1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 4 August Term, 2020 5 6 (Argued: June 3, 2021 Decided: July 22, 2021) 7 8 Docket No. 20-1081-cv 9 10 _____________________________________ 11 12 SECURITIES AND EXCHANGE COMMISSION, 13 14 Plaintiff-Appellee, 15 16 v. 17 18 DONALD J. FOWLER, 19 20 Defendant-Appellant. * 21 22 _____________________________________ 23 24 Before: 25 26 LOHIER and NARDINI, Circuit Judges, and CRONAN, Judge. ** 27 28 In this enforcement lawsuit filed by the Securities and Exchange 29 Commission (SEC), Donald Fowler appeals from a judgment of the United States 30 District Court for the Southern District of New York (Woods, J.) entered after a 31 jury found that he recommended an unsuitable trading strategy and made 32 unauthorized trades in customer accounts. The District Court ordered

* The Clerk of Court is directed to amend the caption of this case as set forth above. ** Judge John P. Cronan, of the United States District Court for the Southern District of

New York, sitting by designation. 1 disgorgement and the payment of civil penalties, among other sanctions. On 2 appeal, Fowler argues that the applicable statute of limitations, 28 U.S.C. § 2462, 3 is jurisdictional and cannot be tolled by agreement, that the SEC’s suitability 4 claim was improper, and that customer testimony was required to prove all of 5 the SEC’s claims of unauthorized trading. Fowler also claims that the civil 6 penalties imposed against him are excessive. For the reasons that follow, and 7 because both parties agree that a modest change in the disgorgement award is 8 warranted, the District Court’s judgment is AFFIRMED as MODIFIED herein. 9 10 JOHN DELLAPORTAS, Beth Claire Khinchuck, Emmet, 11 Marvin & Martin, LLP, New York, NY, for Defendant- 12 Appellant Donald J. Fowler 13 14 RACHEL M. MCKENZIE, Senior Counsel, Dominick V. 15 Freda, Assistant General Counsel, Michael A. Conley, 16 Solicitor, Robert B. Stebbins, General Counsel, Securities 17 and Exchange Commission, Washington, DC, for 18 Plaintiff-Appellee Securities and Exchange Commission 19 20 21 LOHIER, Circuit Judge: 22 The principal questions presented on appeal are (1) whether 28 U.S.C. 23 § 2462, which imposes a five-year statute of limitations on Securities and 24 Exchange Commission (SEC) enforcement actions for civil penalties, is 25 jurisdictional and not subject to tolling by the parties; (2) whether excessive 26 trading in customer accounts constitutes a violation of customer suitability

2 1 requirements as well as churning; 1 and (3) whether civil penalties were properly

2 imposed based on the number of defrauded customers in this case. We hold that 3 the five-year statute of limitations in § 2462 is not jurisdictional and may be 4 tolled by the parties. We also conclude that the SEC’s suitability claim and the 5 civil penalties imposed in this case were proper and that the other challenges on 6 appeal are without merit. After modifying the judgment to correct one error in 7 the amount of disgorgement, we affirm. 8 BACKGROUND 9 I 10 Donald Fowler, a financial broker, challenges a February 28, 2020 11 judgmen