The primacy of the exchanges is further suggested by the very prologue of the Exchange Act, which sets forth as its object the regulation of “transactions in securities as commonly conducted upon securities exchanges and over-the-counter markets…” 15 U.S.C. §78b. In this case, there can be little disagreement regarding the fact the EB-5 investments 14 That registration is not an end in itself but merely a means to achieve the goal of protecting those involved in securities transactions is further illustrated by § 15(a)’s empowerment of the Commission to exempt from the registration requirement any broker or dealer so long as it is “consistent with the public interest and the protection of investors....” 15 U.S.C. §78o(a)(2). 15 15 U.S.C. § 78c(a)(1) defines an “exchange” as “any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange.”

IV. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants are permanently restrained and enjoined from violating, directly or indirectly, Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a), which makes it unlawful for any broker or dealer which is either a person other than a natural person or a natural person, to make use of the mails or any means or instrumentality of Case 2:15-cv-09420-CBM-SS Document 61-1 Filed 01/17/17 Page 3 of 9 Page ID #:4544 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 interstate commerce to effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security (other than an exempted security or commercial paper, bankers’ acceptances, or commercial bills) unless such broker or dealer is registered in accordance with Section 15(b) of the Exchange Act, 15 U.S.C. § 78o(b). IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Final Judgment by personal service or otherwise: (a) any officers, agents, servants, employees, and attorneys of Defendants; and (b) other persons in active concert or participation with Defendants or with anyone described in (a).

The degree to which DOL has overstepped its statutory role is reflected in the breadth of the critique of the financial services industry that it used to justify its actions. Our securities laws, and the regulation of broker-dealers specifically, are founded on disclosure (see, e.g., 15 U.S.C. § 78o)—yet the Department insists that “disclosing . . . conflicts of interest can make consumers worse off.”

The degree to which DOL has overstepped its statutory role is reflected in the breadth of the critique of the financial services industry that it used to justify its actions. Our securities laws, and the regulation of broker-dealers specifically, are founded on disclosure (see, e.g., 15 U.S.C. § 78o)—yet the Department insists that “disclosing . . . conflicts of interest can make consumers worse off.”

The SEC accordingly censured Bear Stearns—a remedy that the SEC may impose only if it finds “on the record after notice and opportunity for hearing” that a broker-dealer, such as Bear Stearns, has willfully violated or willfully aided and abetted violations of the federal securities laws. See 15 U.S.C. § 78o(c)(4). The SEC Order directs Bear Stearns to pay “Disgorgement and Civil Money Penalties,” comprised of “disgorgement in the total amount of $160,000,000” and “civil money penalties in the amount of $90,000,000.”

Indeed, to make this longstanding policy clear to the public, Congress recently amended the Exchange Act to require that: Every registered broker or dealer shall provide notice to its customers that they may elect not to allow their fully paid securities to be used in connection with short sales. 15 U.S.C.A. § 78o(e). Here, apart from Defendants’ right to “elect not to allow their fully paid securities to be used in connection with short sales,” Defendants’ decision to make that election cannot form the basis for any securities fraud claims because Defendants voluntarily told Goldman as early as August 2006 that they did not want their bonds lent to short sellers.

ain types of transactions.19 Section 15(c)(1)(A) makes it unlawful to “induce or attempt to induce the purchase or sale of, any security” by means of any manipulative, deceptive, or other fraudulent device.20 19 Sections 206 (1) and (2) of the Investment Advisers Act of 1940 [15 U.S.C. § 80b-6] make it unlawful for investment advisers: Because the operative language in these sections, like Section 17(a)(2), lacks a proscription on “making” a statement, Janus does not apply to those statutes. (1) to employ any device, scheme, or artifice to defraud any client or prospective client; to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client; (2) to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client 20 Section 15(c)1(A) of the Securities Exchange Act of 1934 [15 U.S.C. § 78o(c)] prohibits brokers and dealers from “mak[ing] use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any security (other than commercial paper, bankers’ acceptances, or commercial bills), or any security-based swap agreement, by means of any manipulative, deceptive, or other fraudulent device or contrivance.” Case 1:06-cv-10885-NMG Document 95 Filed 02/27/12 Page 26 of 29 23 Tambone argues that allowing Section 17(a) to reach conduct not prohibited by Rule 10b- 5 would be an “inexplicable anomaly,” but the explanation is clear.

The corporate defendant in this case is a broker-dealer registered with the Commission. As a registered broker-dealer, Citigroup is subject to examination by the Commission, see 15 U.S.C. § 78o(d), and the Commission’s Office of Compliance Inspections and Examinations (“OCIE”) regularly conducts such exams. If, in the course of an examination, the OCIE staff uncovers evidence of a violation, that evidence may be referred to SEC enforcement staff.

And here, as in Buckman, the relevant statutes and regulations dictate the “subject matter” of JPMorgan’s statements to the agencies. Id.; see also 15 U.S.C. § 78o (SEC: “Registration and regulation of brokers and dealers”); 12 U.S.C. § 161 (OCC: “Reports to Comptroller of the Currency”); 12 C.F.R. § 21.11 (OCC: “Suspicious Activity Report”); 12 C.F.R. § 225.4(f) (Federal Reserve: “Suspicious activity report”); 12 U.S.C. § 1844(a) (Federal Reserve: “[E]ach bank holding company shall register with the Board on forms prescribed by the Board. . . .”). For example, the federal regulations that mandate the filing of a Suspicious Activity Report prescribe when a national bank is required to file a SAR and in what form.

Here, the duty of the issuing trusts to file periodic reports generally was suspended due to the small number of certificate holders. See 15 U.S.C. § 78o(d). But, as set forth in each of the Prospectus Supplements, the monthly reports were posted to an internet site and were available to certificate holders.