Securities & Exchange Commission v. Auctus Fund Management, LLC, 1:23-cv-11233

The SEC sued Auctus Fund Management, LLC, and its principals, Alfred Sollami and Louis Posner, alleging they operated as unregistered securities dealers by engaging in high-volume convertible note transactions from 2013–2021.
Defendants entered over 100 securities purchase agreements, converting debt into over 60 billion shares and selling them for $100 million+ in profit, typically dealing with microcap, cash-poor companies.
Defendants solicited clients through third parties and exercised significant control over business decisions and stock transactions.
Defendants were not registered with the SEC as dealers during the relevant period.
Defendants moved to dismiss, arguing they were not “dealers” under the Securities Exchange Act's definition and also raised due process concerns.
The SEC sought disgorgement, a permanent injunction, and prejudgment interest; the motion to dismiss was denied by the court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are defendants "dealers" under the Exchange Act?	Defendants are in the business of buying and selling securities as part of a regular business and thus subject to the Act’s dealer registration requirement.	Only customer-facing parties who effectuate customer orders are dealers; defendants invest for themselves.	Defendants are dealers; “regular business” and transaction volume/regularity qualify them under the Act.
Does legislative history require a customer-facing role for "dealers"?	No customer-facing distinction exists in the statute; “dealer” is based on business activity.	Legislative history shows dealers must effectuate customer orders akin to brokers.	Legislative history supports a business-based rather than customer-based definition.
Due process “fair notice” challenge to SEC’s interpretation	Defendants had fair notice—the statute and case law support the SEC’s reading.	SEC’s view is new and surprising, so enforcement violates due process.	No due process violation; courts have long used a business-based analysis for "dealer".
Disgorgement appropriateness	Defendants' profits are causally linked to operating as unregistered dealers, so disgorgement is proper.	No causal link between registration status and profits; no investor victims, so no disgorgement.	Sufficient claim for disgorgement; actual harm and causation issues can be addressed in later proceedings.

Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: allegations must be plausible on their face)
SEC v. Big Apple Consulting USA, Inc., 783 F.3d 786 (business model based on high-volume discounted securities transactions triggers dealer status)
EdgePoint Cap. Holdings, LLC v. Apothecare Pharmacy, LLC, 6 F.4th 50 (purpose of broker-dealer registration is investor protection)
Liu v. SEC, 591 U.S. 71 (disgorgement as equitable relief is limited to benefit of investors)
Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (fair notice and agency interpretation for regulated parties)