SEC v. Eric Tsao , 671 F. App'x 157 ( 2016 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1515
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff - Appellee,
and
UNITED STATES OF AMERICA,
Intervenor/Plaintiff,
v.
ERIC I. TSAO,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Roger W. Titus, Senior District Judge.
(8:03-cv-01596-RWT)
Submitted: November 7, 2016 Decided: December 15, 2016
Before SHEDD, AGEE, and KEENAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Stephen J. Crimmins, Brian M. Walsh, MURPHY & MCGONIGLE, P.C.,
Washington, D.C., for Appellant. Jeff Rosenblum, Deputy General
Counsel, Richard M. Humes, Associate General Counsel, Timothy N.
McGarey, Special Trial Counsel, U.S. SECURITIES & EXCHANGE
COMMISSION, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
In 2004, Eric I. Tsao entered into a consent decree with
the Securities and Exchange Commission (SEC). Tsao appeals the
district court’s order denying his motion to reopen the case and
modify the portion of the consent decree barring him from
serving as an officer or director of a public company (“O/D
bar”). Finding no error, we affirm.
We review the denial of a Rule 60(b) motion for abuse of
discretion. Aikens v. Ingram, 652 F.3d 496, 501 (4th Cir. 2011)
(en banc). “Under Rule 60(b)(5), a court may relieve a party
from an order if it is no longer equitable that the judgment
should have prospective application.” Thompson v. U.S. Dep’t of
Hous. & Urban Dev., 404 F.3d 821, 826 (4th Cir. 2005) (internal
quotation marks omitted). Rule 60(b)(5) encompasses a district
court’s inherent authority to modify a consent decree. * Id.To support a motion to modify a consent decree, the moving
party “bears the burden of establishing that a significant
change in circumstances warrants revision of the decree.”
Thompson, 404 F.3d at 827 (quoting Rufo v. Inmates of Suffolk
* Because a district court may modify a consent decree under
Rule 60(b)(5), Tsao’s contention that the decree may also be
modified under Rule 60(b)(6) fails — Rule 60(b)(6) “may be
invoked in only extraordinary circumstances when the reason for
relief from judgment does not fall within the list of enumerated
reasons given in Rule 60(b)(1)-(5).” Aikens, 652 F.3d at 500.
3
Cty. Jail, 502 U.S. 367, 383 (1992)). “A significant change
either in factual conditions or in law can support a requested
modification.” Id. (internal quotation marks omitted).
A significant change in the factual conditions can
support a modification if the changed conditions make
compliance with the decree substantially more onerous,
if the decree proves to be unworkable because of
unforeseen obstacles, or if enforcement of the decree
without the modification would be detrimental to the
public interest. Ordinarily, however, modification
should not be granted where a party relies upon events
that actually were anticipated at the time it entered
into a decree.
Id. (citations and internal quotation marks omitted).
We conclude that the district court did not abuse its
discretion in declining to modify the consent decree. The
district court considered the relevant factors and did not
consider any erroneous facts. While we agree with the district
court’s description of Tsao’s postconviction conduct as
laudable, Tsao has been able to achieve great success in his
profession despite the O/D bar. Tsao’s current employer was
aware of the O/D bar when it hired him, and thus any difficulty
it faces in becoming a public company with him as an officer was
foreseeable. Moreover, Tsao demonstrates no more than
speculation that his employer’s interests would be harmed in the
future. And while Tsao’s work in public health does benefit the
public interest, this fact fails to overcome the public interest
in the finality of judgments. To the extent that Tsao argues
4
the SEC has not sought lifetime O/D bars in other insider
trading cases, we note that the cited cases are distinguishable,
and that the SEC has sought such sanctions in appropriate cases.
See, e.g., Sec. & Exch. Comm’n v. Resnick, 604 F. Supp. 2d 773,
783 (D. Md. 2009); see also Rufo, 502 U.S. at 389 (noting that
not every “clarification in the law automatically opens the door
for relitigation of the merits of every affected consent
decree”).
Accordingly, we affirm the district court’s order. We
dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before
this court and argument would not aid the decisional process.
AFFIRMED
5