Before SWAN, Chief Judge, and CLARK and FRANK, Circuit Judges.
1. The petitioners argue that, in addition to reviewing the Commission's order, we must review the conduct and opinion of the NASD. We think not. For Section 25(a) of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78y, which affords the sole basis of any judicial review, refers to a Commission order only. Moreover, Section (h) (1) of the so-called Maloney Act - i.e., Section 15A of the Securities Exchange Act*fn6 - provides as follows: The Commission shall review disciplinary action taken by a "registered securities association"; in doing so, the Commission shall conduct a hearing of its own and shall consider not only "the record before the association" but also "such other evidence as it may deem relevant"; it shall make its own finding as to whether the disciplined member has done or omitted such acts "as the association has found him to have engaged in or omitted"; the Commission shall then determine for itself whether the act or omission violated such rules of the association "as have been designated in the determination of the association"; the Commission must also determine and declare whether the act or omission constitutes "conduct inconsistent with just and equiable principles of trade, and shall so declare"; and the Commission shall find whether the penalty imposed by the association is "excessive or oppressive, having due regard to the public interest," and, if so, it shall, by order, "cancel, reduce, or require the remission of such penalty." We think that those provisions call for (1) de novo findings by the Commission, (2) the hearing (as here) by the Commission of further evidence if necessary, and (3) an independent decision by the Commission as to the charges and penalty; these matters alone are subject to our review. We conclude that we may consider any errors in the proceedings of the association only if and to the extent that they infected the Commission's action by leading to errors on its part.
2. We perceive no such errors. Having considered the record as a whole, we hold that there is ample substantial evidence to sustain the Commission's findings, which, in turn, fully justify the conclusion that the firm was guilty as charged.
Petitioners, however, contend that the association's opinion contains references to matters not relevant to those charges. The Commission suggests that those references be regarded as dicta. Much can be said for that suggestion: Many court opinions abound with similar "asides", not pertinent to the accompanying decisions, yet no one supposes that the decisions are therefore invalid; it would be strange, then, were a court to invalidate an order by a body of non-lawyers because the order is accompanied by an opinion which imitates the verbal habits of the judiciary. But far more important, the Commission, in its own independent findings, ignored such irrelevant matters. True, lack of supervision and violation of the association's Rule 27 (a)*fn7 were not charged. But the Commission properly took them into account in their bearing on the specific charges brought against the firm and on the duties of the Commission in the circumstances*fn8
3. In the light of the statutory provisions concerning (a) the Commission's power, according to reasonably fixed statutory standards*fn9, to approve or disapprove of the association's Rules, and (b) the Commission's review of any disciplinary action, we see no merit in the contention that the Act unconstitutionally delegates power to the association*fn10
4. Johnson petitioned the Commission to review the action of the association "insofar as said action or the findings" related to him individually. The Commission did so. It found that he was "a cause" of the order expelling the firm. He now urges that the association filed no charges against him. But, as he did not make this point until he reached this court, we may not deal with it; for Section 25 provides, "No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission."
5. Johnson argues that the record contains no substantial evidence to support the finding that his conduct was a "cause" of the firm's expulsion within the meaning of Section 15A(b) (4) (C)*fn11 We do not agree. There is ample evidence (1) that he had complete control of all persons in the organization including the other partners (who were such in little more than name) and (2) that he signally failed to provide any adequate supervision although his extensive control put upon him that responsibility. He contends, however, that such failure does not make him a "cause," because, he says, "cause" must always be interpreted to mean "an immediate or inducing cause," with the result here that a "cause" cannot consist of anything "back of the employee or associate who was guilty of the violation."
We reject that interpretation. It involves the "familiar one-word-one-meaning (or 'pigs is pigs') fallacy"*fn12, grounded on reasoning which "would compel the conclusion that a clotheshorse is an animal of the equine species, and make it impossible to speak of drinking a toast."*fn13 It overlooks the context*fn14 in which the word "cause" is used, i.e., a statute explicitly concerned with adherence to "just and equitable principles of trade."*fn15 Johnson's interpretation would encourage ethical irresponsibility by those who should be primarily responsible for such adherence*fn16 If Johnson's contention were sound, then, in order to circumvent those principles, a person controlling a firm would merely have to arrange to leave wholly unsupervised its employees who deal with customers. We think Johnson's irresponsible behavior with respect to supervision amounted to such recklessness as to justify the finding that he was a "cause"*fn17 of the firm's expulsion*fn18
6. We think that, in passing upon the penalty, the Commission properly considered previous disciplinary action taken against the firm by the association and by the New York Stock Exchange. We think the Commission did not abuse its discretion in not setting aside the penalty fixed by the association. Assuming, arguendo, that we may go further and decide ...