Securities & Exchange Commission v. Apuzzo
689 F.3d 204
| 2d Cir. | 2012Background
- Apuzzo served as Terex CFO (1998–2002); Nolan was URI CFO (1997–2002).
- In 2000 and 2001 URI conducted two sale-leaseback transactions with GECC and Terex, designed to inflate URI's revenue.
- Apuzzo approved and signed documents disguising URI’s continuing indemnification obligations to Terex and inflated Terex invoices.
- SEC alleged Apuzzo aided and abetted multiple securities-law violations through knowledge and substantial assistance in the Terex I and II schemes.
- The district court dismissed for lack of proximate causation under the aiding-and-abetting standard; the SEC appealed.
- The court reversed, holding the Hand framework governs substantial assistance in SEC enforcement actions and the complaint plausibly alleged substantial assistance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard for substantial assistance in SEC actions | SEC: Peoni standard governs. | Apuzzo: proximate causation required. | Hand standard governs; proximate causation not required. |
| Plausibility of substantial assistance by Apuzzo | Complaint shows high knowledge and ongoing involvement. | Participation alone is insufficient. | Complaint plausibly alleges substantial assistance. |
| Relation between knowledge and substantial assistance | High knowledge supports substantial assistance. | Knowledge alone insufficient. | High knowledge can lessen the burden to prove substantial assistance. |
| Intervening/superseding acts and causation | Foreseeable primary acts support liability. | Intervening acts may break causal nexus. | Foreseeable primary acts do not defeat substantial assistance; no proximate-causation requirement. |
| Effect of Forms of documentation and invoices | Invoices and agreements evidence concealment of indemnification. | Invoices not required to establish liability. | Invoices and agreements support substantial assistance at this stage. |
Key Cases Cited
- United States v. Peoni, 100 F.2d 401 (2d Cir. 1938) (classic test for aider and abettor liability in criminal/enforcement actions)
- SEC v. DiBella, 587 F.3d 553 (2d Cir. 2009) (three elements of aiding and abetting including substantial assistance)
- Bloor v. Carro, Spanbock, Londin, Rodman & Fass, 754 F.2d 57 (2d Cir. 1985) (private-action proximate-causation requirement; distinction for SEC actions)
- Central Bank of Denver v. First Interstate Bank, 511 U.S. 164 (1994) (private aiding-and-abetting liability abolished; no liability for aiding and abetting private claims)
- Stoneridge Investment Partners, LLC v. Scientific-Atlanta, 552 U.S. 148 (2008) (SEC authority to pursue aiders and abettors post-Central Bank)
- Edwards & Hanly v. Wells Fargo Sec. Clearance Corp., 602 F.2d 478 (2d Cir. 1979) (discussion on aiding and abetting liability; authority cited for affirmative acts)
- Ogando v. United States, 547 F.3d 102 (2d Cir. 2008) ( Hand standard described in modern context)
- IIT, an Int'l Inv. Trust v. Cornfeld, 619 F.2d 909 (2d Cir. 1980) (relation of knowledge to substantial assistance; nexus considerations)