                                                                           FILED
                            NOT FOR PUBLICATION                             FEB 26 2013

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



SECURITIES AND EXCHANGE                          No. 11-16956
COMMISSION,
                                                 D.C. No. 3:09-cv-05883-SI
              Plaintiff - Appellee,

  v.                                             MEMORANDUM *

VINAYAK S. GOWRISH,

              Defendant - Appellant,

  and

ADNAN S. ZAMAN; PASCAL S.
VAGHAR; SAMEER N. KHOURY;
ELIAS N. HOURY,

              Defendants.



                    Appeal from the United States District Court
                      for the Northern District of California
                      Susan Illston, District Judge, Presiding

                     Argued and Submitted February 12, 2013
                            San Francisco, California

Before: SCHROEDER, NOONAN, and MURGUIA, Circuit Judges.


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      The Securities and Exchange Commission (“SEC”) brought a civil

enforcement action against Vinayak Gowrish alleging three counts of insider

trading in violation of Section 10(b) of the Securities Exchange Act of 1934 and

SEC Rule 10b-5. The jury returned a verdict in favor of the SEC and the district

court imposed civil penalties. We have jurisdiction pursuant to 12 U.S.C. § 1291

and affirm.

1. Due process

      Gowrish argues that due process requires a new trial because (1) he was

denied access to the medical file of an SEC witness, Pascal Vaghar; (2) the SEC

elicited impermissible testimony from another witness, Adnan Zaman; and (3) the

SEC vouched for Vaghar during closing arguments.

      Gowrish did not make a timely request for Vaghar’s medical records, and

the district court’s enforcement of the discovery schedule is reviewed for abuse of

discretion. Nascimento v. Dummer, 508 F.3d 905, 909 (9th Cir. 2007). Gowrish

provides no excuse for failing to meet the deadline and the district court did not

abuse its discretion by denying his untimely request. See id. After the district

court ordered production of the documents prior to the remedy phase, it concluded

that the evidence was merely cumulative and there was no reason to cross-examine

Vaghar again with the new material. See United States v. Kohring, 637 F.3d 895,


                                     Page 2 of 6
908 (9th Cir. 2011) (explaining that cumulative impeachment evidence would not

alter the result).

         Contrary to Gowrish’s assertion that Zaman was called only for an improper

purpose, the SEC obtained valuable testimony from Zaman and cited to his

testimony numerous times during closing argument. Even assuming that some

evidence elicited from Zaman was inadmissible, Gowrish has not shown that

Zaman was called for “the primary purpose of placing before the jury substantive

evidence which is otherwise inadmissible.” United States v. Gilbert, 57 F.3d 709,

711 (9th Cir. 1995). Even more, Gowrish has failed to show that Zaman’s

testimony resulted in a “miscarriage of justice” necessary to overcome his burden

on plain error review. Hemmings v. Tidyman’s Inc., 285 F.3d 1174, 1193 (9th Cir.

2002).

         The SEC’s statement during closing argument that “I’m not asking you to

believe Mr. Vaghar without corroborating evidence” was not vouching. See

United States v. Rudberg, 122 F.3d 1199, 1204 (9th Cir. 1997) (stating that

vouching is implication that the government has “extra-record” evidence

supporting credibility or emphasis of a prosecutor’s personal opinion). Again,

even assuming that the statement was improper, Gowrish fails to establish that it

resulted in plain error. See Hemmings, 285 F.3d at 1193.


                                     Page 3 of 6
2. Scienter

      It is well established that deliberate recklessness is sufficient to establish a

violation of Section 10(b). See SEC v. Platforms Wireless Int’l Corp., 617 F.3d

1072, 1093 (9th Cir. 2010); Hollinger v. Titan Capital Corp., 914 F.2d 1564,

1568–69 (9th Cir. 1990) (en banc) (“Our circuit, however, along with ten other

circuits, has held that recklessness may satisfy the element of scienter in a civil

action for damages under § 10(b) and Rule 10b-5.”); see also Tellabs, Inc. v.

Makor Issues & Rights, Ltd., 551 U.S. 308, 319 n.3 (2007) (noting that every court

of appeals has found recklessness sufficient for a violation of §10(b)). The fact

that this case involves Rule 10b-5(a) and (c) rather than Rule 10b-5(b) does not

change the level of scienter required because recklessness is a form of intentional

conduct that can deceive or defraud. See, e.g., Hollinger, 914 F.2d at 1569;

Platforms Wireless, 617 F.3d at 1093. In fact, recklessness has been applied to

Rule 10b-5(a) and (c) in prior cases. WPP Lux. Gamma Three Sarl v. Spot Runner,

Inc., 655 F.3d 1039, 1056 (9th Cir. 2011) (applying recklessness to insider trading

claim); Mihara v. Dean Witter & Co., Inc., 619 F.2d 814, 821 (9th Cir. 1980)

(applying recklessness to churning claim).




                                      Page 4 of 6
3. Remedies

      The decision to enjoin future violations of Section 10(b) “rests within the

sound discretion of the trial court.” SEC v. Fehn, 97 F.3d 1276, 1295 (9th Cir.

1996); SEC v. Goldfield Deep Mines Co. of Nev., 758 F.2d 459, 465 (9th Cir.

1985). The district court properly considered the five-factor test identified in

Fehn, and Gowrish must show that the application of that test was “illogical,

implausible, or without support in inferences that may be drawn from facts in the

record.” United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc).

Gowrish cannot make such a showing because, at best, he argues that the record

may have supported not imposing an injunction.

      Gowrish did not waive his Seventh Amendment argument that his civil fine

should have been submitted to the jury. See Solis v. County of Los Angeles, 514

F.3d 946, 953 (9th Cir. 2008). Gowrish’s agreement that the judge would impose

the civil fine is consistent with his argument that the judge can only impose a fine

based on facts found by the jury.

      The SEC argues that Tull v. United States, 481 U.S. 412, 427 (1987), is

dispositive because it holds that the Seventh Amendment right to a jury trial does

not extend to the determination of facts necessary to support a civil fine in a




                                     Page 5 of 6
government enforcement action. Despite the potential vulnerability of Tull, it

remains the law and controls in this case.1

      In any event we affirm because any error was harmless. At best, the jury

should have determined the total profits of the scheme and the district court could

have exercised its discretion to impose a fine up to three times that profit. See

United States v. Booker, 543 U.S. 220, 233 (2005) (“For when a trial judge

exercises his discretion to select a specific sentence within a defined range, the

defendant has no right to a jury determination of the facts that the judge deems

relevant.”). To guarantee a fine lower than the $100,000 imposed by the district

court, the jury would have to find that the scheme generated less than $33,333.33

in illegal profits. Such a finding would be practically impossible given that Vaghar

alone stipulated to illegal profits of $318,784. See Fuller v. City of Oakland, 47

F.3d 1522, 1533 (9th Cir. 1995) (Seventh Amendment violation is harmless if “no

reasonable jury” could have came to a different result).

      AFFIRMED.




      1
         Tull has not been overruled, however, Gowrish argues that more recent
Supreme Court cases cast doubt on Tull. See Feltner v. Columbia Pictures
Television, Inc., 523 U.S. 340, 354–55 (1998); Southern Union Co. v. United
States, 132 S. Ct. 2344, 2349 (2012).

                                     Page 6 of 6
