Spitzer v SEC

Meet Paul Spitzer

After forty years of faithfully serving his clients, Paul Spitzer faces a cruel twist at age 74: a financially ruinous SEC action, triggered not by fraud or misconduct, but by an administrative settlement gone terribly wrong.

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 After depleting his home equity, retirement savings, and life's assets dealing with a three-year SEC investigation, Spitzer now waits in administrative purgatory, facing an agency that has refused for years to even respond to his request for relief.

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What began as the regulatory equivalent of a traffic ticket—a technical supervision violation with no investor harm—has morphed into what amounts to a professional life sentence.

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How Did We Get Here?

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The story begins in 2021, when Spitzer, then 71, faced SEC claims for allegedly failing to supervise an employee who had deliberately deceived him. Despite maintaining his lack of knowledge of the employee's misconduct, Spitzer made the difficult decision to settle the SEC's claims without admitting or denying them. With his resources exhausted and facing mounting legal costs, he accepted a settlement that limited his supervisory activities—but crucially, one that would still allow him to work as an investment adviser under supervision—or so he thought. 

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While SEC staff told him this arrangement would preserve his ability to continue in the investment adviser space, the reality proved devastatingly different. Major investment platforms began denying Spitzer access, effectively preventing him from servicing his clients even under supervision. His attempts to resolve this unintended consequence through informal channels with the SEC staff proved futile.

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Eighteen Months of Silence

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In December 2022, Spitzer filed a formal motion to dismiss what had become a de facto supervisory bar. The motion was fully briefed by February 2023. Then... nothing. No hearing date. No decision. Not even an acknowledgment from the Commission. For eighteen months, the SEC has maintained complete silence while Spitzer's savings dwindle and his ability to support himself and his wife hangs in the balance.

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This is why ICAN, working with pro bono partners at Mitchell Silberberg & Knupp, has filed a petition for writ of mandamus with the Ninth Circuit Court of Appeals, demanding the SEC fulfill its basic duty to act on Spitzer's motion.

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A Pattern of "Forever Bars"

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Spitzer's case exemplifies a troubling pattern in SEC enforcement. As then SEC Commissioner Michael Piwowar once warned, "the reinstatement process, even if successful, can take years to complete... and the right to apply for reinstatement can be illusory." Through administrative inaction, the SEC effectively converts limited sanctions into "forever bars," devastating careers and livelihoods without due process.

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The SEC's own rules suggest appeals from administrative orders should be decided within 10 months. Yet Spitzer's straightforward motion has languished for 18 months—and counting. This delay is particularly egregious given his advanced age and dire financial circumstances.

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A System Designed for Delay

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Paul Spitzer's eighteen-month wait for a hearing isn't an anomaly—it's business as usual at the SEC. Recent Supreme Court cases have highlighted this troubling pattern. In SEC v. Jarkesy (2024), Supreme Court Justice Gorsuch noted that in one case, the SEC "afforded itself the better part of six years" just to issue an opinion. In another, the administrative proceedings dragged on for seven years.

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The numbers are staggering. According to a recent court filing, thirteen enforcement cases were at one time pending before the SEC's commissioners. Seven of those cases had been waiting more than six years for resolution. On average, the cases at issue had been pending for about six years (2,177 days)—nearly three times longer than the typical federal court case decided by a jury.

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These delays aren't limited to any particular type of case. Recent examples paint a disturbing picture:

• One individual waited 39 months (over 3 years) for the SEC to review his appeal of a lifetime bar

• Another person's motion to lift trading restrictions sat untouched for four and a half years before being denied

• In yet another case, the SEC waited nearly six years to deny someone's motion, refusing to even consider new evidence​

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This pattern of delay serves as a de facto punishment, wearing down individuals through time and inaction rather than due process. For someone like Paul Spitzer, in his mid-70s and watching his savings dwindle, justice delayed truly is justice denied.

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Why This Case Matters

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While Spitzer's story is compelling on its own, the implications reach far beyond one individual. The SEC's use of administrative delays and inaction to extend sanctions beyond their intended scope creates uncertainty and risk for all market participants. Cases like Spitzer's serve as a warning: any market participant could find themselves trapped in similar circumstances, where even the right to appeal becomes meaningless through bureaucratic neglect.

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Taking the Fight to Court

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ICAN's petition to the Ninth Circuit Court of Appeals makes a compelling case for immediate action. Drawing on decades of precedent, we argue that the SEC's 18-month delay is not just unreasonable—it's causing active harm to Mr. Spitzer and his family, who have already suffered enough.

Our petition highlights several key points:

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• The SEC's own rules suggest certain appeals should be decided within 10 months, yet Spitzer's motion has languished for nearly twice that time

• At 74, Spitzer cannot afford to wait years for bureaucratic wheels to turn while his savings dwindle

• The agency's silence effectively converts a limited sanction into a "forever bar" without due process

• The SEC's delay is particularly egregious given that it spent three years aggressively investigating and prosecuting Spitzer, yet now cannot find time to review his motion

• The motion requires minimal agency resources to review since the SEC is already intimately familiar with the case​

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We're asking the Court to compel the SEC to hear and decide Spitzer's motion within 30 days. This timeline would restore some measure of fairness to a process that has gone badly off track, while still giving the agency reasonable time to review the fully-briefed motion.

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Paul Spitzer's story represents both a personal tragedy and an opportunity for meaningful change. By taking on his case, we're not just fighting for one man's right to work—we're pushing back against a pattern of SEC behavior that threatens everyone in the financial services industry and everyone who relies on financial services professionals. When regulators can effectively end someone's career through endless delays, no one is safe. ICAN is working to ensure that what happened to Paul Spitzer doesn't happen to others who find themselves facing SEC “life sentences” over minor infractions.

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