The SEC has ordered Atlanta, Georgia investment firm Timbervest to pay $585,000 in a long-running dispute regarding the sale of two tracts of timberland. The firm’s CEO, Joel Shapiro, stated that it will continue to fight the SEC in federal court.

The SEC started investigating Timbervest in 2010, and in September 2013 the SEC initiated an enforcement action that accused the firm of violating federal securities laws. The SEC alleges that in 2006 and 2007 Shapiro, Chief Investment Officer Walter William Anthony Boden III, Chief Operating Officer Dondald David Zell Jr., and President Gordon Jones II received over $1 million in unauthorized, undisclosed real estate commissions paid out of the pension plan assets of a large client.

In August of last year, an SEC administrative law judge ruled that Timbervest had violated the Investment Advisers Act and ordered it to pay $1.9 million. Timbervest appealed, stating that the evidence did not support the finding of violations or the sanctions.

In June of this year, Timbervest launched its own attack on the SEC, alleging in a complaint filed in Atlanta federal court that the SEC’s administrative hearings are stacked in favor of the SEC.

In its September 17 opinion, the SEC rejected Timbervest’s attack on the constitutionality of the agency’s hearings, finding that Commission administrative law judges are not “inferior officers” covered by the Appointments Clause of the U.S. Constitution, the two layers of tenure protection that administrative law judges enjoy do not unconstitutionally impede the President’s ability to take care that the laws be faithfully executed, and the decision to file this enforcement matter in the administrative forum as opposed to federal court did not violate Timbervest’s Fifth Amendment right to equal protection of the laws.

The SEC further stated, “Based on our independent, de novo review of the record, we find that Timbervest orchestrated a transaction to sell the property of one of its clients to another client at a below-market rate, to the detriment of the original client.”

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