SEC Reply Brief

Case: 10-1186 Document: 1294177 Filed: 02/22/2011 Page: 1
No. 10-1186 Oral Argument Not Scheduled

___________________________________________________
UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT
___________________________________________________
JOHN GARDNER BLACK,

Petitioner,
v.
SECURITIES AND EXCHANGE COMMISSION,

Respondent.
____________________________________________________
On Petition for Review of an Order of the Securities and Exchange Commission

____________________________________________________
BRIEF OF THE SECURITIES AND EXCHANGE

COMMISSION, RESPONDENT
____________________________________________________
DAVID M. BECKER
General Counsel
JACOB H. STILLMAN
Solicitor
RANDALL W. QUINN
Assistant General Counsel
CHRISTOPHER PAIK
Special Counsel
Securities and Exchange Commission

100 F. Street, N.E.
Washington, D.C. 20549
(202) 551-5187 (Paik)
CERTIFICATE AS TO PARTIES, RULINGS AND RELATED CASES
A. Parties, Intervenors and Amici Curiae
All parties, intervenors and amici appearing before the Securities and
Exchange Commission and in this case are listed in the petitioner’s brief.
B. Rulings That Are the Subjects of the Petition
References to the two rulings at issue appear in the petitioner’s brief. The
rulings, the April 13, 2010 Order of the Securities and Exchange Commission,
Document No. 9 in the Certificate Listing and Describing the Record, and the June
18, 2010 Order Denying Reconsideration, Document No. 11 in the Certificate
Listing and Describing the Record, are appended to the Commission’s brief.
C. Related Cases
Although petitioner’s brief refers to several allegedly related cases, the
Commission’s view is that there are no related cases since petitioner has not
previously requested any court to review the Commission rulings at issue.

GLOSSARY OF ABBREVIATIONS
1. The term “Bar Order” refers to the Commission’s May 4, 1998 Order,
Document No. 1 in the Certificate Listing and Describing the Record.
2. The term “Denial Order” refers to the Commission’s April 13, 2010 Order,
Document No. 9 in the Certificate Listing and Describing the Record.

TABLE OF CONTENTS
PAGE
COUNTERSTATEMENT OF JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
COUNTERSTATEMENT OF THE ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
STATUTES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
COUNTERSTATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Proceedings Before the Commission . . . . . . . . . . . . . . . . . . . . . . . . . 6
STANDARD OF REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
THE COMMISSION DID NOT ABUSE ITS DISCRETION WHEN

IT DENIED BLACK’S REQUEST THAT THE BAR AGAINST
HIM BE LIFTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
CERTIFICATE OF COMPLIANCE WITH F.R.A.P. 32(a)(7) . . . . . . . . . . . . . . 14
CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
i
TABLE OF AUTHORITIES
CASES PAGE
City of Portland v. EPA, 507 F.3d 706 (D.C. Cir. 2007) . . . . . . . . . . . . . . . . 11 n.5
Teicher v. SEC, 177 F.3d 1016 (D.C. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . 7 n.3
Wonsover v. SEC, 205 F.3d 408 (D.C. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . 8
STATUTES AND RULES
Securities Act of 1933, 15 U.S.C. 77a, et seq.
Section 17(a), 15 U.S.C. 77q(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities Exchange Act of 1934, 15 U.S.C. 78a, et seq.
Section 10(b), 15 U.S.C. 78j(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Rules Under the Securities Exchange Act of 1934, 17 C.F.R. 240.0-1, et seq.
Rule 10b-5, 17 C.F.R. 240.10b-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Investment Advisers Act of 1940, 15 U.S.C. 80b-1 et seq.
Section 203(e)(4), 15 U.S.C. 80b-3(e)(4) . . . . . . . . . . . . . . . . . . . . . . 5 n. 2
*Section 203(f), 15 U.S.C. 80b-3(f) . . . . . . . . . . . . . . . . . . . . . . . 1-2, 5 n.2
Section 213(a), 15 U.S.C. 80b-13(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
*Authority chiefly relied on
ii
No. 10-1186
___________________________________________________
UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT
___________________________________________________
JOHN GARDNER BLACK,
Petitioner,
v.
SECURITIES AND EXCHANGE COMMISSION,
Respondent.
____________________________________________________
On Petition for Review of an Order of the Securities and Exchange Commission

____________________________________________________
BRIEF OF THE SECURITIES AND EXCHANGE

COMMISSION, RESPONDENT
____________________________________________________
COUNTERSTATEMENT OF JURISDICTION
Petitioner John Gardner Black seeks review of (a) an April 13, 2010 order
of the Securities and Exchange Commission that denied his request that the
Commission lift a 1998 bar prohibiting Black from associating with any
investment adviser or investment company, and (b) a June 18, 2010 Commission
order that denied Black’s request for reconsideration of the April 13, 2010 order.
The Commission had jurisdiction pursuant to Section 203(f) of the Investment
1
Advisers Act of 1940, 15 U.S.C. 80b-3(f). This Court has jurisdiction pursuant to
Section 213(a) of the Advisers Act, 15 U.S.C. 80b-13(a). Black filed a timely
petition for review in this Court on July 13, 2010, within the 60-day period
prescribed by Section 213(a).
COUNTERSTATEMENT OF THE ISSUE
Black settled a 1997 Commission civil law enforcement action alleging that
he had violated antifraud provisions of the federal securities laws; he consented to
the district court’s entry in that action of a permanent injunction against engaging
in securities fraud. Black also settled a subsequent 1998 Commission
administrative proceeding based on the entry of the injunction; he consented to the
Commission’s issuance in that proceeding of a bar against his association with an
investment adviser or an investment company. In 2009, Black requested that the
Commission lift the bar, arguing that recent regulatory changes showed that his
earlier conduct would not have been illegal if it had occurred after the changes.
The issue before this Court is whether the Commission abused its discretion when
it denied Black’s request to lift the bar.
STATUTES AND REGULATIONS
Black did not append statutes and regulations to his brief. The Commission
appends the pertinent statutes to this brief.
2
COUNTERSTATEMENT OF THE CASE
A. Facts
The relevant facts, as found by the Commission in its April 13, 2010 order
that is on review, are not in dispute. The April 13, 2010 Order, Investment
Advisers Act Release No. 3014, Document No. 9 in the Certificate Listing and
Describing the Record and hereafter referred to as the “Denial Order,” is appended
hereto. 1
In 1997, Black, an investment adviser, agreed to be permanently enjoined
by a district court from violating antifraud provisions of the federal securities
laws. In the civil law enforcement action in which the injunction was issued, the
Commission alleged that Black had engaged in a fraudulent scheme that resulted
in the loss of millions of dollars of municipal bond proceeds that belonged to his
clients, Pennsylvania school districts. The Commission alleged that Black,
through entities that he controlled, represented to the school districts that his
investment products would pay a specified rate of return to the districts over a
fixed period and were fully protected or collateralized by a pool of securities
1
The Commission also appends the other Commission order as to
which Black petitions for review, the Commission Order Denying
Reconsideration dated June 18, 2010, Document No. 11 in the
Certificate Listing and Describing the Record.
3
equaling the amount of the districts’ principal investments. The Commission
alleged that Black and his companies misrepresented the value of the assets held
as collateral, overstating the actual value by approximately $71 million. The
Commission also alleged that Black and his companies misappropriated
approximately $2 million in client funds to pay personal and business expenses.
Denial Order, pp. 1-2.
Black, without admitting or denying the Commission’s allegations,
consented in 1997 to the entry of an order in the district court action that
permanently enjoined him from future violations of the antifraud provisions. In
entering the order, the district court ruled that there was “sufficient basis” for the
entry of the order and prohibited Black from contesting the allegations in the
complaint in connection with the subsequent determination of the amount of
disgorgement and civil penalties. Black subsequently consented to a court order
requiring him to disgorge $3,632,031 and to pay a civil money penalty of
$500,000. Denial Order, p. 2.
On May 4, 1998, with Black’s agreement, the Commission, in a “follow on”
administrative proceeding based on the injunction, issued an order (the “Bar
Order”) that barred Black from association with an investment adviser or an
investment company and also barred him from association with a broker, dealer or
4
municipal securities dealer. The Commission found that Black had been
permanently enjoined by the district court in the civil law enforcement action and
that in the action the Commission had alleged: that he had made material
misrepresentations and omissions, that his clients had lost millions of dollars, and
that Black had benefitted financially from his actions. Denial Order, p. 2. 2
Black subsequently, in 2000, pled guilty in a criminal proceeding to twenty-
one counts of investment adviser fraud, three counts of mail fraud, and two counts
of making false statements. In connection with his guilty plea, Black stipulated (a)
that he represented to clients that he would secure or collateralize the investments
of the clients with securities having a fair market value equal to or great than
100% of the clients’ investments and (b) that at no material time did the collateral
accounts hold collateral at a ratio of 100% of the fair market value of client funds
invested. Black was sentenced to forty-one months’ imprisonment and three years
supervised release, and was ordered to pay $61,300 in restitution. Denial Order,
pp. 2-3.
2
The Commission’s Bar Order was issued pursuant to its authority
under the Advisers Act to bar persons from associating with an
investment adviser if they are enjoined from “engaging in . . . any
conduct or practice . . .in connection with the purchase or sale of any
security.” Section 203(f) of the Advisers Act, 15 U.S.C. 80b-3(f),
incorporating by reference Section 203(e)(4) of the Advisers Act,
80b-3(e)(4).
5
B. Proceedings Before the Commission
In 2009, Black requested that the Commission lift the bars that the
Commission had imposed on May 4, 1998. He argued that, although his conduct
was deemed fraudulent when the Commission imposed the bars in 1998, later
revisions to accounting standards showed his conduct would have been
permissible if it had occurred after the revisions. Document No. 2 in the
Certificate Listing and Describing the Record.
The Commission denied Black’s request that the bar against his association
with an investment adviser or an investment company be lifted, observing that his
argument with regard to the effect of changed accounting standards was not
“persuasive” and lacked “evidentiary support,” but chiefly relying on the fact that
he had agreed to the 1997 district court injunction. Denial Order, p. 5 & n. 13.
Specifically, because of his agreement to the injunction, the Commission stated, it
would not consider challenges from Black to the allegations on which that
injunction was based. Denial Order, p. 5. The Commission noted that Black
could make a Fed. R. Civ. P. 60(b) motion in the district court requesting that the
court vacate the injunction, and, if the district court modified the injunction, Black
would not be bound by the Commission’s allegations. Denial Order, p. 5 & n. 14.
The Commission stated that, even though it would not consider Black’s
6
challenge to the allegations it had made in the district court action, it would, if the
circumstances were otherwise appropriate, modify the sanctions imposed. The
Commission found that in this case modification of the bar against association
with an investment adviser or an investment company was not appropriate. The
Commission noted that Black’s fraudulent scheme had lasted for two years and
that he had defrauded his clients of millions of dollars. It also found that he had
not identified “any unforseen consequences or hardship resulting from the
sanctions” and furthermore that Black had represented that he did not plan on
being involved in the investment advisory business again. Finally, the
Commission found that there was no evidence that Black, who had exhibited no
remorse, had learned from his misconduct or was unlikely to engage in future
misconduct if permitted to re-enter the industry. Denial Order, pp. 6-7. 3
Black asked the Commission to reconsider its denial of his request that the
bar against his acting as an investment adviser be lifted. Black contended in his
reconsideration request that, when the Commission issued the bar in 1998, it either
3
The Commission, however, did lift the bar against Black associating
with a broker, dealer, or municipal securities dealer. Denial Order, p.
7. The validity of such a bar in an investment adviser proceeding had
been called into question subsequent to the Commission’s issuing the
bar here. See Teicher v. SEC, 177 F.3d 1016, 1020-22 (D.C. Cir.
1999).
7
acted fraudulently or lacked jurisdiction. Document No. 10 in the Certificate
Listing and Describing the Record. The Commission denied his request for
reconsideration on June 18, 2010. Document No. 11 in the Certificate Listing and
Describing the Record, publicly issued as John Gardner Black, Investment
Advisers Act of 1940, Rel. No. 3040 (June 18, 2010). Black then filed his petition
with this Court.
STANDARD OF REVIEW
A Commission decision to deny a request to lift a bar is reviewed for abuse
of discretion. Cf. Wonsover v. SEC, 205 F.3d 408, 416 (D.C. Cir. 2000) (the
Commission remedy of a bar is reviewed for abuse of discretion).
SUMMARY OF ARGUMENT
Since Black does not address the Commission’s main ground for denying
his application to lift the bar against him -- that he had agreed to the entry of a
district court injunction against him and therefore the Commission would not
consider his challenges to the allegations on which the injunction was based -- the
Commission’s order denying the application should be affirmed. In any event, the
various arguments that Black does make are either wrong or irrelevant.
8
ARGUMENT
THE COMMISSION DID NOT ABUSE ITS DISCRETION WHEN IT

DENIED BLACK’S REQUEST THAT THE BAR AGAINST HIM BE
LIFTED.
In his brief, Black never even mentions the Commission’s main ground for
denying his application, that he had agreed to the entry of the 1997 district court
injunction against him and therefore the Commission would not consider his
challenges to the allegations on which that injunction was based. See supra, p. 6.
By not addressing the Commission’s main ground, Black fails to show that the
Commission abused its discretion when it denied his request that the bar be lifted,
and this Court should therefore affirm the Commission’s order.
In any event, the arguments Black does make are either wrong or irrelevant.
Black argues that recent changes in accounting standards mean that his conduct, if
judged by current accounting standards, would not violate the federal securities
laws. Br. 10, 11, 21-13. He apparently means to argue that his consent to the
1997 injunction should therefore be disregarded. This argument is wrong because,
first, Black is not free to withdraw his consent. Second, the Commission, although
chiefly relying on Black’s consent to the 1997 injunction, also found in its Denial
Order that Black’s underlying argument, i.e., that his conduct would not by
today’s standards be violative, was not “persuasive” and lacked “evidentiary
9
support.” Supra, p. 6. Even assuming the valuation methods Black used were
valid, the valuation Black arrives at for the assets in question depends on the
assumption that the assets would appreciate in value at an average of 14% per year
indefinitely – an assumption for which, as the Commission stated in its Denial
Order, Black provided no evidence. See Br. 25; Denial Order, p. 5, n. 13. 4
Black makes the following irrelevant arguments:
1. He argues that the Commission “did not allege that any misconduct
by [him] was in connection with the purchase or sale of a security.”
Br. 9; see also Br. 10. But the Commission’s May 4, 1998 Bar Order
was based on the injunction entered in the Commission’s district
court action against Black, in which the district court enjoined Black
from future violations of Section 17(a) of the Securities Act, Section
10(b) of the Securities Exchange Act and Rule 10b-5 thereunder,
which require misconduct related to the offer, sale or purchase of a
security for their violation. See Document No. 1 in the Certificate
Listing and Describing the Record, publicly issued as John Gardner
4
Furthermore, the Commission had alleged that Black had
misappropriated for his own purposes approximately $2 million in
client funds. Supra, p. 4. Thus, even if changed accounting standards
had retroactively validated his accounting methods, his conduct still
would have violated the antifraud provisions.
10
Black, Investment Advisers Act of 1940 Release No. 1720, 1998 SEC
Lexis 845 (May 4, 1998). 5
2. He argues that “[t]he district court, acting ex parte, granted the SEC
complaint despite the failure of the complaint to detail a single
transaction, neither an offer, purchase nor sale of the [security he sold
to his clients] at other than fair value.” Br. 16-17; see also Br. 26.
Black appears to be referring to the district court grant of a temporary
restraining order; that district court action is irrelevant, since the bar
was based on the subsequent permanent injunction.
3. He contends that the 1998 Commission administrative proceeding
was conducted “without the presence of [him] or his counsel,” Br. 11,
implying that the Commission held a hearing in 1998 at which he was
neither present nor represented. But there was no hearing in 1998: as
Black admits, he “stipulated [in the administrative proceeding] that he
would not contest the facts in the [administrative] complaint,” Br. 11,
and thus the Commission issued a bar without holding a hearing.
5
Furthermore, Black waived the “in connection with” argument by not
making it before the Commission. Documents Nos. 2, 8, 10 in the
Certificate Listing and Describing the Record; City of Portland v.
EPA, 507 F. 3d 706, 710 (D.C. Cir. 2007).
11
4. He argues that “[n]o settlement was reached [in the administrative
proceeding] . . . with the [Commission] regarding alleged violations
pursuant to either the Securities Act of 1933 or the Securities
Exchange Act of 1934.” Br. 18. To the contrary, Black agreed to a
bar on the basis of a district court injunction against violations of the
antifraud provisions of the Securities Act and the Exchange Act.
Finally, Black argues that he is “innocent of the grand jury indictment” in
the criminal case against him. Br. 17 n. 4. He does not deny, however, that he
pled guilty in the criminal case. Moreover, Black has already failed in one attempt
to have his criminal sentence vacated, set aside, or corrected. United States v.
Black, 2001 Dist. LEXIS 26296 (W.D. Pa. 2001), aff’d 85 Fed. Appx. 875 (3d Cir.
2003)(unpublished).
12
CONCLUSION
For the foregoing reasons, the order of the Commission should be affirmed.
Respectfully submitted,
DAVID M. BECKER
General Counsel
JACOB H. STILLMAN
Solicitor
RANDALL W. QUINN
Assistant General Counsel
s/Christopher Paik
CHRISTOPHER PAIK
Special Counsel
Securities and Exchange Commission

100 F. Street, N.E.
Washington, D.C. 20549
(202) 551-5187 (Paik)
February 2011
13
CERTIFICATE OF COMPLIANCE WITH F.R.A.P. 32(a)(7)
I, Christopher Paik, hereby certify that the Brief of the Securities and
Exchange Commission, Respondent, in Black v. SEC, No. 10-1186, complies with
the type-volume limitations set forth in F.R.A.P. 32(a)(7). The Brief, including
cover, tables and certificates, contains approximately 3150 words, as counted by
the word processing program WordPerfect 11.
s/Christopher Paik
Christopher Paik
14
CERTIFICATE OF SERVICE
I, Christopher Paik, hereby declare that on February 22, 2011, I caused to be
served by UPS copies of the Brief of the Securities and Exchange Commission,
Respondent, in Black v. SEC, No. 10-1186, on John Gardner Black, 1446 Centre
Line Road, Warriors Mark, PA 16877, pro se.
s/Christopher Paik
Christopher Paik
15

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Case: 10-1186 Document: 1294177 Filed: 02/22/2011 Page: 1

No. 10-1186 Oral Argument Not Scheduled

UNITED STATES COURT OF APPEALS

JOHN GARDNER BLACK,

SECURITIES AND EXCHANGE COMMISSION,

On Petition for Review of an Order of the Securities and Exchange Commission

BRIEF OF THE SECURITIES AND EXCHANGE

Securities and Exchange Commission

CERTIFICATE AS TO PARTIES, RULINGS AND RELATED CASES

A. Parties, Intervenors and Amici Curiae

B. Rulings That Are the Subjects of the Petition

18, 2010 Order Denying Reconsideration, Document No. 11 in the Certificate

Although petitioner’s brief refers to several allegedly related cases, the

previously requested any court to review the Commission rulings at issue.

Document No. 1 in the Certificate Listing and Describing the Record.

Document No. 9 in the Certificate Listing and Describing the Record.

COUNTERSTATEMENT OF THE ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATUTES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

COUNTERSTATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

B. Proceedings Before the Commission . . . . . . . . . . . . . . . . . . . . . . . . . 6

THE COMMISSION DID NOT ABUSE ITS DISCRETION WHEN

CERTIFICATE OF COMPLIANCE WITH F.R.A.P. 32(a)(7) . . . . . . . . . . . . . . 14

Teicher v. SEC, 177 F.3d 1016 (D.C. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . 7 n.3

Wonsover v. SEC, 205 F.3d 408 (D.C. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . 8

STATUTES AND RULES

Securities Act of 1933, 15 U.S.C. 77a, et seq.

Section 17(a), 15 U.S.C. 77q(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Securities Exchange Act of 1934, 15 U.S.C. 78a, et seq.

Section 10(b), 15 U.S.C. 78j(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Rule 10b-5, 17 C.F.R. 240.10b-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Investment Advisers Act of 1940, 15 U.S.C. 80b-1 et seq.

Section 203(e)(4), 15 U.S.C. 80b-3(e)(4) . . . . . . . . . . . . . . . . . . . . . . 5 n. 2

*Section 203(f), 15 U.S.C. 80b-3(f) . . . . . . . . . . . . . . . . . . . . . . . 1-2, 5 n.2

Section 213(a), 15 U.S.C. 80b-13(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

*Authority chiefly relied on

UNITED STATES COURT OF APPEALS

JOHN GARDNER BLACK,

SECURITIES AND EXCHANGE COMMISSION,

On Petition for Review of an Order of the Securities and Exchange Commission

BRIEF OF THE SECURITIES AND EXCHANGE

The Commission had jurisdiction pursuant to Section 203(f) of the Investment

prescribed by Section 213(a).

COUNTERSTATEMENT OF THE ISSUE

he had violated antifraud provisions of the federal securities laws; he consented to

in securities fraud. Black also settled a subsequent 1998 Commission

administrative proceeding based on the entry of the injunction; he consented to the

Commission’s issuance in that proceeding of a bar against his association with an

investment adviser or an investment company. In 2009, Black requested that the

it denied Black’s request to lift the bar.

STATUTES AND REGULATIONS

appends the pertinent statutes to this brief.

COUNTERSTATEMENT OF THE CASE

In 1997, Black, an investment adviser, agreed to be permanently enjoined

by a district court from violating antifraud provisions of the federal securities

clients, Pennsylvania school districts. The Commission alleged that Black,

fixed period and were fully protected or collateralized by a pool of securities

equaling the amount of the districts’ principal investments. The Commission

as collateral, overstating the actual value by approximately $71 million. The

Commission also alleged that Black and his companies misappropriated

approximately $2 million in client funds to pay personal and business expenses.

Denial Order, pp. 1-2.

Black, without admitting or denying the Commission’s allegations,

permanently enjoined him from future violations of the antifraud provisions. In

complaint in connection with the subsequent determination of the amount of