Tradex Global Master Fund Spc v. Benjamin Chui, 702 F. App'x 632

Tradex (Tradex Global Master Fund SPC, Ltd. and Tradex Global Advisors LLC) appealed a district court order affirming a bankruptcy court judgment denying Tradex a nondischargeability determination under 11 U.S.C. § 523(a)(4) and § 523(a)(19).
Tradex sought summary judgment based solely on an SEC "Order Instituting Administrative and Cease-and-Desist Proceedings" (the SEC Order) issued against Chui, arguing the Order satisfied the requirements of § 523(a)(19).
The bankruptcy court held after a bench trial that Tradex failed to meet its burden under § 523(a)(19); Tradex did not appeal the bench-trial factual findings or the merits decision.
The SEC Order did not mention Tradex and expressly limited its effect to SEC proceedings (and stated Chui made no admission of liability), so it did not create liability in favor of Tradex.
Both the bankruptcy and district courts concluded the SEC Order did not show the Tradex debt "resulted from" the SEC proceeding as required by § 523(a)(19)(B).
The courts also rejected Tradex's collateral-estoppel argument because the Order was not a final determination against Chui in favor of Tradex, Tradex was not a party or in privity, and the Order did not satisfy collateral-estoppel elements.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the SEC Order satisfies 11 U.S.C. § 523(a)(19) as a matter of law	The SEC Order against Chui establishes a securities-law violation and thus the Tradex debt "resulted from" that proceeding	The Order does not name Tradex and is limited to SEC enforcement; it does not create liability in favor of Tradex	No — the Order does not satisfy § 523(a)(19)(B) because it does not show the debt "resulted from" the SEC proceeding
Whether the bankruptcy court could treat the SEC Order as giving rise to nondischargeability via collateral estoppel	Tradex contends collateral estoppel gives the Order preclusive effect independent of § 523(a)(19)	Courts say collateral estoppel cannot substitute for the statute and the Order fails collateral-estoppel elements (no final judgment, Tradex not a party)	No — collateral estoppel cannot cure the statutory deficiency and the Order does not meet collateral-estoppel requirements
Whether the bankruptcy court may enter an independent securities-law judgment separate from a non-bankruptcy tribunal's judgment	Tradex argues bankruptcy court may conduct broad inquiry and enter judgment	Respondents and courts limited reliance to statutory prerequisites and the actual content of the SEC Order	Not decided — the panel declined to resolve the broader question of bankruptcy authority to enter independent judgments under § 523(a)(19)

Palmer, 207 F.3d 566 (9th Cir.) (describes collateral estoppel elements and requirements for issue preclusion)