U.S Securities and Exchange Commission v. Saw

Background

The SEC brought a civil enforcement action against Clarice Saw, alleging violations of Section 17(a)(1) and (a)(2) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5. The SEC alleged that Saw, a registered securities representative, misappropriated approximately $2.4 million from her brokerage client, Fu Sheng Jiang.

Jiang had opened a Citigroup brokerage account with Saw in 2020. In December 2020, he gave Saw a New York power of attorney. The document authorized her to act on his behalf in several financial matters but stated that she could not use his assets for herself or make gifts to herself unless he specifically granted that authority. Jiang did not sign the document’s statutory gifts rider.

After Saw moved to Cetera Investment Services, Jiang transferred his holdings to a Cetera account. In December 2021, while Jiang was hospitalized after being struck by a motorcycle, Saw added herself to one of his TD Bank accounts and opened another TD Bank account naming herself as the primary owner and Jiang as a co-owner. The opinion states that Jiang did not authorize or know about those actions.

Saw then entered a note into Cetera’s internal system stating that Jiang had decided to liquidate his investments and place the money in cash for donation or distribution. The court found that statement false because Jiang had not authorized Saw to liquidate his positions or distribute the proceeds. Saw sold approximately $1.7 million in securities on December 16, 2021, and approximately $734,000 more on December 20, 2021. She transferred the proceeds through the TD Bank accounts and then transferred $2 million to her personal bank account.

Saw used some of the money for cash withdrawals, personal expenses, and transfers to personal investment accounts. The opinion identifies expenses including payments connected to a Mercedes-Benz dealership, a casino, a mortgage servicer, and other personal transactions. The court also noted that Saw’s deposition answers about the power of attorney and the transactions invoked the Fifth Amendment privilege against self-incrimination.

Summary Judgment Standards

Summary judgment is proper when the evidence shows no genuine dispute about a material fact and the moving party is entitled to judgment under the law. A party opposing summary judgment must support disputed facts with evidence; unsupported denials, speculation, and general attacks on a witness’s credibility are insufficient.

The court also held that invoking the Fifth Amendment does not provide evidence supporting the asserting party’s position. Because Saw did not provide admissible evidence supporting her denials, the court treated the SEC’s supported factual statements as admitted under the applicable local rule.

Court’s Analysis

The court concluded that the undisputed evidence established the elements of securities fraud. First, Saw engaged in deceptive conduct by selling Jiang’s securities without his knowledge or authorization, transferring the proceeds through accounts she controlled, and using the money for her own purposes. The court relied on precedent holding that a broker acts deceptively when she sells a customer’s securities and uses the proceeds for herself without the customer’s knowledge or consent.

Second, the court found that Saw made a material misrepresentation to Cetera through the SmartWorks system. Her statement that Jiang had decided to liquidate his positions was false, and it enabled her to sell the securities despite Cetera’s policies restricting conduct such as commingling customer funds, maintaining joint accounts with non-family members, and acting under a power of attorney for an unrelated person without written approval.

Third, the court found scienter, meaning the intent to deceive, manipulate, or defraud. It relied on the sequence of Saw’s false statement, the liquidation of more than $2 million in securities, the movement of the proceeds into accounts she controlled, and her use of the money for personal purposes. The court also noted that the power of attorney expressly prohibited her from using Jiang’s assets for her own benefit.

Fourth, the court found that the fraud occurred in connection with securities sales because Saw’s deceptive conduct coincided with the unauthorized sales of securities from Jiang’s Cetera account.

Saw’s Arguments

Saw argued that Jiang’s testimony presented credibility issues and that their alleged close relationship supported an inference that he authorized the transactions. The court rejected those arguments because Saw offered no admissible evidence contradicting Jiang’s testimony or the account records. The court also rejected arguments that the SEC needed affidavits from Jiang or a Cetera employee, explaining that deposition testimony and the company’s manual were permissible evidence in the summary-judgment record.

The court further ruled that Jiang’s English-language abilities were not relevant to whether Saw liquidated his portfolio without authorization. Although Jiang knowingly and voluntarily signed the power of attorney, that fact did not authorize Saw to use his assets for herself because the document prohibited that conduct and Jiang had not signed the gifts rider.

Disposition

The court granted the SEC’s motion for summary judgment on its claims that Saw violated Section 10(b) of the Exchange Act, Rule 10b-5, and Section 17(a) of the Securities Act. The ruling resolved liability. The court directed the SEC to submit briefing on appropriate remedies by August 14, 2025, and allowed Saw to respond by August 28, 2025. The opinion does not determine the amount or form of any remedies.