United States Securities & Exchange Commission v. Collyard, 2017 U.S. App. LEXIS 11582

Paul D. Crawford (and his sole-owned Crawford Capital) solicited investors for Bixby Energy between Feb. 2004 and Nov. 2006, receiving $240,000 (10% commissions) on about $2.4 million of investor subscriptions. He invited clients to presentations, emailed promotions, advised on tax credits, sometimes handled investors’ checks, assisted at least once with a subscription agreement, and offered to negotiate prices or arrange credit deals.
Crawford had been a registered broker in prior decades; his license was suspended in 1996 for selling unregistered securities and was not reinstated.
The SEC sued in Dec. 2011 under § 15(a) of the Exchange Act, alleging Crawford acted as an unregistered broker and seeking a permanent injunction and disgorgement.
The district court granted summary judgment for the SEC, entered a permanent injunction against future § 15(a) violations, and ordered disgorgement of $240,000. Crawford appealed.
The appeal raises (1) whether 28 U.S.C. § 2462’s five-year limitations period bars disgorgement and/or injunctive relief, (2) whether Crawford was a “broker” under § 78c(a)(4)(A), and (3) whether a judicially recognized “finder” exception or defense shields him from unregistered-broker liability.

Issue	Plaintiff's Argument (SEC)	Defendant's Argument (Crawford)	Held
Whether § 2462 bars disgorgement	§ 2462 does not apply to equitable disgorgement orders	§ 2462’s 5-year limit bars disgorgement because claims accrued by Nov. 2006	Disgorgement is a penalty under Kokesh; § 2462 bars disgorgement — disgorgement vacated
Whether § 2462 bars injunctive relief	§ 2462 does not bar equitable injunctions seeking prospective protection	§ 2462 bars any remedial relief that functions as a penalty	Injunction here is prospective, remedial, aimed to protect public, not a § 2462 penalty — injunction allowed
Whether Crawford acted as a "broker" under § 78c(a)(4)(A)	Crawford’s activities (commission-based referrals, solicitation, investor advice, handling checks, filling forms) make him a broker	He was merely a finder with limited activity, akin to non-brokers in some cases	Court applied six-factor George test and found Crawford met five factors; he was a broker
Whether a judicial "finder" exception/defense exempts Crawford	No statutory finder exception; SEC no-action letters don’t create a general exemption	There is a recognized finder exception/defense shielding nonregistrants engaged in narrow referral activity	No viable statutory or recognized defense here; district court correctly rejected a finder exception/defense

Gabelli v. SEC, 568 U.S. 442 (2013) (§ 2462 accrual rule applicable to SEC enforcement claims)
Sierra Club v. Otter Tail Power Co., 615 F.3d 1008 (8th Cir. 2010) (discussion of § 2462 and equitable remedies)
SEC v. George, 426 F.3d 786 (6th Cir. 2005) (adopted nonexclusive six-factor broker test)
SEC v. Fischbach Corp., 133 F.3d 170 (2d Cir. 1997) (stating primary purpose of disgorgement is deterrence)
Rondeau v. Mosinee Paper Corp., 422 U.S. 49 (1975) (historic character of injunctive relief as deterrent, not punishment)
Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982) (describing injunctive relief principles)
Huntington v. Attrill, 146 U.S. 657 (1892) (defining penalties as punishment for offenses against the State)
Meeker v. Lehigh Valley R.R. Co., 236 U.S. 412 (1915) (penalty/forfeiture language refers to punitive impositions)
Bell v. Wolfish, 441 U.S. 520 (1979) (deterrence as punitive in certain contexts)
Hecht Co. v. Bowles, 321 U.S. 321 (1944) (historic description of injunctive process)
SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990) (prior Eighth Circuit discussion of broker-dealer activity)
SEC v. Texas Gulf Sulphur Co., 312 F. Supp. 77 (S.D.N.Y. 1970) (disgorgement as relief ancillary to injunction)