UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


CANADY, LAURIE JONES

v.

SEC


99-1407a

D.C. Cir. 2000


*	*	*


Karen Lecraft Henderson, Circuit Judge: Laurie Jones  Canady petitions
for review of two orders of the Securities  and Exchange Commission
(SEC): the first barred her from  future association with any
securities broker or dealer and  directed her to disgorge commissions
for having violated  section 17(a) of the Securities Act of 1933, 15
U.S.C. s 77q(a),  section 10(b) of the Securities Exchange Act of
1934,15 U.S.C.  s 78j(b), and Rule 10b-5, 17 C.F.R. s 240.10b-5, and
the  second denied reconsideration of the first. Canady chal- lenges
the orders on the sole ground that most of the violative  conduct
occurred more than five years before the enforce- ment proceeding was
commenced and therefore fell outside  the limitation period
established in 28 U.S.C. s 2462.1 The  SEC concluded in its review
order that Canady had waived  the defense by failing to argue it, even
after one of the  commissioners questioned her counsel about the
defense dur- ing oral argument. We hold the SEC's waiver conclusion in
 the review order must be upheld as neither arbitrary nor  capricious
and that we lack jurisdiction to review the Com- mission's order


I.


On October 25, 1994 the SEC Division of Enforcement  commenced this
proceeding alleging that from January 1988 




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n 1 Section 2462 provides:


Except as otherwise provided by Act of Congress, an action,  suit or
proceeding for the enforcement of any civil fine, penalty,  or
forfeiture, pecuniary or otherwise, shall not be entertained  unless
commenced within five years from the date when the  claim first
accrued if, within the same period, the offender or  the property is
found within the United States in order that  proper service may be


28 U.S.C. s 2462.


to February 1990 Canady, a Davenport, Iowa registered  securities
broker, violated section 17(a), section 10(b) and  Rule 10b-5 through
fraudulent misrepresentations and non- disclosures and by conducting
transactions that were unau- thorized or not in the interests of her
clients. JA 20-21. On  October 31, 1995, after a two-week hearing, the
administra- tive law judge (ALJ) issued an Initial Decision
permanently  barring Canady from association with the securities
profes- sion and ordering her to disgorge $136,382.28 in commissions 
improperly earned on the accounts of 14 investors. JA 243.


On December 4, 1995 Canady petitioned the Commission  for review, and
on December 7, 1995 the Commission granted  review and set a briefing
schedule. Canady filed her review  brief on February 6, 1995. During
oral argument on June 22,  1998, one of the commissioners asked
Canady's counsel for his  thoughts on "the applicability of Patricia
Johnson," referring  to this court's June 21, 1996 decision in Johnson
v. SEC, 87  F.3d 484 (D.C. Cir. 1996), which held that an SEC enforce-
ment action seeking censure and a six-month suspension from  the
securities profession is "an action, suit, or proceeding for  the
enforcement of any civil fine, penalty, or forfeiture, pecu- niary or
otherwise" within the meaning of 28 U.S.C. s 2462  and therefore
subject to the statute's five-year limitation  period. Counsel


I think it's, I think it's striking because Patricia  Johnson is a case
that ultimately, because of the five  years that went by, was a, I
think a mistake to even  proceed with. Here we have someone who, ten
years  ago almost ten years ago, left the business as we stand  here
today.


We were talking about, actually eight years, eight and  a half years
and you have to ask why are we doing--why  are we pursuing this? Why
did they pursue it? And I  think that once they made that
determination that this is  a bad person who over reached her
customers, the  Commission was willing--the Division was willing to
stop  at almost nothing to see if they could not convict her of  wrong


JA 596. When asked later during the argument why he had  not "raised
the Patricia Johnson issue in the lower proceed- ings," counsel
responded that he had not had an opportunity  because the ALJ
proceeding was concluded and the briefs on  review already filed when
Johnson issued. He further ex- plained he did not believe he could
file a reply brief under  Commission rules, which he was "not,
unfortunately, that  familiar with." JA 615-16.


In an opinion and order dated April 5, 1999 the Commission  upheld the
ALJ's findings that Canady defrauded and mis- managed the accounts of
the four clients who testified before  the ALJ but rejected the ALJ's
findings as to the other ten,  non-testifying clients. The
Commission's decision again or- dered a lifetime bar from the
securities industry and dis- gorgement, directing the disgorgement
amount to be adjusted  in accordance with the Commission's amended
findings. Re- garding section 2462 the Commission stated, in part:


It is well-established that " '[r]eliance on a statute of  limitations
is an affirmative defense and is waived if a  party does not raise it
in a timely fashion.' " Canady's  failure to raise the statute of
limitations in this case  constitutes a waiver of that claim.


Even when asked directly at oral argument to address  the applicability
of Johnson, Canady's counsel responded  only vaguely and without
reference to Section 2462 that  the proceedings should never have been
instituted and  now--having been appealed to us--were aged. Although 
the Johnson decision issued after briefing was completed  in this
case, the District of Columbia Circuit had applied  section 2462 to
administrative proceedings as early as  March 1994. Respondents in
other administrative pro- ceedings brought by this Commission,
including the  Johnson respondents, raised Section 2462 as an affirma-
tive defense before the appellate court's decision in John- son.


In deeming Canady to have forfeited a statute of  limitations defense,
we are furthering both fairness and  efficiency. As the District of
Columbia Circuit has held, 


a party claiming the statute of limitations defense must  give adequate
notice of that claim in order to permit the  other side "not only to
frame legal arguments, but to  establish relevant facts that might
affect the applicability  of the statute of limitations." Canady's
failure to raise  the claim deprived the Division of such notice and
oppor- tunity to develop its factual and legal defenses to the 


JA 573-76 (quoting citing Harris v. Secretary, United States  Dep't of
Veterans Affairs, 126 F.3d 339, 343, 344 (D.C. Cir.  1997); footnotes
and other citations omitted).


On May 1, 1999 Canady filed a timely request for reconsid- eration of
the Commission's April 5, 1999 order, arguing at  last that section
2462 deprived the Commission of jurisdiction.  She further argued that
she had not waived the statute of  limitations defense. See JA 439-43.
In a decision dated  August 6, 1999 the Commission denied
reconsideration, noting  Canady's "inaction" in not pursuing the
defense, not even "in  the period between oral argument and issuance
of [the Com- mission's] decision" after the Commission itself had
raised the  issue. JA 580. Canady then filed a petition for review


II.


As an initial matter we hold we are without jurisdiction to  review the
Commission's denial of reconsideration. Denial of  agency
reconsideration is "generally nonreviewable unless the  request for
reconsideration was based on new evidence or  changed circumstances."
Schoenbohm v. FCC, 204 F.3d 243,  246 (D.C. Cir. 2000) (citing ICC v.
Brotherhood of Locomotive  Eng'rs, 482 U.S. 270, 279-80 (1987);
Southwestern Bell Tel.  Co. v. FCC, 180 F.3d 307, 311 (D.C. Cir.
1999); Entravision  Holdings, LLC v. FCC, 202 F.3d 311, 312 n. * (D.C.
Cir. 2000)), petition for cert. filed, No. 00-6095 (July 28, 2000). 
Because Canady asserted neither ground in moving for recon- sideration
below,2 we may not review the Commission's denial 




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n 2 Canady did file a motion for leave to adduce additional evidence 
which the Commission denied in its reconsideration decision. The 


of her motion.3


We next consider Canady's challenge to the Commission's  holding in the
April 5, 1999 order on review that she waived  her statute of
limitations defense. Under the Administrative  Procedure Act, we "will
set aside [the Commission's] legal  conclusions only if 'arbitrary,
capricious, an abuse of discre- tion, or otherwise not in accordance
with law,' 5 U.S.C.  s 706(2)(A)." Wonsover v. SEC, 205 F.3d 408, 412
(D.C. Cir.  2000) (internal quotation omitted). Because the Commis-
sion's waiver holding satisfies this standard, we conclude it  must be


In support of its waiver conclusion the Commission specifi- cally cited
two provisions of the SEC's procedural rules. The  first rule provided
for filing of proposed findings and conclu- sions with the hearing
officer and stated that "any proposed  finding or conclusion not
briefed may be regarded as waived."  17 C.F.R. s 201.16(d). The second
rule provided: "Any  person who seeks Commission review of an initial
decision by  a hearing officer shall, within 15 days after service of
such  initial decision, serve and file a petition for Commission 
review containing exceptions thereto indicating specifically  the
findings and conclusions as to which exceptions are taken  together
with supporting reasons for such exceptions. These  reasons may be
stated in summary form. Any objection to an  initial decision not
saved by written exception filed pursuant  to this rule will be deemed
to have been abandoned and may  be disregarded." 17 C.F.R. s 217(b).4
Given the plain mean- ing of these rules, it was not arbitrary for the
Commission to  deem forfeited Canady's statute of limitations defense
which  was neither briefed to the ALJ nor raised in Canady's 




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n additional evidence was directed to the merits, not to the
limitations  issue. See JA 582-84.


3 We note that the only order identified in Canady's petition is, 
appropriately, the April 5, 1999 order.


4 The SEC has since revised its regulations to require more 
specifically that "[a] defense of res judicata, statute of limitations
or  any other matter constituting an affirmative defense shall be
assert- ed in the answer." 17 C.F.R. 201.220(c) (1999).


exceptions to his decision--nor urged by Canady at any time  before the
Commission's opinion on review. Cf. Harris v.  Secretary, United
States Dep't of Veterans Affairs, 126 F.3d  339, 343, 344 (D.C. Cir.
1997) (finding forfeiture of limitation  defense where not pleaded in
answer as required by Fed. R.  Civ. P. 8(c)).5


For the preceding reasons, the petition for review is


Denied.




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n 5 Canady contends she cannot reasonably be expected to have  asserted
the defense before Johnson issued in June 1996 when she  had by then
already filed her review brief with the Commission. As  early as March
1994, however, this court held the statute applicable  to agency as
well as to judicial proceedings. See 3M Co. v.  Browner, 17 F.3d 1453
(D.C. Cir. 1994). There was no reason  thereafter to doubt that it
applied to SEC proceedings. The only  issue in Johnson was whether an
SEC censure or professional  suspension is a "civil fine, penalty, or
forfeiture, pecuniary or  otherwise" within the meaning of section
2462. As Canady ac- knowledges, uncertainty on the issue before
Johnson definitively  resolved it did not prevent counsel in other
similar SEC proceed- ings, including, of course, Johnson itself, from
timely asserting a  section 2462 defense. See Brief of Appellee at 23.
Further,  Canady offers no justification for failing to pursue the
defense  between Johnson's issuance on June 21, 1996 and the
Commission's  review decision on April 5, 1999.