# INITIAL DECISION RELEASE NO. 1408

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- **Collection:** Agency decision
- **Document type:** Agency decision

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INITIAL DECISION RELEASE NO. 1408
ADMINISTRATIVE PROCEEDING
FILE NO. 3-18422
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

In the Matter of
JOSHUA D. MOSSHART

APPEARANCES:

:
:
:

INITIAL DECISION
February 11, 2021

Gary Y. Leung for the Division of Enforcement,
Securities and Exchange Commission
Joshua D. Mosshart, pro se

BEFORE:

Carol Fox Foelak, Administrative Law Judge
SUMMARY

This Initial Decision suspends Joshua D. Mosshart from the securities industry for twelve
months. He was previously enjoined from violating the registration provisions of the federal securities
laws.
I. INTRODUCTION
A. Procedural Background
The Securities and Exchange Commission instituted proceedings against Respondent Joshua
D. Mosshart with an Order Instituting Proceedings, pursuant to Section 15(b) of the Securities
Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, on April 5, 2018.
The proceeding is a follow-on proceeding based on SEC v. Enviro Board Corp., No. 2:16-cv-6427
(C.D. Cal.), in which he was enjoined from violating the registration provisions of the federal securities
laws.
On August 22, 2018, in light of Lucia v. SEC, 138 S. Ct. 2044 (2018), the Commission
ordered a new hearing in each pending proceeding, including this one, before an administrative law
judge (ALJ) who had not previously participated in the proceeding, unless the parties expressly
agreed to alternative procedures, including agreeing that the proceeding remain with the previous
presiding ALJ. Pending Admin. Proc., Securities Act of 1933 Release No. 10536, 2018 SEC
LEXIS 2058, at *2-3. Accordingly, the proceeding was reassigned and then assigned to the
undersigned on March 18, 2019. Pending Admin. Proc., Admin. Proc. Rulings Release Nos. 5955,
2018 SEC LEXIS 2264 (C.A.L.J. Sept. 12, 2018); 6505, 2019 SEC LEXIS 512 (C.A.L.J. Mar. 18,
2019).

The parties filed motions for summary disposition, pursuant to 17 C.F.R. § 201.250(b), and
responsive pleadings. 1 The Division of Enforcement requested that Mosshart be barred from the
securities industry, arguing that his conduct underlying the injunction was egregious and recurrent.
Mosshart requested that the proceeding be dismissed, arguing that he did not engage in conduct that
violated the registration provisions. Accordingly, the undersigned resolved some, but not all, of the
allegations of the OIP. Joshua D. Mosshart, Admin. Proc. Rulings Release No. 6787, 2020 SEC
LEXIS 4145 (A.L.J. Sept. 10, 2020) (Summary Disposition Order). The Summary Disposition
Order concluded that neither party’s request could be granted on the then-current record, but that
there was no genuine issue with regard to a number of material facts within the meaning of Rule
250(b).2
The Summary Disposition Order concluded that there is no genuine issue with regard to
these material facts: Mosshart was enjoined from violating Section 5 of the Securities Act of 1933,
which makes unlawful the offer or sale of securities not registered with the Commission for which
no exemption is available, and from violating Section 15(a) of the Exchange Act, which makes it
unlawful for a person not associated with a registered broker or dealer to effect transactions in or
induce the purchase or sale of any security. Mosshart was associated with several registered brokerdealers between 1999 and 2012, most recently, LPL Financial LLC, which is also a Commissionregistered investment adviser, from July 2, 2004, until November 13, 2012, and was not so
associated thereafter. Enviro Board securities were not registered with the Commission and no
exemption was available. Mosshart provided information concerning Enviro Board securities to
several investors, referred them to the company’s founders, and was compensated when at least one
made an investment. These proven activities occurred in 2011 and 2012, and the proven amount of
such compensation was $40,000. The loss of $400,000 by one customer is also proven. The proven
activities occurred during Mosshart’s association with LPL; still at issue is whether or not LPL
knew of and approved them such that they were within the scope of his association with LPL during
the time he was so associated. Mosshart, who was employed as president of Enviro Board as of
January 1, 2012, for an annual salary of $120,000, also engaged in other activities on behalf of the
company, such as public relations, lobbying, and sales. Enviro Board paid a total of $553,355 for
Mosshart’s services between May 2011 and May 2013.
The parties were ordered to confer on further procedures. Mosshart requested the
undersigned to decide the proceeding based on the then-current record, and the Division requested
the opportunity to make a further evidentiary submission. The Division was given the opportunity
to submit further evidence by November 16, 2020, and Mosshart, to file a response by November
1

See Joshua D. Mosshart, Admin. Proc. Rulings Release Nos. 5716, 2018 SEC LEXIS 1084
(C.A.L.J. May 7, 2018); 6157, 2018 SEC LEXIS 2779 (A.L.J. Oct. 10, 2018) (amending briefing
schedule); 6422, 2018 SEC LEXIS 3628 (A.L.J. Dec. 21, 2018) (setting supplemental briefing
schedule); 6440, 2019 SEC LEXIS 82 (A.L.J. Feb. 4, 2019) (extending supplemental briefing
schedule); 6700, 2019 SEC LEXIS 4245 (A.L.J. Oct. 28, 2019) (construing Mosshart’s filings as a
cross-motion for summary disposition seeking dismissal of the proceeding and inviting responsive
pleadings). Division of Enforcement’s motion was filed on May 21, 2018.
Rule 250(b) provides for summary disposition based on “undisputed pleaded facts, declarations,
affidavits, documentary evidence or facts officially noticed pursuant to Rule 323.”
2

2

30, 2020. Joshua D. Mosshart, Admin. Proc. Rulings Release No. 6795, 2020 SEC LEXIS 4795
(A.L.J. Nov. 2, 2020). The Division submitted its Supplemental Submission on November 16, and
Mosshart submitted a letter in support of his request that the proceeding be dismissed. The
Division’s Supplemental Submission is supported by the Declaration of Gary Y. Leung, with
attached Exhibits 1-6. Mosshart did not file a response to the Supplemental Submission.
B. Allegations and Arguments of the Parties
The Division requests that Mosshart be barred from the securities industry, arguing that his
conduct underlying the injunction was egregious and recurrent. Mosshart seeks dismissal of the
proceeding, arguing that he did not engage in conduct that violated the registration provisions and
that the compensation he received from Enviro Board was for services such as sales and marketing.
II. PROCEDURAL ISSUES
A. Official Notice
Official notice pursuant to 17 C.F.R. § 201.323 is taken of the Commission’s public official
records and of the docket reports and court’s orders in SEC v. Enviro Board Corp., and of Financial
Industry Regulatory Authority, Inc. (FINRA), records as well. See Joseph S. Amundsen, Exchange
Act Release No. 69406, 2013 SEC LEXIS 1148, at *1 n.1 (Apr. 18, 2013), pet. denied, 575 F.
App’x 1 (D.C. Cir. 2014).
B. Collateral Estoppel
Mosshart is estopped from relitigating the judgment in SEC v. Enviro Board in this
proceeding. It is well established that the Commission does not permit a respondent to relitigate
issues that were addressed in a previous civil proceeding against the respondent, whether resolved
by consent, by summary judgment, or after a trial. See Jeffrey L. Gibson, Exchange Act Release
No. 57266, 2008 SEC LEXIS 236, at *10 (Feb. 4, 2008) (injunction entered by consent), pet.
denied, 561 F.3d 548 (6th Cir. 2009); John Francis D’Acquisto, Advisers Act Release No. 1696,
1998 SEC LEXIS 91, at *1-2 & n.1, *7 (Jan. 21, 1998) (injunction entered by summary judgment);
James E. Franklin, Exchange Act Release No. 56649, 2007 SEC LEXIS 2420, at *11 & nn.13-14
(Oct. 12, 2007) (injunction entered after trial), pet. denied, 285 F. App’x 761 (D.C. Cir. 2008);
Demitrios Julius Shiva, Exchange Act Release No. 38389, 1997 SEC LEXIS 561, at *5-6 & nn.6-7
(Mar. 12, 1997); see also Marshall E. Melton, Advisers Act Release No. 2151, 2003 SEC LEXIS
1767, at *2-10, *22-30 (July 25, 2003). However, an injunction entered by default, like the
injunction against Mosshart in SEC v. Enviro Board, without more, usually cannot be the basis for
sanctions in an administrative proceeding. Gary L. McDuff, Exchange Act Release No. 74803,
2015 SEC LEXIS 1657 (Apr. 23, 2015) (remanding proceedings to administrative law judge); Don
Warner Reinhard, Exchange Act Release No. 61506, 2010 SEC LEXIS 1010 (Feb. 4, 2010)
(remanding proceedings to administrative law judge); see also Gary L. McDuff, Exchange Act
Release No. 78066, 2016 SEC LEXIS 2121 at *29-30 (June 14, 2016) (noting the limited preclusive
effect of an injunction entered on default; that a respondent in a follow-on proceeding may
introduce evidence regarding the circumstances surrounding the underlying conduct to address
whether sanctions should be imposed in the public interest; and that an administrative law judge
must give careful scrutiny to any prior testimony that was not subject to cross-examination).
3

III. FINDINGS OF FACT
A. Findings of Fact Established Previously in the Summary Disposition Order
The following facts were found in the Summary Disposition Order:3
Mosshart has been in the securities industry since at least 1999; he was associated with
several registered broker-dealers between 1999 and 2012; and from July 2, 2004, to November 13,
2012, he was associated with LPL Financial LLC, a registered broker-dealer and Commissionregistered investment adviser and has not been associated with a registrant thereafter. He was
permitted to resign from LPL on November 13, 2012, and was barred, on consent, from association
with any FINRA member firm in any capacity.
In the underlying civil case, Mosshart was enjoined against violations of Section 5 of the
Securities Act and Section 15(a) of the Exchange Act, on default, and ordered to pay disgorgement of
$293,655 plus prejudgment interest of $30,240.41 and a civil penalty of $293,655. Although he failed
to respond to the summons, Mosshart participated in the proceeding, and the court denied his motion to
set aside the default. The court noted Mosshart’s arguments that he did not sell securities, that he only
provided arms-length referrals, and that his conduct was approved by his then-employer, LPL.
However, the court concluded that Mosshart failed to establish that he had a meritorious defense since,
to support his assertions, he provided declarations from only two investors, one of whom was his
father, while the complaint alleged that he had referred at least eighteen individuals to Enviro Board.
The court found that “Mosshart was put on notice that he was being sued in early September and chose
not to participate in the action for months despite conceding that he became aware of the lawsuit as
early as October 8, 2016.” Mosshart appealed the court’s denial of his motion to set aside the default;
the United States Court of Appeals for the 9th Circuit dismissed the appeal for failure to prosecute.
Enviro Board
The remaining defendants in SEC v. Enviro Board were Enviro Board, Glenn B. Camp, and
William J. Peiffer. Camp and Peiffer founded and controlled Enviro Board. A 2010 Private
Placement Memorandum represented that Enviro Board planned to develop a technology that would
allow it to manufacture low-cost, environmentally friendly building panels out of straw and other
agricultural waste fiber. The complaint alleged that the company never constructed a mill capable of
commercial manufacturing production and that Camp and Peiffer made false and misleading
statements about the status of commercialization efforts and financial projections to investors. 4
Enviro Board securities were not, and are not, registered with the Commission. Mosshart
does not argue that the securities were exempt from registration, and there is no evidence in the
3

Citations to the evidence on which the findings of fact are based are found in the Summary
Disposition Order. See Joshua D. Mosshart, 2020 SEC LEXIS 4145, at *8-14.
4

Enviro Board, Camp, and Peiffer settled. The court enjoined all three from violations of the
antifraud provisions of the securities laws and Enviro Board and Camp from violation of the
registration provisions; ordered an officer and director bar against Camp and Peiffer; and ordered each
of the three to pay a civil penalty and disgorgement.
4

record that an exemption was available. However, he believed that the securities were exempt from
such registration. Peiffer advised Mosshart and others in June 2011 that securities counsel had
advised Enviro Board that transactions in Enviro Board stock were not required to be registered,
pursuant to Section 4(2) of the Securities Act, and no SEC filing was necessary. While Securities
Act Section 5 is a strict liability statute that does not require any form of intent to violate,
Mosshart’s belief that the transactions were exempt is relevant to the sanctions analysis below.
Mosshart’s Activities for Enviro Board
Camp and Mosshart initially discussed Mosshart’s working for Enviro Board sometime in
2011, leading to Enviro Board’s January 1, 2012, agreement with Malia Ventures, Inc.,5 for the
services of Mosshart. Mosshart was engaged as president for an annual salary of $120,000, payable
in equal monthly installments, plus 10% of sales, subject to certain conditions. Mosshart’s activities
for the company included public relations, lobbying, and sales. The January 1, 2012, agreement
also provided that Enviro Board would pay Malia 10% of financing resulting from parties
introduced by Mosshart who made an investment of debt or equity capital. That agreement also
awarded Mosshart a stock option to acquire 150 shares for $1 at any time ninety-one days after the
date he made introductions resulting in the sale of $2,600,000. Likewise, the June 2013 agreement
between Enviro Board on the one hand and Mosshart and Malia on the other provided for Enviro
Board to pay Malia 10% of financing by parties introduced by Mosshart who made an investment of
debt or equity capital. Mosshart owned one share of Enviro Board stock as of April 13, 2011, and
an additional 150 shares as of November 7, 2012. 6 It is found that payments to Mosshart, including
the 150 shares, were payment for raising money. It is found as undisputed, based on the January
2012 agreement proffered by the Division and the June 2013 agreement proffered by Mosshart, that
Mosshart was to receive transaction-based compensation for investments made by parties whom he
referred to Peiffer and Camp.
The Division alleges that Mosshart referred to Enviro Board at least eighteen individuals
who purchased nearly $5 million of the company’s securities, beginning in May 2011. The material
under consideration establishes that Mosshart introduced four individuals – Tina Brodie, Ilona
5

Mosshart was the sole shareholder of Malia Ventures, Inc., f/k/a Malia Ventures LLC, of which
he was the manager and sole member. Mosshart and Malia received $553,355 from Enviro Board
between May 11, 2011, and May 9, 2013.
6

Mosshart claims that each share was valued at $20,000. He does not explain the basis for the
valuation, and Enviro Board was not listed on the Pink Sheets or elsewhere or otherwise publicly
quoted.
In March 2017, Mosshart reached an agreement with Enviro Board, Camp, and Peiffer regarding a
lawsuit in state court and SEC v. Enviro Board. Mosshart agreed to quitclaim all right, title, and
interest in Enviro Board stock and specified Enviro Board property rights and to dismiss all claims
against the other parties to the agreement. Enviro Board agreed to use its best efforts to settle SEC
v. Enviro Board, to obtain a dismissal in favor of Mosshart, and to obtain for Mosshart a dollar for
dollar credit for any payments by Enviro Board, Camp, and Peiffer of disgorgement and civil
penalties with the proviso that they would not indemnify Mosshart. Enviro Board also agreed to
execute a promissory note in favor of Mosshart in the amount of $222,655.
5

Chandler, Roy Christofferson, and Joseph Mavilia – for investments that totaled $430,000. Brodie
invested $400,000 on January 10, 2012, in an Enviro Board bond; the three others invested a total of
$30,000 in May and June 2011. Thus, based on the January 1, 2012, agreement, it is found that
Enviro Board paid Mosshart $40,000 – 10% of the Brodie investment. 7 Enviro Board paid
Mosshart, via Malia, $50,000 – $40,000 plus his $10,000 monthly salary – on January 12, 2012, the
same day that Brodie’s $400,000 check, dated January 10, 2012, was posted.
Brodie, recently widowed, met Mosshart in October 2011; he told her that he knew of a safe
investment for the proceeds of her husband’s life insurance, directed her to Enviro Board’s website,
and introduced her to Camp; she lost the entire $400,000 despite efforts to obtain payment,
including suing Enviro Board, which defaulted. Chandler, Christofferson, and Mavilia did not place
securities orders with Mosshart; Mosshart referred each one to Camp and provided information
about Enviro Board at his or her request.
Mosshart was associated with LPL, a registered-broker dealer, until November 13, 2012. At
issue is whether LPL knew of and approved Mosshart’s activities with regard to Brodie, Chandler,
Christofferson, and Mavilia. With reference to Exchange Act Section 15(a), which makes it
unlawful to operate as an unregistered broker, Mosshart maintains that LPL was aware of his
involvement with Enviro Board and approved it; he maintains that he informed LPL that his LPL
clients were interested in investing in Enviro Board. To the contrary, according to FINRA’s letter
regarding Mosshart’s acceptance, waiver, and consent (AWC), “[i]n May 2011, Mosshart sought
permission from LPL to be an Enviro Board sales representative. . . . Although LPL approved this
outside business activity, it specifically advised Mosshart that he was not to solicit any individuals
to invest in Enviro Board.” However, “[f]rom May 2011 through November 13, 2012, while
associated with LPL, Mosshart referred about 20 investors . . . to Enviro Board . . . [and] received
about $485,000 in referral fees.” While the conclusion of the AWC is that, as of and after May
2011, Mosshart was not acting as a registered representative associated with LPL when he solicited
any clients to invest in Enviro Board, he is not estopped from arguing the contrary in this
proceeding. He agreed that he “may not take any action or permit to be made any public statement,
including in regulatory filings or otherwise, denying, directly or indirectly, any finding in this AWC
or create the impression that the AWC is without factual basis. . . . [However, n]othing in this
provision affects [his] . . . right to take legal or factual positions in litigation or other legal
proceedings in which FINRA is not a party.”
B. Additional Findings of Fact
As stated in the Summary Disposition Order, still left open was whether it can be found, in
this proceeding, that Mosshart also violated Exchange Act Section 15(a), which depends on the
scope of his association with LPL. Further, even if it is established that he was not acting within the
scope of that association, it must be established that he was acting as an unregistered broker to
conclude that he violated Section 15(a).
Mosshart’s comment on the payment for Brodie’s investment was “Tina Brodie didn’t know
about my compensation for my services because we didn’t have her Life Insurance monies at
LPL[.] All of my clients get a consolidated monthly statement with fees and commission charges.
My employment agreement with Enviro Bard was separate from LPL.”
7

6

The Division’s November 16, 2020, Supplemental Submission is supported by the
Declaration of Gary Y. Leung, with attached exhibits. To avoid confusion with exhibits in previous
submissions, these will be referred to as “Third Suppl. Leung Decl. Ex __.” Where Bates numbers
are cited, leading zeros are omitted. Mosshart’s January 2019 “Supporting Evidence & Statement”
included numerous exhibits, which will be referred to as “Resp. Ex. _.” His November 16, 2020,
letter (2020 Letter) and June 2018 “Respondent’s Answer” (Opposition) did not include any
exhibits.
In his letter, Mosshart argues that the Division grossly misrepresented the facts. He argues
that he merely referred investors to Enviro Board – did not negotiate terms, sign contracts, or have
custody of funds – and, therefore, did not solicit them; thus, he was not selling away. See generally
2020 Letter. He also described his efforts to ensure that the clients were fully informed about the
investment, including advising them to consult their CPAs and bankers, and described his due
diligence concerning Enviro Board. Id. at 2. He also states, “I would never say I was paid
$501,056 in commission when I had an employment agreement with Enviro Board in which [I]
received $10,000 per month in salary [which] would account for over 2/3rd’s of the money earned.”
Id. at 2. This statement is inaccurate. Mosshart submitted a signed statement, dated May 16, 2013,
to FINRA in connection with its examination No. 20120351723. Third Supp. Leung Decl. Ex. 5.
In it he listed “the dates of all referrals and all fees and commissions paid to me.” Id. at F2130-31.
The commissions that he listed total $501,056: $373,369 in 2011, $119,187 in 2012 (including
$4,000 after November 13, when he was no longer associated with LPL, for two referrals), and
$8,500 in 2013 for three referrals. Id. He listed a total of more than thirty referrals to twenty-five
customers during 2011, 2012, and 2013. Id. Somewhat inconsistently, he now claims that he
referred fifteen investors in addition to Tina Brodie over three years. 2020 Letter at 2.
Mosshart had more than 100 household clients at LPL; he claims he discussed referrals with
“less than” five of them. Id. at 1. Brodie had been an existing client at LPL. Opp. at 6-7. Mosshart
did not negotiate terms of investments in Enviro Board, sign contracts, or have custody of funds.
Opp. at 2; 2020 Letter at 3-4.
Mosshart clearly received transaction-based compensation (“commissions”) and evidenced
other indications of broker status. There were more than a few isolated transactions (“referrals”).
The transactions included previous customers of his at LPL. As a long-time associated person of
broker-dealers, he had a history of selling securities of other issuers.
IV. CONCLUSIONS OF LAW
Mosshart has been permanently enjoined “from engaging in or continuing any conduct or
practice in connection with . . . the purchase or sale of any security” within the meaning of Sections
15(b)(4)(C) and 15(b)(6)(A)(iii) of the Exchange Act and Sections 203(e)(4) and 203(f) of the
Advisers Act. Some of the misconduct underlying the civil case occurred while Mosshart was
associated with a registered broker-dealer and investment adviser.
Specifically, Mosshart was enjoined, on default, from violating Securities Act Section 5(a)
and Exchange Act 15(a) and the evidence in this proceeding, in which he appeared and participated,
shows that he violated those provisions.

7

As concluded previously in the Summary Disposition Order, Mosshart violated Securities
Act Section 5 in advising Brodie concerning Enviro Board and referring her to Camp to make an
investment. His receipt of transaction-based compensation for that referral makes clear that his
conduct was an offer for sale of Enviro Board securities within the meaning of Section 5. Joshua
D. Mosshart, 2020 SEC LEXIS 4145, at *14.
Section 15(a)(1) of the Exchange Act makes it unlawful for any entity to effect transactions
in securities, by jurisdictional means, without registering as a broker or dealer. 15 U.S.C. §
78o(a)(1). “Broker” is defined in Section 3(a)(4) of the Exchange Act as “any person engaged in
the business of effecting transactions in securities for the account of others.” 15 U.S.C. §
78c(a)(4)(A). Scienter is not required to establish a violation of Section 15(a)(1). SEC v. Montana,
464 F. Supp. 2d 772, 785 (S.D. Ind. 2006).
Activities of a broker are characterized by “a certain regularity of participation in securities
transactions at key points in the chain of distribution.” Mass. Fin. Servs., Inc. v. Secs. Investor Prot.
Corp., 411 F. Supp. 411, 415 (D. Mass. 1976), aff’d, 545 F.2d 754 (1st Cir. 1976). Other relevant
factors include whether the alleged broker: “1) is an employee of the issuer; 2) received
commissions as opposed to salary; 3) is selling, or previously sold, the securities of other issuers; 4)
is involved in negotiations between the issuer and the investor; 5) makes valuations as to the merits
of the investment or gives advice; and 6) is an active rather than passive finder of investors.” SEC
v. Zubkis, No. 97-cv-8086, 2000 WL 218393, at *9 (S.D.N.Y. Feb. 23, 2000) (quoting SEC v.
Hansen, No. 83-cv-3692, 1984 WL 2413, at *10 (S.D.N.Y. Apr. 6, 1984)). Accord SEC v. George,
426 F.3d 786, 797 (6th Cir. 2005) (“[F]actors . . . includ[e] regular participation in securities
transactions, employment with the issuer of the securities, payment by commission as opposed to
salary, history of selling the securities of other issuers, involvement in advice to investors and active
recruitment of investors.”). However, “transaction-based compensation” is “one of the hallmarks of
being a broker-dealer.” SEC v. Kramer, 778 F. Supp. 2d 1320, 1334 (M.D. Fla. 2011) (quoting
Cornhusker Energy Lexington, LLC v. Prospect Street Ventures, No. 8:04-cv-586, 2006 WL
2620985, at *6 (D. Neb. Sept. 12, 2006)). “Activities that are indicative of being a broker include
holding oneself out as a broker-dealer, recruiting or soliciting potential investors, handling client
funds and securities, negotiating with issuers, and receiving transaction-based compensation.”
Anthony Fields, CPA, Securities Act Release No. 9727, 2015 SEC LEXIS 662, at *75 (Feb. 20,
2015).
It is concluded that Mosshart was acting as a broker in his activities “referring” investors to
Enviro Board. He received transaction-based compensation. While associated with LPL, where he
had a book of business of 100 clients, he sold the securities of other issuers. He was an active
finder of investors in that he referred some of his LPL clients, including Brodie, to Enviro Board.
On the other hand, he did not handle client funds and was only tangentially involved in negotiations
between the issuer and the investor when he referred potential investors to Peiffer and Camp.
Without regard for whether he was acting outside the scope of his association with LPL when he
was associated with LPL, by acting as a broker when he was no longer associated with a registered
broker-dealer, he violated Exchange Act Section 15(a).
V. SANCTION
A twelve-month suspension from the securities industry will be ordered.
8

A. Sanction Considerations
The Commission determines sanctions pursuant to a public interest standard. See 15 U.S.C.
§§ 78o(b)(6), 80(b)(3). The Commission considers factors including:
the egregiousness of the defendant’s actions, the isolated or recurrent nature of the
infraction, the degree of scienter involved, the sincerity of the defendant’s assurances
against future violations, the defendant’s recognition of the wrongful nature of his
conduct, and the likelihood that the defendant’s occupation will present opportunities
for future violations.
Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979) (quoting SEC v. Blatt, 583 F.2d 1325, 1334
n.29 (5th Cir. 1978)), aff’d on other grounds, 450 U.S. 91 (1981). The Commission also considers
the age of the violation and the degree of harm to investors and the marketplace resulting from the
violation. Marshall E. Melton, 2003 SEC LEXIS 1767, at *5. Additionally, the Commission
considers the extent to which the sanction will have a deterrent effect. Schield Mgmt. Co.,
Exchange Act Release No. 53201, 2006 SEC LEXIS 195, at *35 & n.46 (Jan. 31, 2006). The public
interest requires a severe sanction when a respondent’s past misconduct involves fraud because
opportunities for dishonesty recur constantly in the securities business. See Vladimir Boris
Bugarski, Exchange Act Release No. 66842, 2012 SEC LEXIS 1267, at *18 n.26 (Apr. 20, 2012);
Richard C. Spangler, Inc., Exchange Act Release No. 12104, 1976 SEC LEXIS 2418, at *34 (Feb.
12, 1976). When there is no genuine issue with regard to any material fact in a follow-on
proceeding like this one, the weighing of factors relating to the choice of the appropriate sanction is
an issue committed to the agency’s discretion and does not require a hearing. See Seghers v. SEC,
548 F. 3d 129, 134-36 (D.C. Cir. 2008).
The Commission rarely imposes an industry bar in a litigated administrative proceeding for
violating registration provisions absent an antifraud violation. 8 Such a sanction is typically imposed
where the respondent has also violated, or aided and abetted violation of, the antifraud provisions.
See David F. Bandimere, Securities Act Release No. 9972, 2015 SEC LEXIS 4472 (Oct. 29, 2015)
(violation of antifraud, broker-dealer registration, and securities registration provisions), set aside
on other grounds, 844 F.3d 1168 (10th Cir. 2016); Maria T. Giesige, Exchange Act Release No.
60000, 2009 SEC LEXIS 1756 (May 29, 2009) (violation of antifraud, broker-dealer registration,
8 To the extent that the Division cites to settlements to support its request for a bar, it goes without

saying that a settlement is not precedent, as the Commission has stressed many times. See Richard
J. Puccio, Exchange Act Release No. 37849, 1996 SEC LEXIS 2987, at *10-11 (Oct. 22, 1996)
(citing David A. Gingras, Exchange Act Release No. 31206, 1992 SEC LEXIS 2537, at *20 (Sept.
21, 1992), and cases cited therein); Robert F. Lynch, Exchange Act Release No. 11737, 1975 SEC
LEXIS 599, at *12 n.17 (Oct. 15, 1975) (citing Samuel H. Sloan, Exchange Act Release No. 11376,
1975 SEC LEXIS 1742, at *12 n.24 (Apr. 28, 1975); Haight & Co., Inc., Exchange Act Release No.
9082, 1971 SEC LEXIS 436, at *67-69 (Feb. 19, 1971), aff’d without opinion, (D.C. Cir. 1971);
Security Planners Assocs., Inc., Exchange Act Release No. 9421, 1971 SEC LEXIS 1035, at *13-14
(Dec. 17, 1971)); see also Mich. Dep’t of Natural Res. v. FERC, 96 F.3d 1482, 1490 (D.C. Cir.
1996), and cases cited therein (settlements are not precedent). Indeed, Commission settlement
orders contain a disclaimer to this effect: “The findings herein are made pursuant to [Respondent’s]
Offer of Settlement and are not binding on any other person or entity in this or any other
proceeding.”
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and securities registration provisions); Paul Carroll Ferguson, Exchange Act Release No. 6009,
1959 SEC LEXIS 549 (July 7, 1959) (violation of antifraud, broker-dealer registration, and other
provisions; respondent’s registration as a broker-dealer revoked); Gregory & Co., Exchange Act
Release No. 5680, 1958 SEC LEXIS 251 (Apr. 18, 1958) (violation of antifraud, broker-dealer
registration, and other provisions; respondent’s application for registration as a broker-dealer
denied); The Whitehall Corp., Exchange Act Release No. 5667, 1958 SEC LEXIS 246 (Apr. 2,
1958) (violation of antifraud, broker-dealer registration, and other provisions; respondent’s
application for registration as a broker-dealer denied).
Even those few cases in which a respondent was barred in the absence of fraud involved
conduct that was much more serious, long-running, and otherwise harmful to the markets than
Mosshart’s conduct. See Ronald S. Bloomfield, Securities Act Release No. 9553, 2014 SEC LEXIS
698 (Feb. 27, 2014) (registered representatives sold large amounts of unregistered penny stocks on
behalf of highly questionable customers, and manager failed reasonably to supervise them with a
view toward detecting and preventing their registration violations; all aided and abetted and caused
broker-dealer’s failure to file Suspicious Activity Reports; registered representatives barred;
manager barred with a right to reapply in a non-proprietary, non-supervisory capacity after two
years), pet. denied, 649 F. App’x 546 (9th Cir. 2016). Lesser sanctions have been imposed for less
impactful violations in the absence of fraud. See Russo Secs., Inc., Exchange Act Release No.
44186, 2001 SEC LEXIS 2771 (Apr. 17, 2001) (broker-dealer violated net capital and related
recordkeeping and reporting provisions; chief financial officer suspended for one year; firm had
included in its net capital calculations stock that it did not even have and that had no ready market;
firm had negative net capital for three months).
B. Sanction
As described above, Mosshart’s conduct was recurrent, took place during a three-year
period, and involved about twenty-five customers. Although he is not charged with fraud, by acting
as a broker for transactions in unregistered securities and referring investors to Camp and Peiffer, he
facilitated the fraud as to those investors and their resulting losses. Scienter is not an element of
violation of Securities Act Section 5 or Exchange Act Section 15(a). Mosshart believed that the
Enviro Board securities were exempt from registration, but was at least negligent in his violation of
Exchange Act Section 15(a). His previous occupation in the securities industry, which included
twelve years as a registered representative associated with broker-dealers, would present
opportunities for future violations if he were allowed to continue that work in the future. Consistent
with a defense of the charges against him, he has not displayed a recognition of the wrongful nature
of his conduct or made assurances against future violations. His misconduct is no longer recent,
having ended in 2013. This consideration and the absence of a violation of the antifraud provisions
militate against a bar. A twelve month suspension is sufficient as a sanction and as a deterrent. A
“collateral” suspension from the industry is appropriate because the need for compliance with
statutes and regulations applies to all elements of the securities industry, even if the violative
conduct is limited to the professional capacity in which Mosshart was acting. Cf. John W. Lawton,
Advisers Act Release No. 3513, 2012 SEC LEXIS 3855, at *42-43 (Dec. 13, 2012), vacated in part
on other grounds, Advisers Act Release No. 4402, 2016 SEC LEXIS 1926 (May 27, 2016).
VI. ORDER

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IT IS ORDERED that, pursuant to Section 15(b) of the Securities Exchange Act of 1934 and
Section 203(f) of the Advisers Act of 1940, JOSHUA MOSSHART IS SUSPENDED FOR A
PERIOD OF TWELVE MONTHS from associating with any broker, dealer, investment adviser,
municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical
rating organization and from participating in an offering of penny stock. 9
This Initial Decision shall become effective in accordance with and subject to the provisions
of Rule 360 of the Commission’s Rules of Practice, 17 C.F.R. § 201.360. Pursuant to that Rule, a
party may file a petition for review of this Initial Decision within twenty-one days after service of
the Initial Decision. A party may also file a motion to correct a manifest error of fact within ten
days of the Initial Decision, pursuant to Rule 111 of the Commission’s Rules of Practice, 17 C.F.R.
§ 201.111. If a motion to correct a manifest error of fact is filed by a party, then a party shall have
twenty-one days to file a petition for review from the date of the undersigned’s order resolving such
motion to correct a manifest error of fact. The Initial Decision will not become final until the
Commission enters an order of finality. The Commission will enter an order of finality unless a
party files a petition for review or a motion to correct a manifest error of fact or the Commission
determines on its own initiative to review the Initial Decision as to a party. If any of these events
occur, the Initial Decision shall not become final as to that party.
/S/ Carol Fox Foelak
Carol Fox Foelak
Administrative Law Judge
Served by email on both parties

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Thus, Mosshart will be barred from acting as promoter, finder, consultant, or agent; or otherwise
engaging in activities with a broker, dealer, or issuer for purposes of the issuance or trading in any
penny stock, or inducing or attempting to induce the purchase or sale of any penny stock, pursuant
to Exchange Act Section 15(b)(6)(A), (C).
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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A98f7be7cac889ad6. Public record. Not legal advice.