Donald Hateley, the Cambridge Group, and Wendy Seretan v. Securities and Exchange Commission

Petitioners Donald Hateley, Wendy Sere-tan and The Cambridge Group, Inc. (collectively “Petitioners”) challenge a decision by respondent Securities and Exchange Commission (“SEC”) affirming a $55,000 disgorgement order imposed against them jointly and severally. We conclude that the amount of the disgorgement is excessive and unreasonable but deny the petition for review in all other respects.

I. Background

The Cambridge Group, Inc. (“Cambridge”) was a three-person broker-dealer securities firm and a member of the National Association of Securities Dealers, Inc. (“NASD”). Hateley and Seretan were officers and directors of the firm. Hateley served as president of the company while Seretan was executive-vice-president. Hateley was the sole-shareholder. In June 1985, while Hateley and Seretan were abroad enjoying their honeymoon, the firm’s third director, Winston C. Sheppard, Jr., entered into a “finder’s fee agreement” with Lawrence Jay Hold on behalf of Cambridge. The agreement, which was executed without the knowledge of the other two directors, provided that Hold would receive 90% of the commissions generated by all securities transactions he solicited for the firm.…