Securities and Exchange Commission v. Kevin Michael McCarthy Thomas William Blodgett

Kevin McCarthy and Thomas Blodgett appeal the district court’s order granting the Application of the United States Securities and Exchange Commission (the “Commission”) seeking enforcement of a Commission order. The Commission affirmed a disciplinary decision of the National Association of Securities Dealers (“NASD”), fining McCarthy and Blodgett $48,892.37 and $50,453.33 respectively. Appellants appeal on the grounds that (1) the Commission does not possess standing to file this Application; (2) the district court erred in utilizing summary proceedings not authorized under the Federal Rules of Civil Procedure; (3) the district court failed to provide them with an opportunity to respond to the Commission’s Application; and (4) Appellants were not permitted to assert affirmative defenses to the Commission’s Application in district court.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Securities Exchange Act of 193f

Congress enacted the Securities Exchange Act of 1934 (the “Exchange Act”) to “achieve a high standard of business ethics in the securities industry.” Affiliated Ute Citizens v. United States, 406 U.S. 128, 151 , 92 S.Ct. 1456 , 31 L.Ed.2d 741 (1972). The Act allows…