SEC can seek an injunction from alleged Ponzi scheme defendants, but is time-barred from seeking declaratory relief or disgorgement. In 2013, the SEC brought an action against five individuals, alleging that between 2004 and 2008 they had violated federal securities law by selling condominiums that were, in reality, functioning as unregistered securities. They allegedly raised over US$300 million from around 1,400 investors but failed to pay out the returns that they had guaranteed. The Eleventh Circuit agreed with the district court that the SEC was time-barred from proceeding with its claims for declaratory relief, which is a penalty, and disgorgement, which is a forfeiture. The panel, however, remanded for further proceedings on the injunction remedy since it is not considered a penalty. (5/26/2016). SEC.
Mere offer to buy steak dinner for insider information source is enough to satisfy Newman. A criminal defense attorney was accused of offering to buy a golf buddy an expensive steak dinner in exchange for insider information that the buddy received from a corporate insider. He contended that he did not end up actually buying the dinner, so his buddy could not have received the benefit. The First Circuit affirmed his conviction, holding that while the Second Circuit’s United States v. Newman decision requires tippers to actually receive personal benefits, the allegation that appellant offered to buy his source an expensive steak dinner was enough for the charges to be upheld. (5/26/2016) Parigian.
Panel agrees with CFTC that independent commodity trading advisor had actual and apparent authority to conduct trades on investor’s behalf. The CFTC found that an independent commodity trading advisor “had actual and apparent authority” to conduct particular trades of commodities futures on behalf of an investor. The Ninth Circuit denied the investor’s petition for review of the order, determining that the independent commodity trading advisor made no material misrepresentation or omission, that there was no unauthorized trading, and that the record did not support a finding of fraud. The panel further noted that the investor was obviously aware of the ongoing trading, having objected to one trade where a risk manager had placed a stop. (5/25/2016) CFTC.