Recently, in SEC v. Spartan Securities Group, Ltd, et al., a Florida federal court held that the Securities and Exchange Commission (“SEC”) could seek disgorgement and direct funds to the Treasury because the defrauded victims could not be identified.
This question was important because some cases do not lend themselves to victim compensation. For instance, it is sometimes difficult if not impossible to identify the victims of insider trading. Assuming the victims are the parties on the opposite sides of the transactions, they may be unidentifiable, especially if the insider trading involves options transactions. Did this mean that disgorgement will be unavailable in insider-trading actions? Or that inability to identify victims will be a valid reason to pay disgorgement funds to the Treasury? These open questions may have been clarified.
‘Enforcement 40’ for 2020
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