacated on other grounds, Basic Inc.
v. Levinson, 485 U.S. 224 (1988). It is also consistent with
  9
    In some circumstances not relevant here, the Private Securities Litiga-
tion Reform Act (PSLRA) requires a showing that the defendants knew
their statements were false. See 15 U.S.C. § 78u-5(c)(1)(B)(i) (requiring
“actual knowledge . . . that the statement was false or misleading” in pri-
vate securities actions challenging forward-looking statements). The
claims in this case are not covered by the PSLRA, so scienter can be
established by either knowledge or recklessness.
                             GEBHART v. SEC                             2495
traditional common law principles. See generally Restatement
(Second) of Torts § 526 (1977) (permitting scienter to be
established by showing either knowledge or conscious reckless-
ness).10

  [2] “Scienter can be established by direct or circumstantial
evidence.” Provenz v. Miller, 102 F.3d 1478, 1490 (9th Cir.
1996). In Hollinger, we explained that the objective unreason-
ableness of a defendant’s conduct may give rise to an infer-
ence of scienter:

       [R]eckless conduct may be defined as . . . an extreme
       departure from the standards of ordinary care, . . .
       which presents a danger of misleading buyers or sell-
       ers that is either known to the defendant or is so
       obvious that the actor must have been aware of it.

Hollinger, 914 F.2d at 1569 (quoting Sundstrand Corp. v. Sun
Chem. Corp., 553 F.2d 1033, 1045 (7th Cir. 1977)) (first
alteration in original).

   [3] Scienter, however, is a subjective inquiry. It turns on
the defendant’s actual state of mind. See 8 Louis Loss & Joel
Seligman, Securities Regulation 3676 (3d ed. 2004). Thus,
although we may consider the objective unreasonableness of
the defendant’s conduct to raise an inference of scienter, the
ultimate question is whether the defendant knew his or her
statements were false, or was consciously reckless as to their
truth or falsity. See Ernst & Ernst v. Hochfelder, 425 U.S.
185, 206 (1976) (“There is no indication that Congress
intended anyone to be made liable for such practices unless he
  10
    The conclusion that we require either knowledge of falsity or con-
scious recklessness is supported by our decision in In re Silicon Graphics
Inc. Securities Litigation, 183 F.3d 970 (9th Cir. 1999), abrogation on
other grounds recognized by South Ferry LP, 542 F.3d at 784, where we
explained that, in the securities fraud context, scienter requires “deliberate
recklessness,” which we defined as conduct reflecting “some degree of
intentional or conscious misconduct.” Id. at 977.
2496                        GEBHART v. SEC
acted other than in good faith.”); Hollinger, 914 F.2d at 1570
(scienter requires “something more egregious than even
‘white heart/empty head’ good faith.” (quoting Sundstrand,
553 F.2d at 1045) (internal quotation marks omitted)); Kaplan
v. Rose, 49 F.3d 1363, 1379-81 (9th Cir. 1994) (applying
good faith standard); In re Worlds of Wonder Sec. Litig., 35
F.3d 1407, 1425 (9th Cir. 1994) (same); In re Apple Com-
puter Sec. Litig., 886 F.2d 1109, 1117-18 (9th Cir. 1989)
(same); cf. Restatement (Second) of Torts § 526 cmt. d (“The
fact that the misrepresentation is one that a man of ordinary
care and intelligence in the maker’s situation would have rec-
ognized as false is not enough to impose liability . . . , but it
is evidence from which his lack of honest belief may be
inferred.” (emphasis added)).11

                                     B.

   The Gebharts contend that the SEC applied an erroneous
scienter standard in this case by focusing exclusively on Hol-
linger’s objective inquiry and disregarding evidence of sub-
  11
     Our decision in Kaplan is illustrative of the respective roles played by
the objective and subjective components of the scienter inquiry. We began
by citing Hollinger and observing that scienter can be established by
showing an extreme departure from the ordinary standards of care and an
obvious danger of misleading investors. 49 F.3d at 1378. But we also
observed that several defendants had submitted sworn declarations testify-
ing that they believed in good faith that their statements were true. Id. at
1379. The plaintiff argued that he had presented sufficient evidence of
scienter to survive summary judgment because “[t]hese statements are so
false that defendants must have known they were false and must have
intended to mislead the public.” Id. We disagreed, explaining that plain-
tiff’s argument “does not suffice to rebut the declarations of good faith
made by the defendants.” Id. Kaplan shows that the objective unreason-
ableness of the defendant’s actions may raise an inference of scienter, but
the factfinder must consider the direct and circumstantial evidence as a
whole to determine whether the defendant knew his or her statements were
false, or consciously disregarded the risk that they were false. See Kaplan,
49 F.3d at 1379-80; Worlds of Wonder, 35 F.3d at 1424-25; Apple, 886
F.2d at 1117-18. In Kaplan, as to those particular defendants, the evidence
as a whole was insufficient to survive summary judgment.
                       GEBHART v. SEC                      2497
jective good faith. We disagree. The SEC considered all of the
evidence bearing on the Gebharts’ actual state of mind,
including the Gebharts’ extreme departure from ordinary stan-
dards of care, and found that the Gebharts were consciously
aware of the risk that their statements were false. There was
no error.

   The SEC certainly considered the objective unreasonable-
ness of the Gebharts’ actions as part of its analysis. The SEC
found that the Gebharts’ failed to perform any meaningful
investigation into the MHP promissory notes — an extreme
departure from ordinary standards of care that “created the
substantial [and obvious] risk . . . that their representations
were not true.” The SEC found that the Gebharts “made no
effort to investigate or understand why their clients were
being sold second (and not first) deeds of trust; no effort to
identify the first trust deed holders or the amounts of those
outstanding trust deeds; and no effort to ensure their clients’
investments were actually being secured by recorded trust
deeds.” The Gebharts made “no effort” to corroborate
Archer’s representations that the parks were not overly
encumbered.

   [4] The SEC properly considered the objective unreason-
ableness of the Gebharts’ actions as some evidence supporting
the inference that the Gebharts acted with scienter, but did not
treat it as dispositive. The Commission recognized that
scienter turns on “an actor’s actual state of mind at the time
of the relevant conduct.” It considered the Gebharts’ argu-
ments that they acted in good faith and took into account “the
Gebharts’ assertions that they believed they had done enough
to confirm the truthfulness of their statements to clients.” It
evaluated “the evidence the Gebharts put forward to demon-
strate their good faith beliefs” as “part of the complete mix of
facts bearing on an evaluation of their [actual] state of mind”
and concluded that the “[e]vidence from the Gebharts about
their subjective belief [wa]s not sufficient to overcome” the
inference of scienter created by the evidence as a whole. The
2498                   GEBHART v. SEC
Gebharts’ assertions of good faith were “not plausible” and
lacked “credibility.” Based on the evidence as a whole, the
SEC determined that the Gebharts “knew they had no direct
knowledge of the truth or falsity” of their statements, and
made their statements “despite not knowing whether they
were true or false.” The SEC correctly applied the appropriate
scienter standard.

                              C.

  The Gebharts also argue that the SEC’s finding that they
acted with scienter is not supported by substantial evidence.
We disagree.

   The SEC’s factual findings are reviewed for substantial evi-
dence. Ponce, 345 F.3d at 728. The substantial evidence stan-
dard also applies to the SEC’s finding of scienter. Vernazza
v. SEC, 327 F.3d 851, 859 (9th Cir.), amended by 335 F.3d
1096 (9th Cir. 2003). Substantial evidence means more than
a mere scintilla but less than a preponderance; it means such
relevant evidence as a reasonable mind might accept as ade-
quate to support a conclusion. NLRB v. Int’l Bhd. of Elec.
Workers, Local 48, 345 F.3d 1049, 1053-54 (9th Cir. 2003).
The standard is “extremely deferential” and a reviewing court
must uphold the agency’s findings “unless the evidence pre-
sented would compel a reasonable finder of fact to reach a
contrary result.” Monjaraz-Munoz v. INS, 327 F.3d 892, 895
(9th Cir.), amended by 339 F.3d 1012 (9th Cir. 2003) (quoting
Singh-Kaur v. INS, 183 F.3d 1147, 1149-50 (9th Cir. 1999))
(internal quotation marks omitted). If the evidence is suscepti-
ble to more than one rational interpretation, we may not sub-
stitute our judgment for that of the agency. Bear Lake Watch,
Inc. v. Fed. Energy Regulatory Comm’n, 324 F.3d 1071, 1076
(9th Cir. 2003).

  The Gebharts point out that there is some evidence support-
ing an inference that they genuinely believed that they had an
adequate basis for their statements. Significantly, the Geb-
                            GEBHART v. SEC                           2499
harts themselves invested substantially in the MHP notes. See
8 Loss & Seligman, supra, at 3691 n.558 (“[I]nvestment of
one’s own money tends to negate scienter, since it ‘belies any
known or obvious danger.’ ” (quoting Hoffman v. Estabrook
& Co., 587 F.2d 509, 517 (1st Cir. 1978))). The Gebharts also
may have sincerely, if mistakenly, believed that MONY and
MSC had approved the MHP program.
   [5] Substantial evidence, however, supports the SEC’s
finding of recklessness. The Gebharts represented that the
MHP notes were a good investment, that they were secured
by recorded trust deeds and that in the event of a problem
investors would be able to get their investments back because
the parks were not heavily leveraged. The Gebharts based
these statements on representations by Archer and conducted
no meaningful independent investigation to confirm the truth
of their representations.12 It was therefore reasonable for the
  12
     The Gebharts contend that they conducted an adequate investigation
into the MHP program and that they sincerely believed they had a reason-
able basis for their statements that the MHP notes were secured and that
the parks were not overencumbered. In addition to their own purchases of
MHP notes, they point to (1) their mistaken belief (based on Archer’s
statements) that MONY had approved the MHP program; (2) their having
informed MSC’s compliance officer about the MHP program and receiv-
ing no objection in response; (3) their belief that third party banks would
confirm that deeds of trust were being recorded; (4) the absence of any
problems with payments on the notes prior to 2000; (5) their visits to two
mobile home parks that were part of the program; and (6) statements by
clients that the Gebharts never intended to deceive them. They also rely
on the NASD hearing panel’s finding that they “truly believed that they
had fulfilled their responsibilities to assure that MHP and CSG were
appropriate investments.” The SEC reasonably discounted most of this
evidence. The Gebharts failed to confirm Archer’s claim that MONY had
approved the MHP program and the Gebharts acknowledge that MSC
never formally approved the program. Whether clients believed the Geb-
harts intended to deceive them — there is no evidence in the record that
the Gebharts ever intended to defraud anyone — is irrelevant to whether
the Gebharts made statements recklessly. The Gebharts’ visits to the two
parks afforded them no information about whether the parks were over-
encumbered or the trust deeds were recorded. The SEC found no credibil-
2500                        GEBHART v. SEC
SEC to infer that the Gebharts were consciously aware that
they lacked sufficient information for their statements. See
Restatement (Second) of Torts § 526 (1977) (“A misrepresen-
tation is fraudulent if the maker . . . does not have the confi-
dence in the accuracy of his representation that he states or
implies, or . . . knows that he does not have the basis for his
representation that he states or implies.”). By asking the court
to draw inferences different from those reasonably drawn by
the SEC, the Gebharts misapprehend the nature of our review.
See Vernazza, 327 F.3d at 861. We may not substitute our
judgment for the reasonable judgment of the Commission. See
Ponce, 345 F.3d at 728 (“If . . . the evidence is open to more
than one interpretation, we are required to uphold the SEC’s
finding.”).
                    III. REMAINING ISSUES
   [6] The Gebharts’ remaining contentions are unpersuasive.
The SEC adequately explained its determination not to defer
to the NASD hearing panel’s finding that the Gebharts acted
in good faith by offering detailed, specific reasons supported
by substantial evidence for rejecting the hearing panel’s find-
ing. See Maka v. INS, 904 F.2d 1351, 1355 (9th Cir. 1990),
amended by 932 F.2d 1352 (9th Cir. 1991). The Gebharts
waived their challenges to the SEC’s factual findings (that the
trust deeds were not recorded and that the parks were over-
encumbered) by failing to raise them in their prior appeal. See
In re Cellular 101, Inc., 539 F.3d 1150, 1155-56 (9th Cir.
2008). The SEC did not abuse its discretion by imposing a
lifetime bar on Alvin Gebhart. See Ponce, 345 F.3d at 740-41.
   PETITION DENIED.

ity in the Gebharts’ claims that they relied on third-party banks to ensure
the validity of the MHP program and the recording of trust deeds. The
hearing panel’s finding of good faith was reversed by the NASD National
Adjudicatory Council. Our role is not to weigh the evidence for ourselves
but to determine whether the SEC reached a reasonable conclusion. We
cannot say that it did not do so.
