The U.S. Court of Appeals for the D.C. Circuit upheld a permanent bar against an investment adviser even though the alleged wrongdoing would not have been illegal following subsequent rule changes.   The Court indicated that it will uphold SEC sanctions determinations unless “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”   The Court believed that the SEC properly applied a "multi-factor test" to determine that the public interest did not support lifting the bar because the adviser showed lack of remorse and failed to repay the amounts assessed against him.  The case involved the mis-pricing of bonds using a methodology which the adviser claims would have been permitted under future FASB rules.

OUR TAKE:  The SEC has broad discretion to impose (and maintain) sanctions against advisers, even where the underlying wrongdoing is not clear.  Perhaps, the adviser would have had more chance had he paid off the assessments imposed in the initial order.