Securities and Exchange Commission v. Chan, 465 F.Supp.3d 18

Schultz Chan was hired as Akebia’s Director of Biostatistics and, between November 2013 and September 2015, participated in an insider‑trading/tipping scheme; relevant here, he bought ~14,000 Akebia shares in August 2015 shortly before a September 2015 positive trial announcement that caused a 45% stock jump.
Chan profited approximately $68,699 from his Akebia trades; he also allegedly tipped others (including co‑defendant Wang and his wife) who realized additional profits.
Chan was criminally indicted and, on July 10, 2018, convicted on counts including insider trading and tipping related to Akebia; he was sentenced to prison, fined, and ordered restitution; his criminal appeal was pending.
The SEC filed a civil enforcement action in June 2016 (stayed during the criminal case); after the criminal conviction the stay was lifted and the SEC moved for summary judgment in the civil case, relying on collateral estoppel from the criminal verdict.
The district court held that the criminal convictions precluded relitigation of Chan’s civil liability under Section 10(b) and Rule 10b‑5 and granted the SEC summary judgment on liability.
As remedies the court imposed a permanent injunction against future violations, a five‑year officer/director bar, disgorgement of $68,699 plus $13,738 prejudgment interest, and declined to impose an additional civil penalty.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Chan is collaterally estopped from contesting civil liability after criminal conviction	Criminal jury verdict established the facts/elements of 10(b)/10b‑5 liability; preclusive effect applies to SEC suit	Conviction is on appeal; trial errors and inconsistent government theories preclude preclusion	Collateral estoppel applies despite pending appeal and asserted trial errors/inconsistencies; conviction precludes relitigation
Whether the criminal findings satisfy civil elements of Section 10(b)/Rule 10b‑5	Criminal elements match civil elements; jury findings prove materiality, scienter, connection to trades	Disputes about evidence/admission at trial and variance in proofs	Jury found material nonpublic information, breach, scienter, and interstate commerce; civil liability established
Appropriate officer/director bar	SEC sought permanent bar	Chan offered no substantive opposition; single prior offense, modest profit argues against permanent ban	Court balanced Patel factors and imposed a five‑year officer/director bar (not permanent)
Relief: civil penalties, disgorgement, prejudgment interest	Sought disgorgement, prejudgment interest, and civil penalty up to statutory maximum	Chan did not contest remedies in opposition	Disgorgement $68,699 plus $13,738 interest ordered; court declined to impose additional civil penalty given criminal fines/restitution

Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
Ramallo Bros. Printing, Inc. v. El Dia, Inc., 490 F.3d 86 (1st Cir. 2007) (elements and application of collateral estoppel)
Emich Motors Corp. v. General Motors Corp., 340 U.S. 558 (criminal judgments have preclusive effect in later civil actions)
SEC v. Ficken, 546 F.3d 45 (1st Cir. 2008) (elements of securities fraud and scienter)
SEC v. Sargent, 329 F.3d 34 (1st Cir. 2003) (factors for injunctive relief and civil penalties)
SEC v. Patel, 61 F.3d 137 (2d Cir. 1995) (Patel factors for officer/director bars)
SEC v. Weed, 315 F. Supp. 3d 667 (D. Mass. 2018) (applying collateral estoppel to parallel criminal conviction in SEC enforcement)