 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued March 16, 2017               Decided October 13, 2017

                         No. 15-1430

                      JOHN M.E. SAAD,
                        PETITIONER

                              v.

          SECURITIES AND EXCHANGE COMMISSION,
                       RESPONDENT


            On Petition for Review of an Order of
           the Securities & Exchange Commission


     Sara E. Kropf argued the cause for petitioner. With her on
the briefs was Steven Nathan Berk.

      Dina B. Mishra, Attorney, U.S. Securities and Exchange
Commission, argued the cause for respondent. On the brief
were Anne K. Small, General Counsel at the time the brief was
filed, Sanket J. Bulsara, Deputy General Counsel at the time
the brief was filed, John W. Avery, Deputy Solicitor, and
Christopher Paik, Special Counsel.

   Before: GARLAND, Chief Judge, and KAVANAUGH and
MILLETT, Circuit Judges.
                               2



    Opinion for the Court filed by Circuit Judge MILLETT.

    Concurring opinion filed by Circuit Judge Kavanaugh.

    Dubitante opinion filed by Circuit Judge Millett with
respect to Section II.B of the opinion.

      MILLETT, Circuit Judge: John M.E. Saad, a broker-dealer,
unlawfully misappropriated his employer’s funds on two
separate occasions, and then spent the next seven months
misleading investigators in an effort to cover up his
wrongdoing. After a lengthy review process, the Securities and
Exchange Commission sustained a decision of the Financial
Industry Regulatory Authority (“FINRA”) permanently
barring Saad from membership and from working with any of
its affiliated members. Saad challenges the Commission’s
decision as insufficiently attentive to mitigating factors and
argues that the permanent bar is impermissibly punitive rather
than remedial. We hold that the Commission reasonably
grounded its decision in the record, which extensively
evidenced Saad’s acts of misappropriation, his prolonged
efforts to cover his tracks through falsehoods, and his repeated
and deliberate obstruction of investigators. With respect to the
permanent bar on Saad’s registration with FINRA and
affiliation with its members, the court remands for the
Commission to determine in the first instance whether Kokesh
v. SEC, 137 S. Ct. 1635 (2017), has any bearing on Saad’s case.
Accordingly, Saad’s petition for review is denied in part and
remanded to the Commission in part.
                               3
                               I

                               A

     FINRA is a private self-regulatory organization that
oversees the securities industry, including broker-dealers.
Saad v. SEC, 718 F.3d 904, 907 (D.C. Cir. 2013); see Public
Investors Arbitration Bar Ass’n v. SEC, 771 F.3d 1, 2 (D.C.
Cir. 2014). As part of its industry oversight, FINRA sets
professional rules of conduct for its members. See Saad, 718
F.3d at 907; see also 15 U.S.C. § 78o–3(b)(2). One such rule—
FINRA Rule 2010—requires “[a] member, in the conduct of its
business, [to] observe high standards of commercial honor and
just and equitable principles of trade.” FINANCIAL INDUSTRY
REGULATORY AUTHORITY, FINRA MANUAL, FINRA RULES,
Rule 2010. 1 The high ethical standards enforced by Rule 2010
are vital because “customers and firms must be able to trust
securities professionals with their money.” J.A. 111–112.
Trustworthiness and integrity thus are essential to the
functioning of the securities industry.

     FINRA has developed “Sanction Guidelines,” which
elaborate upon the contours of its rules of conduct. As relevant
here, the Guidelines provide that conversion and the improper
use of funds or securities will violate Rule 2010. J.A. 93.
Conversion is defined as “an intentional and unauthorized
taking of and/or exercise of ownership over property by one
who neither owns the property nor is entitled to possess it.” Id.
In cases of conversion, the Sanction Guidelines provide that “a
[lifetime] bar is standard,” “regardless of [the] amount
converted.” Id.


    1
         http://finra.complinet.com/en/display/display_main.html?
rbid=2403&element_id=607.
                                4
     In determining the appropriate sanction to be imposed for
a violation of its rules, FINRA’s Guidelines outline eight
factors to be considered: (i) the need for the sanction to be
remedial, to deter future misconduct, and to improve business
standards in the securities industry, (ii) the violator’s status as
a repeat or one-time violator, (iii) the appropriateness of the
sanction for the specific misconduct, (iv) the need in a
particular case either to aggregate or to sanction individually
similar violations, (v) the appropriateness of restitution or
rescission, (vi) the remediation needed to ensure the individual
does not benefit from ill-gotten gains, (vii) the necessity of
requalification before permitting continued participation in the
securities industry, and (viii) the violator’s ability to pay any
fine or restitution. J.A. 87–90.

     In addition to those general principles, FINRA
adjudicators must consider any other mitigating or aggravating
factors. J.A. 91. FINRA’s Sanction Guidelines provide a non-
exhaustive list of nineteen potential aggravating or mitigating
factors, including whether the violator (i) accepts responsibility
for the misconduct, (ii) took voluntary corrective action prior
to detection, (iii) engaged in a pattern of misconduct, (iv)
perpetrated the misconduct over an extended period of time, (v)
attempted to conceal the misconduct, (vi) acted intentionally,
or (vii) was already disciplined by the FINRA member firm.
J.A. 91–92.

     The disciplinary process begins when FINRA’s
Department of Enforcement or Department of Market
Regulation files a complaint with the FINRA Office of Hearing
Officers. FINRA Rule 9211. A panel of hearing officers then
conducts a disciplinary proceeding, FINRA Rule 9213, and
issues a final written decision addressing both liability and
remedial sanctions, FINRA Rule 9268.
                               5
    Either FINRA or the violator may appeal to the National
Adjudicatory Council, FINRA Rule 9311, which “may affirm,
modify, reverse, increase, or reduce any sanction, or impose
any other fitting sanction,” FINRA Rule 9349(a). The Council
then provides a proposed decision to the FINRA Board.
FINRA Rule 9349(c). If no Board member calls for review of
the Council’s decision, it becomes final. Id.

     The violator may then seek review of FINRA’s decision
by the Securities and Exchange Commission, FINRA Rule
9370, which superintends the disciplinary decisions of
financial industry self-regulatory organizations like FINRA, 15
U.S.C. § 78s(d)–(e). The Commission conducts its own review
of the disciplinary action, and may modify, affirm, or set aside
the sanction. Id. § 78s(e)(1)(A)–(B). The Commission will set
a remedial order aside if the order “imposes any burden on
competition not necessary or appropriate” to further the
purposes of the Securities Exchange Act, or if the sanction “is
excessive or oppressive.” Id. § 78s(e)(2).

                               B

                               1

     John Saad was a regional director in the Atlanta Office of
Penn Mutual Life Insurance Company, and was a FINRA-
registered broker-dealer employed by Penn Mutual’s affiliate
Hornor, Townsend, & Kent, Inc. Saad, 718 F.3d at 906.
Hornor, Townsend, & Kent, Inc. is a FINRA member firm. Id.

     In July 2006, Saad scheduled a business trip from Atlanta,
Georgia, to Memphis, Tennessee, but the trip was canceled at
the last minute. Saad, 718 F.3d at 908; see also J.A. 107.
Instead of going home to his wife and infant twins, Saad
checked into an Atlanta hotel for two days. Saad, 718 F.3d at
                               6
908. Upon returning to his office, Saad submitted a false
expense report for air travel to Memphis and a two-night stay
in a Memphis hotel. Id. Attached to that false expense report
were forged receipts for the fictitious airfare and hotel. Id.

     Unconnected to the fabricated Memphis trip, Saad
submitted another false expense report to his firm for a
replacement cellphone. Saad, 718 F.3d at 908. Contrary to his
representation in the expense report, Saad did not replace his
own cellphone but instead purchased the cellphone for a female
insurance agent at another firm. Id.; see also J.A. 62.

     Saad’s misconduct was soon discovered by an
administrator in the Atlanta office of his firm because Saad
submitted for reimbursement a receipt for four drinks
purchased at an Atlanta hotel lounge on the same date that he
was supposedly in Memphis. Saad, 718 F.3d at 908. When the
administrator confronted him with the receipt, Saad grabbed
the receipt and threw it away. Id. The administrator retrieved
the receipt and sent it to Penn Mutual’s home office. Id. In
September 2006, Saad’s employment was terminated. Id.

     After Saad’s termination, investigators from the National
Association of Securities Dealers (“NASD”)—FINRA’s
predecessor—questioned him about the false expense reports.
Saad, 718 F.3d at 908. In a November 2006 email, Saad falsely
told investigators that the fabricated trip report was “for a
business trip that had yet to occur[.]” Id. Five months later, in
April 2007, Saad falsely stated to investigators that he did not
know the person for whom he had purchased the cellphone. Id.
The next month, Saad untruthfully told examiners that he could
not remember if he had purchased a plane ticket for the
fabricated Memphis trip. Id.
                                  7
     In September 2007, FINRA brought a disciplinary
proceeding against Saad alleging “Conversion of Funds” in
violation of FINRA Rule 2010. Saad, 718 F.3d at 908. 2 The
hearing panel found that Saad had violated Rule 2010. Saad,
in his own defense, explained that he had been experiencing
significant personal and professional stress at the time he
submitted the false expense reports because his sales had
declined and one of Saad’s one-year old twins was suffering
from a stomach disorder that required frequent hospitalizations.
Id. The hearing panel imposed a bar that permanently forbade
Saad from associating with any FINRA member firm in any
capacity. Id. at 909.

     Saad appealed, and the National Adjudicatory Council
affirmed. Saad, 718 F.3d at 909. In reviewing the lifetime ban,
the Council concluded that Saad’s misconduct involved several
aggravating factors, such as “the intentional and ongoing
nature of Saad’s misconduct, Saad’s efforts to deceive [Hornor,
Townsend, & Kent] and Penn Mutual, [and] Saad’s initial
instinct to conceal the extent of his actions from state and
FINRA examiners.” Id. at 909 (second alteration in original
and citation omitted). The Council further determined that no
mitigating factors counseled a lesser sanction. Id.

     2
        Saad was initially investigated for and charged with violating
National Association of Securities Dealers Rule 2110. See Saad, 718
F.3d at 909. NASD Rule 2110 is identical to FINRA Rule 2010. Id.
at 907; see also FINANCIAL INDUSTRY REGULATORY AUTHORITY,
FINRA         MANUAL,        NASD         RULES,      Rule      2110,
http://finra.complinet.com/en/display/display_main.html?rbid=2403
&element_id=605 (“A member, in the conduct of its business, shall
observe high standards of commercial honor and just and equitable
principles of trade.”). At the time Saad’s disciplinary proceeding
was formally initiated in September 2007, the SEC had “approved
the consolidation of NASD with certain functions of the New York
Stock Exchange to create” FINRA. Saad, 718 F.3d at 907.
                                8

    The Securities and Exchange Commission affirmed,
holding that, on this record, FINRA’s sanction was not
“excessive or oppressive.” Saad, 718 F.3d at 909.

     This court granted Saad’s petition for review in part. We
upheld the Commission’s use of the Sanction Guideline
governing conversion as a “starting point” for determining the
appropriate sanction for Saad’s two acts of misappropriation.
Saad, 718 F.3d at 911. We remanded only because the
Commission’s analysis failed to address potentially mitigating
factors, such as Saad’s termination by his employer and Saad’s
personal and professional stress. Id. at 913. We left open the
question whether the lifetime bar was an “excessive or
oppressive” sanction, noting that the Commission had an
obligation on remand to ensure its sanction was remedial rather
than punitive. Id.

                                2

      On remand, the Commission directed the National
Adjudicatory Council to reconsider the imposition of the
lifetime bar and, in particular, to address whether (i) a member
firm’s discipline of a rule violator prior to regulatory detection
is a mitigating factor for the alleged violator, the member firm,
or both, J.A. 36; (ii) the mitigating effect, if any, of Saad’s
termination prior to regulatory detection, J.A. 38; (iii) the
mitigating effect, if any, of Saad’s personal and professional
stress, J.A. 39; (iv) any other mitigating considerations, J.A.
45; and (v) the appropriateness of the lifetime bar for Saad’s
misconduct, J.A. 49.

    The Council determined that (i) prior discipline by a
member firm may be mitigating for an individual violator, J.A.
37–38; (ii) Saad’s termination prior to regulatory detection was
                                9
not mitigating on this record, J.A. 39; (iii) neither Saad’s
personal nor his professional stress was mitigating, J.A. 43–45;
(iv) no other relevant mitigating factors existed in the case, J.A.
45–49; and (v) a permanent bar remained the appropriate
remedy for Saad’s misconduct, J.A. 49–50.

     The Commission again affirmed. The Commission
determined that Saad’s repeated attempts over the course of
seven months to conceal his misconduct from his employer and
to mislead regulatory investigators were aggravating factors
that supported FINRA’s imposition of the permanent bar. J.A.
112. The Commission further concluded that the “‘collateral
consequences’ of misconduct, including loss of employment,
reputation, and income, [were] not mitigating” on the facts of
this case because they provided “‘no guarantee of changed
behavior’ and may not be enough to overcome [the
Commission’s] concern that he * * * ‘poses a continuing
danger to investors and other security industry participants
(including would-be employers).’” J.A. 112–113 (quoting
Denise M. Olson, Exchange Act Release No. 75837, 2015 WL
5172954, at *5 (Sept. 3, 2015)). The Commission also decided
that, “under these circumstances,” Saad’s claims of
professional and personal stress were not mitigating because
his misconduct involved multiple instances of deliberate and
deceptive conduct spread out over a long period of time, rather
than a spontaneous or “unthinking” action triggered by stress
and “later redressed.” J.A. 113. The Commission found no
mitigating value in Saad’s arguments that his misconduct was
“a series of blunders,” his misappropriation did not involve
customer funds, and he had a clean disciplinary record before
his misappropriation. J.A. 114. Finally, the Commission
reasoned that a permanent bar was the appropriate remedy in
Saad’s case because it “serves important deterrent objectives
and reaffirms long-standing FINRA policy that such
dishonesty by members or their associated persons will not be
                               10
tolerated.” J.A. 115. Accordingly, the Commission affirmed
the permanent bar finding it to be “remedial, not punitive,” and
“necessary to protect FINRA members, their customers, and
other securities industry participants[.]” J.A. 115.

                               II

      We defer to the Commission’s sanction decision if it is
reasonable and reasonably explained, and will overturn it only
if it is “arbitrary, capricious, or an abuse of discretion.” Saad,
718 F.3d at 910 (quoting Siegel v. SEC, 592 F.3d 147, 155
(D.C. Cir. 2010)).

                                A

     This court’s prior decision remanded for the Commission
to address Saad’s mitigating evidence. Saad, 718 F.3d at 913-
914. Saad now contends that the Commission failed to give his
mitigating evidence sufficient heed. We disagree. The
Commission reasonably balanced the relevant mitigating and
aggravating factors before determining that the gravity of
Saad’s behavior warranted remedial action.

     First, with respect to the mitigating relevance of Saad’s
termination by his employer for misconduct, the Commission
recognized that a FINRA Sanction Guideline provides that
disciplinary action prior to regulatory detection may be
considered mitigating. J.A. 112–113 (noting FINRA Principal
Consideration in Determining Sanctions #14). But the
Commission explained that his termination carried little weight
in this case because “Saad repeatedly used dishonest means to
overcome personal and professional disappointments and
obstacles, and to mislead his employer and regulators.” J.A.
113. Given those facts, the Commission reasonably concluded
that “termination, while mitigating under certain
                               11
circumstances, [did not] overcom[e] the threat [Saad] would
pose to investors and other securities industry participants were
he to return to the industry.” J.A. 113.

     Second, the Commission credited Saad’s claims of
personal and professional stress.             The Commission
nevertheless found them to lack mitigating force in this case
because Saad’s conduct was not a momentary or impulsive
action driven by stress, but instead involved “deceptive
conduct demonstrat[ing] a high degree of intentionality over a
long period of time.” J.A. 113. The Commission found it
particularly significant that (i) Saad had not discussed the
professional setbacks he was undergoing with his firm or
otherwise sought assistance; (ii) his deception required
planning and research; and (iii) he “methodically forg[ed] hotel
and airfare receipts that bore logos that he had copied from the
internet.” J.A. 113. In addition, the Commission stressed that
Saad did not own up to his missteps when the firm
administrator confronted him about the fabricated expense
report, but instead tried to destroy the evidence and repeatedly
misled investigators for at least seven more months. J.A. 114.
On top of that, Saad engaged in a second act of
misappropriation by using firm funds to purchase a cellphone
for a person who worked at another firm. J.A. 114. The
Commission reasonably concluded that a pattern of such
prolonged and repeated misbehavior could not be attributed to
stress. J.A. 114.

     Third, the Commission fairly addressed Saad’s arguments
that his misconduct did not involve the misappropriation of
customer funds, and that he otherwise had a clean disciplinary
record. J.A. 114. The Commission explained that it had not
differentiated between the source of mistreated funds in the
past, upholding bars even though “the underlying dishonesty
did not relate directly to customers.” J.A. 114; see also J.A.
                                12
114 n.24 (citing disciplinary proceedings involving
misappropriation of non-customer funds). That makes sense.
As the Commission previously has explained, it is the
deception and fraud in the handling of others’ property that
endangers the integrity of the securities industry, and that threat
remains the same whether the victim is a trusting employer or
trusting client. See Richard Dale Grafman, Exchange Act
Release No. 21648, 1985 WL 548687, at *2 (Jan. 14, 1985)
(upholding a sanction even though the conduct did not involve
public customers because “[t]he securities business presents a
great many opportunities for abuse and overreaching, and
depends very heavily on the integrity of its participants”).

     The Commission further noted that it has “repeatedly held
that a clean disciplinary record is not mitigating.” J.A. 114; see
also J.A. 114 n.25 (citing a disciplinary proceeding holding that
the lack of a disciplinary history is not mitigating); J.A. 91 n.1
(FINRA Sanction Guidelines manual, citing Rooms v. SEC,
444 F.3d 1208, 1214–1215 (10th Cir. 2006), for the proposition
that disciplinary history can serve only as an aggravating factor
and its absence cannot be mitigating). There is nothing
unreasonable about the Commission concluding that
individuals in a profession that depends critically on public
trust and honesty are already expected to have a clean record,
so it is not something for which they get extra credit. See
Rooms, 444 F.3d at 1214 (noting that the violator “was required
to comply with NASD’s high standards of conduct at all
times”); see also World Trade Fin. Corp., Exchange Act
Release No. 66114, 2012 WL 32121, at *16 (Jan. 6, 2012)
(“[F]irms and their associated persons should not be rewarded
for acting in accordance with their duties.”).

    Accordingly, we hold that the Commission’s
thoroughgoing decision directly addressed the mitigating
evidence, as required by our prior remand order, and provided
                              13
a careful and comprehensive analysis of Saad’s arguments
seeking a reduction in his sanction. Its decision reasonably
focused on the record of Saad’s prolonged pattern of
falsehoods and deception, as well as the direct threat that his
misconduct posed to customers’ and other participants’ faith in
the integrity of the securities industry.

                              B

     Saad also challenges the Commission’s affirmance of
FINRA’s lifetime bar on his affiliation with FINRA and its
members as impermissibly punitive. We remand that question
to the Commission to address, in the first instance, the
relevance—if any—of the Supreme Court’s recent decision in
Kokesh v. SEC, 137 S. Ct. 1635 (2017). Accordingly, Saad’s
petition for review is denied in part and remanded to the
Commission in part.

                                                   So ordered.
    KAVANAUGH, Circuit Judge, concurring: I add this brief
concurrence to explain why I believe the Court is correct to
remand this case to the SEC.

     Our precedents say that the SEC may approve expulsion
or suspension of a securities broker as a remedy, but not as a
penalty. Our cases in turn have upheld various expulsions or
suspensions as remedial. See, e.g., PAZ Securities, Inc. v. SEC,
566 F.3d 1172, 1175-76 (D.C. Cir. 2009). Our use of the term
“remedial” to describe expulsions or suspensions finds its roots
in a single, unexplained sentence in a 77-year-old Second
Circuit case. See Wright v. SEC, 112 F.2d 89, 94 (2d Cir.
1940). Applying those precedents here, the SEC concluded
that the lifetime expulsion of Saad from the securities industry
was permissible because the sanction was remedial, not
punitive.

     My fundamental problem with this line of cases is that the
term “remedial” makes little sense when describing the
expulsion or suspension of a securities broker. Like other
punitive sanctions, expulsion and suspension may deter others
and will necessarily deter and prevent the wrongdoer from
further wrongdoing. Expulsion and suspension may thereby
protect the investing public. But expulsion and suspension do
not provide a remedy to the victim. Under any common
understanding of the term “remedial,” expulsion and
suspension of a securities broker are not remedial. Rather,
expulsion and suspension are punitive.

    Of course, as a three-judge panel, we ordinarily must stick
with our precedents. But here, the Supreme Court’s recent
decision in Kokesh v. SEC, 137 S. Ct. 1635 (2017), means that
we can no longer characterize an expulsion or suspension as
remedial. After the Supreme Court’s decision in Kokesh, in
other words, our precedents characterizing expulsions or
suspensions as remedial are no longer good law.
                               2
     In Kokesh, the Supreme Court ruled that disgorgement
paid to the Government is a “penalty” subject to the five-year
statute of limitations in 28 U.S.C. § 2462. 137 S. Ct. at 1643-
45, slip op. at 7-11. The Court reasoned that the disgorged
money often does not go to victims and, moreover, is not
limited to the amount of harm to victims – both of which would
be required if the sanction were truly remedial rather than
punitive. See id. at 1644-45, slip op. at 9-11. The Court stated:
“Sanctions imposed for the purpose of deterring infractions of
public laws are inherently punitive because deterrence is not a
legitimate nonpunitive governmental objective.” Id. at 1643,
slip op. at 8 (internal quotations omitted). And the Court
added: “A civil sanction that cannot fairly be said solely to
serve a remedial purpose, but rather can only be explained as
also serving either retributive or deterrent purposes, is
punishment, as we have come to understand the term.” Id. at
1645, slip op. at 11 (internal quotations omitted). Notably, the
Supreme Court’s decision in Kokesh overturned a line of cases
from this Court that had concluded that disgorgement was
remedial and not punitive. See, e.g., Zacharias v. SEC, 569
F.3d 458, 471-72 (D.C. Cir. 2009).

     As I see it, the Kokesh analysis matters here. The Supreme
Court’s reasoning in Kokesh was not limited to the specific
statute at issue there. Like disgorgement paid to the
Government, expulsion or suspension of a securities broker
does not provide anything to the victims to make them whole
or to remedy their losses. Therefore, in light of the Supreme
Court’s analysis in Kokesh, expulsion or suspension of a
securities broker is a penalty, not a remedy.

    Judge Millett’s separate opinion cites cases such as Smith
v. Doe, 538 U.S. 84 (2003), for the proposition that
occupational debarments are not punitive. But the question in
Smith v. Doe, for example, was whether a particular sanction
                                  3
(there, required registration as a sex offender) was civil or
criminal for purposes of the Ex Post Facto Clause. Some
penalties are civil, and some penalties are criminal. The
question of whether a penalty is civil or criminal is distinct
from (although overlapping with) the question of whether a
sanction is a penalty rather than a remedy. See Hudson v.
United States, 522 U.S. 93, 105 (1997) (civil penalty at issue
there was not “criminally punitive” for double jeopardy
purposes). As I read it, nothing in Smith v. Doe or any of the
other Supreme Court cases cited by Judge Millett’s separate
opinion says or suggests that occupational debarment is a
remedy.

     Judge Millett’s separate opinion also states that Saad
forfeited any argument that the sanction here was punitive, not
remedial. I respectfully disagree. Saad expressly argued both
to the SEC and to this Court that the lifetime expulsion in his
case was punitive, not remedial. He of course did not cite
Kokesh because Kokesh was not yet decided at the time. In my
view, Saad preserved the argument that the sanction imposed
on him was a penalty, not a remedy.

    Judge Millett’s separate opinion distinguishes this case
from ordinary civil penalty cases by relying on FINRA’s status
as a self-regulatory organization. But by statute, FINRA is
heavily regulated by the SEC, and a FINRA-sanctioned party
has a right to appeal FINRA sanctions to the SEC. See 15
U.S.C. § 78s; 78s(d).1 FINRA is therefore not akin to, for

     1
        “In their review of disciplinary orders, the federal courts of
appeals do not distinguish between SEC orders that affirm FINRA
disciplinary sanctions and SEC orders that affirm sanctions imposed
through the SEC’s administrative hearing system; both are
considered SEC orders. Accordingly, parties rarely raise the
objection that FINRA is not a government body, and if the objection
is raised, courts quickly dispense with it.” Barbara Black, Punishing
                               4
example, a state bar association or the National Football
League – organizations that may impose discipline without
statutorily required review by a federal agency.

     In appeals from FINRA sanctions, the SEC must
determine whether the FINRA-imposed sanctions are
“excessive or oppressive.” 15 U.S.C. § 78s(e)(2). Our pre-
Kokesh cases in turn say that the SEC may uphold FINRA
sanctions as not being excessive or oppressive if the sanctions
are remedial, not punitive. See Siegel v. SEC, 592 F.3d 147
(D.C. Cir. 2010); Paz, 566 F.3d at 1175-76. And our pre-
Kokesh cases further say that an expulsion or suspension can
be considered remedial, not punitive.

    My sole point here is to cast doubt on our pre-Kokesh
cases’ characterization of an expulsion or suspension as
remedial rather than punitive. My point is not to suggest that
FINRA lacks power to impose punitive sanctions such as
expulsions or suspensions. After all, FINRA Rule 8310
expressly allows FINRA to impose expulsions and suspensions
in appropriate cases. See also 15 U.S.C. § 78o-3(b)(7)
(authorizing FINRA to impose expulsions or suspensions).
And the SEC may still approve an expulsion or suspension if
such a FINRA-imposed sanction is an appropriate (that is, not
“excessive or oppressive”) penalty in particular cases. The
question here therefore is whether the lifetime expulsion of
Saad – what our prior opinion in this case called the “securities
industry equivalent of capital punishment,” Saad v. SEC, 718
F.3d 904, 906 (D.C. Cir. 2013) – was a permissible and
appropriate penalty under the relevant statutes and regulations.




Bad Brokers: Self-Regulation and FINRA Sanctions, 8 BROOK. J.
CORP., FIN. & COMM. L. 23, 41-42 (2013).
                                  5
     If FINRA and the SEC can still impose expulsions and
suspensions in certain cases, why does the terminological
distinction matter? In other words, why should we care that
FINRA and the SEC must characterize certain sanctions as
punitive rather than remedial? One answer is this: If FINRA
and the SEC must justify expulsions or suspensions as punitive
(as I believe they must after Kokesh), they will have to explain
why such penalties are appropriate under the facts of each case.
FINRA and the SEC will no longer be able to simply wave the
“remedial card” and thereby evade meaningful judicial review
of harsh sanctions they impose on specific defendants. Rather,
FINRA and the SEC will have to reasonably explain in each
individual case why an expulsion or suspension serves the
purposes of punishment and is not excessive or oppressive.
Over time, a fairer, more equitable, and less arbitrary system of
FINRA and SEC sanctions should ensue. Cf. 18 U.S.C. §
3553(a). 2

    With those observations, I join the Court’s decision to
remand the case to the SEC for the Commission to address in
the first instance whether, in light of Kokesh, the penalty
imposed on Saad was excessive or oppressive.


     2
       Judge Millett’s separate opinion suggests that the SEC on
remand should not and, indeed, may not change its approach to this
issue in the wake of Kokesh. To state the obvious, her separate
opinion speaks for only one judge, as does my separate opinion. If a
majority of the panel agreed with all of the sentiments expressed in
Judge Millett’s separate opinion, we presumably would not be
remanding the case. If a majority of the panel agreed with all of the
sentiments expressed in my separate opinion, we presumably would
be remanding the case with specific directions about Kokesh.
Instead, the Court is remanding for the SEC, in the first instance, to
address the relevance of Kokesh. The Kokesh issue remains
undecided for now in this Court.
    MILLETT, Circuit Judge, dubitante regarding Part II.B:

     I have grave doubts about the propriety of remanding this
case to the Commission yet again. This time, the remand seeks
the Commission’s views on the relevance—if there is any at
all—of Kokesh v. SEC, 137 S. Ct. 1635 (2017). But in my
view, the Commission amply explained the remedial reasons
for sustaining FINRA’s permanent bar on Saad’s affiliation
with it and its members, and there is nothing in Kokesh that
helps Saad. That presumably is why Saad himself has not
whispered a word to this court about Kokesh having any
bearing upon his case. Not one word. Accordingly, adding
another round to this already decade-long saga does not seem
worth the candle. Nor does further delay seem fair to FINRA’s
efforts to protect the integrity of the securities industry from
securities brokers who exploit and abuse the trust of their
employers and the investing public.

     In my view, the Commission did exactly what our earlier
decision flagged for remand: It addressed Saad’s mitigating
evidence and quite reasonably concluded that FINRA’s
permanent bar on Saad’s affiliation with its members is
remedial, rather than “excessive or oppressive,” 15 U.S.C.
§ 78s(e)(2). The Commission’s affirmance of FINRA’s
decision about how best to deal with Saad’s pattern of serious
professional misconduct echoes the Supreme Court’s
recognition of “how essential it is that the highest ethical
standards prevail in every facet of the securities industry.” SEC
v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 186–
187 (1963) (quotation omitted); see Kokesh, 137 S. Ct. at 1640
n.1.

    In addition, in imposing Saad’s bar, FINRA hewed to the
remedy its Sanction Guidelines recommend, which we
previously held FINRA could properly extend to this case. See
Saad v. SEC, 718 F.3d 904, 911 (D.C. Cir. 2013) (upholding
                               2
FINRA’s reliance on the Sanction Guideline for conversion or
improper use because “misappropriation is doubtless
analogous to conversion”) (internal quotation marks and
citation omitted). That Sanction Guideline reflects a deliberate
and objective assessment of the type of remedy needed to
protect the securities industry and the investing public from
misconduct involving mendacity and the misuse of entrusted
property—misdeeds that strike at the heart of the investing
public’s trust in the securities industry. FINRA’s evenhanded
application of that prescribed remedy supports the sanction’s
remedial character.

     As the Commission also explained, FINRA’s
determination in this case to permanently bar Saad from
registering with FINRA or affiliating with its members was
tailored to the individual circumstances of his case and Saad’s
serious and serial misconduct. In addition to two separate acts
of misappropriating property entrusted to him—the fabricated
Memphis trip and the abusive use of employer funds to
purchase a cellphone for someone else—Saad forged
documents, attempted to hide evidence of his misconduct after
it was discovered by the Atlanta administrator, and deliberately
deceived and misled regulators for more than half a year as they
investigated his misconduct. The Commission thus had an
adequate factual foundation to sustain FINRA’s judgment that
“Saad’s actions betray a dishonest character * * * [and]
demonstrate that he cannot be entrusted with firm or customer
money[.]” J.A. 115. In an industry the functioning of which is
predicated on the public trust, “[c]haracter is as important a
qualification as knowledge[.]” Hawker v. New York, 170 U.S.
189, 191 (1898). For the same reason, the Commission
reasonably concluded that Saad “would pose a continuing and
unacceptable threat to investors and other industry participants
if not barred.” J.A. 115; see Kokesh, 137 S. Ct. at 1640 n.1
(emphasizing the need to “achiev[e] a high standard of business
                                3
ethics in the securities industry”) (quoting Capital Gains
Research Bureau, 375 U.S. at 186).

     Given all of that, Kokesh is of no help to Saad. Kokesh
held only that “[d]isgorgement” ordered by the Commission in
“enforcement proceedings” prosecuted by the Commission
itself to punish violations of “public law” “operates as a penalty
under [28 U.S.C.] § 2462,” 137 S. Ct. at 1644, 1645. In
multiple respects, that bears no resemblance to FINRA’s
private decision in this case to disaffiliate from Saad because
of his repeated violations of FINRA’s own professional rules
of conduct.

    First, the two cases implicate quite different remedial
schemes and materially different statutory standards. As noted,
Kokesh interpreted the term “penalty” under 28 U.S.C. § 2462,
which prescribes a five-year statute of limitations for the
imposition of any “civil fine, penalty, or forfeiture, pecuniary
or otherwise” in proceedings brought to enforce Acts of
Congress.

    Commission review in this case, by contrast, does not
involve a governmental entity enforcing an Act of Congress,
federal regulation, or any other type of public law. Instead, in
this case, the Commission is exercising discretionary
superintendence over the decisions of a private self-regulatory
organization (FINRA) to ensure only that its disciplinary
decisions do not “impose[] any burden on competition not
necessary or appropriate” and are not “excessive or
oppressive.” 15 U.S.C. § 78s(e)(2). If they are, the
Commission “may” alter them. Id.

     Those distinctions are critical. Kokesh is quite explicit that
the defining feature of a “penalty” under 28 U.S.C. § 2462 is
that it is “imposed as a sanction for violating federal securities
                                   4
law.” Kokesh, 137 S. Ct. at 1639 (emphasis added). Indeed,
“violating a public law” is a “hallmark[] of a penalty.” Id. at
1644; see id. at 1643 (“SEC disgorgement is imposed by the
courts as a consequence for violating what we described in
Meeker as public laws.”) (emphasis added); id. (“Sanctions
imposed for the purpose of deterring infractions of public laws
are inherently punitive[.]”) (emphasis added); id. at 1641 (“The
Commission sought civil monetary penalties, disgorgement,
and an injunction barring Kokesh from violating securities
laws in the future.”) (emphasis added).

     By contrast, all that Saad is charged with violating—and
all that is being remediated in this proceeding—is FINRA’s
rules of professional conduct. See J.A. 109 (“FINRA instituted
disciplinary proceedings * * * alleging [a] * * * violation of
NASD Rule 2110.”) (emphasis added); J.A. 110 (“‘[P]ersonal
problems’ could be mitigating if they ‘interfered with an ability
to comply with FINRA rules[.]’”) (emphasis added).

     The Supreme Court has ruled time and again that such
“occupational debarment” is a “nonpunitive” sanction. See
Hudson v. United States, 522 U.S. 93, 104 (1997) (order
forbidding further participation in the banking industry is a
nonpunitive sanction); see also De Veau v. Braisted, 363 U.S.
144, 156–160 (1960) (barring certain persons from work as
union officials); Hawker, 170 U.S. at 194–200 (permitting the
revocation of a medical license); see generally Smith v. Doe,
538 U.S. 84, 100 (2003). 1

1
  The Concurring Opinion dismisses the Supreme Court’s debarment
cases by suggesting that such discipline is, as a matter of law, a civil
“penalty,” and thus automatically “excessive or oppressive.”
Concurring Op. 3. But in upholding those measures, the Supreme
Court recognized the important remedial role that such debarments
can play in protecting the integrity of an industry and those members
of the public who interact with it. See Hudson, 522 U.S. at 105
                                 5
     This case is even easier than those Supreme Court cases.
The question of whether debarments (or even suspensions, as
the Concurring Opinion suggests) are “excessive or
oppressive” is, at bottom, a pure question of statutory
construction. And on that question, Congress has mandated
that any securities-industry self-regulatory organization that
wishes to register with the Commission include in its rules the
ability to “discipline[]” members who violate “the rules of the
association” by, inter alia, “expulsion, suspension, * * * [and]
being suspended or barred from being associated with a
member.” 15 U.S.C. §78o-3(b)(7); see id. §78o-3(h)(3).
Disciplinary tools required by Congress in Section 78o-3
cannot categorically be impermissibly “excessive or
oppressive” under Section 78s(e)(2). 2

     Second, Kokesh involved an order of disgorgement
commanding the payment of funds into the United States
Treasury. That sanction thus did nothing to protect or to
compensate the victims of the crime. Kokesh, 137 S. Ct. at
1644 (“When an individual is made to pay a noncompensatory
sanction to the Government as a consequence of a legal
violation, the payment operates as a penalty.”) (emphasis
added); id. (“SEC disgorgement thus bears all the hallmarks of
a penalty: It is imposed as a consequence of violating a public
law and it is intended to deter, not to compensate.”).



(holding that ancillary deterrence effects are not dispositive when a
sanction’s main purpose is “to promote the stability of the banking
industry”); Hawker, 170 U.S. at 192 (upholding character
requirements for medical licensing because of the “most intimate”
relationship between the medical profession and the “life and health”
of the general public).
2
    Section 78o-3 does not mention disgorgement.
                               6
     By contrast, Saad’s offense harmed FINRA’s members
not just by misappropriating his employer’s money, but also by
imperiling, through both his fraud and his deceitful cover-up,
the trust and confidence of the investing public that is the
lifeblood of the securities industry. Saad’s seven-month-long
obstruction of investigators also squandered FINRA’s and its
members’ resources, forcing them to expend time, personnel,
and money unravelling the truth from his falsehoods. Under
these circumstances, allowing an industry to protect itself and
its clients from Saad’s mendacity and purloining by
disassociating from him is a remedial measure that protects the
industry and its investors. See J.A. 115 (“Because we conclude
that a bar is necessary to protect FINRA members, their
customers, and other securities industry participants, we find
that it is remedial, not punitive.”); see also id. (“[Saad’s
actions] demonstrate that he cannot be entrusted with firm or
customer money, and that therefore he would pose a continuing
and unacceptable threat to investors and other industry
participants if not barred.”).       Saad’s discipline, unlike
Kokesh’s, does not surrender anything “to the Government.”
137 S. Ct. at 1644. The remedy here thus bears no punitive
resemblance to the disgorgement order in Kokesh.

    Third, given the significant differences in the two statutory
schemes, Saad cannot wrap himself in Kokesh without first
establishing that the meaning of “penalty” in 28 U.S.C.
§ 2462’s statute of limitations governing the enforcement of
Acts of Congress both (i) directly dictates the meaning of
“excessive or oppressive” under 15 U.S.C. § 78s(e)(2), and
also (ii) overrides the Commission’s discretionary judgment
whether to correct a FINRA disciplinary measure, thereby
mandating relief in his case, cf. id. (Commission “may” correct
orders).
                                7
     Saad, however, has never argued in any way at any point
in these proceedings that we should extrapolate the meaning of
“penalty” under 28 U.S.C. § 2462 to the determination of
whether a sanction is “excessive or oppressive” under 15
U.S.C. § 78s(e)(2). Saad made no such argument before
FINRA or the Commission. And before this court—giving
Saad every benefit of the doubt—he at most indirectly bumped
into the point by citing a case that arose under Section 2462—
and even that appeared for the first time in his reply brief. Saad
Reply Br. 2 (mentioning a case that involved a proceeding
under 28 U.S.C. § 2462, but not citing the statute or arguing its
extension to this context); see 15 U.S.C. § 78y(c)(1) (“No
objection to an order or rule of the Commission, for which
review is sought under this section, may be considered by the
court unless it was urged before the Commission or there was
reasonable ground for failure to do so.”); United States v. TDC
Mgmt. Corp., 827 F.3d 1127, 1130 (D.C. Cir. 2016)
(undeveloped arguments are forfeited); American Wildlands v.
Kempthorne, 530 F.3d 991, 1001 (D.C. Cir. 2008) (“We need
not consider this argument because plaintiffs have forfeited it
on appeal, having raised it for the first time in their reply
brief.”).

     More to the point, Saad himself apparently sees no
relevance to the Supreme Court’s decision in Kokesh because,
in the five months since Kokesh was decided, he has not said a
single word to this court about that decision or its potential
applicability. Because Saad himself does not consider the
decision worth mentioning and has never argued at any point
that 28 U.S.C. § 2462’s definition of “penalty” controls this
very different statutory scheme enforcing a different statutory
standard (“excessive or oppressive”), he has forfeited any
reliance on that argument. Or so the Commission could
sensibly conclude.
                               8
     Fourth, binding circuit precedent—indeed, law of the
case—has established that the Commission “may approve
‘expulsion not as a penalty but as a means of protecting
investors.’” Saad, 718 F.3d at 913 (quoting PAZ Securities,
Inc. v. SEC, 494 F.3d 1059, 1065 (D.C. Cir. 2007)). See also
Siegel v. SEC, 592 F.3d 147, 158 (D.C. Cir. 2010) (consecutive
suspensions permissibly imposed “to protect customers”)
(internal quotation marks omitted); PAZ Securities, Inc. v.
SEC, 566 F.3d 1172, 1175 (D.C. Cir. 2009) (debarment
permissibly imposed “to protect investors” and to redress “a
significant harm to the self-regulatory system”); McCurdy v.
SEC, 396 F.3d 1258, 1265 (D.C. Cir. 2005) (suspension
permissibly imposed “to protect the public from [the violator’s]
demonstrated capacity for recklessness”).

     This court is not alone in that judgment. See, e.g., ACAP
Fin., Inc. v. SEC, 783 F.3d 763, 768 (10th Cir. 2015) (Gorsuch,
J.) (suspension permissibly imposed where the violator’s
conduct “cast doubt on his ability to carry out his obligations
as a securities professional in any capacity”). The Eighth
Circuit, moreover, recently ruled that nothing in Kokesh called
into question the authority of the Commission to sustain a
disciplinary order enjoining the continued violation of the
securities laws. That prospective order remained remedial
because it was designed “to protect the public prospectively[.]”
SEC v. Collyard, 861 F.3d 760, 764 (8th Cir. 2017) (discussing
Kokesh).

    Nothing in Kokesh unravels our on-point circuit precedent.
Kokesh involved a different sanction (disgorgement), imposed
under a different statute under an entirely different type of
Commission proceeding, to enforce public law not industry
professional standards, and involved markedly different
remedial and protective implications for private industry and
private investors. Accordingly, nothing in Kokesh “effectively
                                9
overrules” or “eviscerates” that binding precedent, which is
what we require before abandoning law of the circuit. See
National Inst. of Military Justice v. Department of Defense,
512 F.3d 677, 682-683 n.7 (D.C. Cir. 2008) (“[W]hether [a]
Supreme Court opinion supersedes Circuit precedent
* * * depends on whether [that] opinion ‘effectively
overrules,’ i.e. ‘eviscerates’ precedent”) (quoting United States
v. Williams, 194 F.3d 100, 105 (D.C. Cir. 1999)).

     Accordingly, under settled authority, the Commission’s
affirmance of a FINRA debarment decision is not “excessive
or oppressive” when it is designed, as it was here, to remedially
protect the industry and the investing public. This panel, and
any panel reviewing the Commission’s decision on remand, is
bound by that precedent, and (absent an intervening en banc
ruling) will continue to be bound by that precedent on review
of any subsequent SEC decision. See LaShawn A. v. Barry, 87
F.3d 1389, 1393 (D.C. Cir. 1996) (en banc). 3

     The foundational premise of the Concurring Opinion is
that only disciplinary sanctions that “provide a remedy to the
victim” can qualify as “remedial.” Concurring Op. 1; see id. at
2. But Kokesh does not go anywhere near that far. More to the
point, it says nothing at all about what constitutes a remedial
sanction in the context of a self-regulatory organization’s
enforcement of its professional standards, rather than public
laws. This circuit has ruled that, in this exact statutory context,

3
   The Concurring Opinion says that Kokesh overturns circuit
precedent characterizing “expulsion[s] or suspension[s]” as
remedial. Concurring Op. 1. But the Concurring Opinion cites no
language in Kokesh that even suggests such a sweeping holding, let
alone that clearly “eviscerates” our precedent. Nor does the
Concurring Opinion grapple with our strict circuit standard for
relying upon intervening Supreme Court precedent to abandon
circuit precedent.
                              10
a disciplinary sanction that is “purely remedial and
preventative” but not compensatory—such as a general order
to cease-and-desist violating the securities laws—is “not a
‘penalty’ or ‘forfeiture’” within the meaning of 28 U.S.C.
§ 2462. Riordan v. SEC, 627 F.3d 1230, 1234 (D.C. Cir.
2010); see id. at 1232 (labeling the cease-and-desist order
“remedial”). A prospective cease-and-desist order of that
general breadth “does not provide anything to the victims to
make them whole or to remedy their losses,” as the Concurring
Opinion would require. Concurring Op. 2. Yet it certainly is
remedial to ensure that, going forward, a harm stops.

     The Concurring Opinion says that debarment and even a
one-day suspension have to be treated as a penalties because,
in its view, they do not “provide a remedy to the victim.”
Concurring Op. 1. But that argument conflates “remedial” with
“compensatory.” Victimization and harm entail more than just
replacing lost dollars. There can be non-pecuniary harms too.
There certainly were here. The harm that Saad inflicted and
that FINRA remedied did not stop with his employer’s bank
account. His conduct also sowed distrust in the industry, and
his seven months of falsehoods and misrepresentations to
regulatory investigators stole their time and scarce resources,
while compounding the harms he caused to industry integrity.

    FINRA’s order of debarment directly remedied that full
range of harms by making sure they stopped. Ordering the fox
out of the henhouse falls comfortably within the “common
understanding of the term ‘remedial,’” Concurring Op. 1, and
indeed provides to Saad’s many victims a more comprehensive
                                  11
and realistic remedy than the Concurring Opinion’s dollars-
only approach. 4

     In sum, Saad’s repeated turpitudinous misconduct, his
nearly year-long venture in misleading and lying to his
employer and investigating regulators, and the paramount need
for the utmost honesty and integrity in the handling of others’
property in the securities industry amply justified the
Commission’s decision to sustain FINRA’s imposition of
debarment as a remedy in this case. I do not see anything in
Kokesh that bears on that decision by a private self-regulatory
organization to disaffiliate with someone who repeatedly
transgressed industry rules that are necessary to protect the
investing public and the integrity of the securities industry. For
those reasons, I have deep doubts about the decision to remand
this case to the Commission to address a case that is so off-
point that Saad himself has paid it no heed, especially because
the remedial sufficiency of the Commission’s order is
controlled by circuit precedent. I have gone along only because


4
     The Concurring Opinion’s suggestion that FINRA “may”
somehow be able to impose “civil penalt[ies]” is quite puzzling.
Concurring Op. 4. Civil penalties punish violations of federal law,
not private industry rules. See, e.g., Kokesh, 137 S. Ct. at 1639, 1644.
And nothing in the relevant federal securities laws empowers a non-
governmental body like FINRA to prosecute and punish violations
of federal law directly. Nor does federal law provide any avenue by
which the Commission “may” be able to review FINRA’s
prosecution of civil penalties. Concurring Op. 4. More puzzling still
is the Concurring Opinion’s suggestion that FINRA was supposed to
justify Saad’s debarment as “punitive.” Concurring Op. 4-5. This
court remanded this case to the Commission to explain why its
disciplinary measures were not “punitive.” Saad, 718 F.3d at 913.
Thankfully, law of the case and law of the circuit foreclose the
Concurring Opinion’s volte-face.
                           12
nothing in our simple remand order says that Kokesh should
alter the outcome of Saad’s case.
