Securities And Exchange Commission v. Woodley, 4:15-cv-02767

SEC sued Eldrick E. Woodley after serving him; Woodley never appeared and the Clerk entered default.
From at least 2010 Woodley operated as an investment adviser through Woodley & Co. Wealth Strategies and was state‑registered Dec 2010–Dec 2012.
From May 2012 to June 2014 Woodley submitted at least 34 fraudulent “Invoice Fee Form for Investment Advisor’s Fee” invoices to SEI Private Trust Company, causing SEI to bill Woodley’s clients for services not performed.
The fraud misappropriated $147,023.39 from ten clients; when questioned Woodley gave a false explanation then ceased communication.
The SEC sought a default judgment, a permanent injunction, disgorgement with prejudgment interest, and a civil penalty; the Court granted the SEC’s motion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Woodley violated Sections 206(1) and (2) of the Advisers Act (scheme/practice to defraud)	Woodley repeatedly submitted fraudulent invoices to clients, causing misappropriation; these acts constitute a scheme and fraudulent practice.	No defense—Woodley failed to appear or contest allegations.	Default admits allegations; Court finds violations of §§ 206(1) and (2).
Whether scienter is established	Conduct (repeated false bills, false explanation, cutoff of communication) shows intentional fraud.	No defense asserted.	Court finds sufficient scienter (intent to defraud).
Whether a permanent injunction is appropriate	Injunction warranted because conduct was egregious, recurrent, intentional, and indicates likelihood of future violations.	No defense; no evidence of remediation or recognition.	Permanent injunction granted restraining future violations of the Advisers Act.
Remedies: disgorgement, prejudgment interest, civil penalty	Disgorgement of ill‑gotten gains ($147,023.39), prejudgment interest using IRS underpayment rate, and a third‑tier civil penalty appropriate given fraud and risk of substantial loss (penalty imposed $1,000,000).	No defense or ability/financial condition presented.	Court orders disgorgement $147,023.39; prejudgment interest $22,549.47; civil penalty $1,000,000.

S.E.C. v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (Advisers Act purpose: impose fiduciary standards)
Steadman v. S.E.C., 603 F.2d 1126 (5th Cir.) (scienter requirement discussion under Advisers Act)
Ernst & Ernst v. Hochfelder, 425 U.S. 185 (scienter defined as intent to deceive, manipulate, or defraud)
In re Dierschke, 975 F.2d 181 (5th Cir.) (default operates as deemed admission of liability)
S.E.C. v. Life Partners Holdings, Inc., 854 F.3d 765 (5th Cir.) (standard for permanent injunction under Advisers Act)
S.E.C. v. Kahlon, 873 F.3d 500 (5th Cir.) (disgorgement limited to defendant’s net pecuniary gain)
Allstate Ins. Co. v. Receivable Fin. Co., L.L.C., 501 F.3d 398 (5th Cir.) (disgorgement as reasonable approximation of causal profits)
S.E.C. v. Blatt, 583 F.2d 1325 (5th Cir.) (prejudgment interest may be added to disgorgement)
S.E.C. v. First Jersey Sec., Inc., 101 F.3d 1450 (2d Cir.) (use of IRS underpayment rate to calculate prejudgment interest)