separate from the charges217 brought against the company he worked for,
Ferris, Baker Watts, Inc. (“Ferris”).218 Urban was the general counsel,
member of the board of directors, and supervised the compliance department
at Ferris.219 One of the registered representatives, Glantz, manipulated the
market for a certain stock.220 Urban recommended firing Glantz in late 2004,
but management wanted to keep him on with “special supervision.”221 The
manager assigned for the special supervision (who was originally against
firing Glantz) did not reasonably supervise and the illegal activity
continued.222 In the end, Urban was charged with failure to supervise Glantz
and failure to detect and stop the violations that occurred.223
In 2010, the ALJ found Urban to be Glantz’s supervisor based on case law
and the SEC’s previous definitions of a supervisor.224 Urban’s views of legal
and compliance matters were seen as authoritative and people typically
followed his recommendations.225 The ALJ disagreed with the SEC on
Urban’s charge, finding that he reasonably supervised Glantz and did not
have reasonable alternatives to escalate Glantz’s supervision.226 The
commissioners of the SEC were evenly divided on the order instituting
administrative proceedings and whether violations had been established.227
Due to the division of the SEC commissioners, the proceedings against Urban
The “failure-to-supervise” charge from the Urban case left a lingering
worry for many CCOs, even though the case was ultimately dismissed.229
One of the SEC commissioners, Daniel Gallagher (“Gallagher”), commented
on the possible negative effect this case might have, causing CCOs to be less
217. See In the Matter of Ferris, Baker Watts, Inc., U.S. Sec. & Exch. Comm’n, Admin.
Proc. File No. 3-13364 (Feb. 10, 2009), https://www.sec.gov/litigation/admin/2009/34-
218. Urban Order Instituting Administrative Proceedings, supra note 215, at 1.
220. Id. at 2–3.
221. Id. at 8–9.
222. Id. at 9.
223. Id. at 11.
224. Urban Initial Decision, supra note 6, at 51–52.
225. Id. at 52.
226. Id. at 52, 55.
227. In the Matter of Theodore W. Urban, U.S. Sec. & Exch. Comm’n, Admin. Proc. File
No. 3-13655, at 2 (Jan. 26, 2012), https://www.sec.gov/litigation/admin/2012/34-66259.pdf.
228. Id. at 1–2.
229. Peter K.M. Chan, SEC’s Friendly Fire Against CCOs – And How to Avoid It, Law
360 (Aug. 10, 2015), https://www.law360.com/articles/688789/sec-s-friendly-fire-against-