*1 500 2A1.1, not 2A1.2. Because Section issue the dis-
Dеloyd did UNITED SECURITIES AND STATES raise court, engage plain-error re- trict we COMMISSION, EXCHANGE Puckett, 135, U.S. view. S.Ct. Plaintiff-Appellee correctly applied guideline. Although first-degree-murder KAHLON, known Yossef also as Jossef second-degree convicted of Deloyd was Management Kahlon; Group, TJ law, degree Louisiana “first under murder L.L.C., Defendants-Appellants crime is the federal most analo murder gous degree Louisiana second mur to the No. 16-41431 Tolliver, 61 der United States v. statute.” Appeals, United States Court of 1189, 1221 1995), vacated Fifth grounds sub nom. Moore Circuit. v. United States, U.S. S.Ct. FILED October (1996). Federal classifies a L.Ed.2d degree,” of murders as range “first broad willful, ...
including “any kind of deliber
ate, maliсious, premeditated killing.” contrast, 1111. In U.S.C. Louisiana’s
first-degree-murder applies only statute example, For to an applies
certain facts. felony has committed mur
offender who
der, police officer, firefighter, murdered child, elderly person, or mur
young persons. multiple
dered See La. Rev. Stat. 14:30.
Ann. second-degree-murder
Louisiana’s stat- applies
ute is broader. It much when person has killed a
offender and had
specific kill or great bodily intent to inflict 14:30.1(A)(1). encompass-
harm. Id. This that, law,
es murders under federal Thus, degree.” “first it was
classified as apply obvious error to clear guideline.
first-degree murder stated, judgment
For the reasons is except respect
AFFIRMED 9, 10,
sufficiency of as to evidence Counts 14, on which we REVERSE acquittal.
direct judgment This matter for resentencing ap- REMANDED
propriate. *3 Vetter, Hardin, Tracey
Benjamin M. White, Counsel, Christy Secu- U.S. Senior Commission, Washing- Exchange rities <& Birkenheier, DC, ton, E. John Ú.S. Securi- Commission, IL, Chicago, Exchange ties & Plaintiff-Appellee. Steven-Coale, Esq., Lynn Pinker David Dallas, TX, L.L.P., Hurst, for De- Cox & fendants-Appellants. JONES, DAVIS, and
Before SOUTHWICK, Judges. Circuit CURIAM; PER purchases This around case rеvolves the. by “penny sales of stocks”1 Yossef solely compa- of his Kahlon and one owned nies. In Securities States. United (“SEC”) a Exchange Commission filed company Kahlon and his complaint against unregis- resale purchase granted tered securities. The.district Rules, , generally Stock refers ‘penny 1. "The term stock’ https://www.sec.gov/fast-answers/ (last company very visited security answerspennyhtm.html October small issued -share," 13, 2017); per $5 less see also C.F.R. trades than 240.3a51-l quoted definition). over-the- (technical "[p]enny generally stocks Exch, Comm’n, Penny U.S. Sec. .& counter.” summary judgment purposes and later for “investment and not with a distribution!;.]” damages in favor of the SEC. Kahlon view TJM towards was is- company timely appeal filed this sued stock legends certificates without re- stricting as to both determinations. We their resale. Notwithstanding AFFIRM. its representation issuer, TJM would BACKGROUND open then sell the stocks on the as market possible generate soon profit. For dispute. of this case are not in facts all but one companies in- Act 'of in, (“Securities Act”), 77e, began vested resales U.S.C. within re- days purchase. told, five its first All quires detailed state- May 2008 SEC, between be filed in- ment with the unless *4 vested 11 companies purchased in and exception offer applies, before the or sale and unregistered sold over 18 billion public through to shares for inter- trading gain of over exception state on million. $7.7 commerce. which penny-stock in investor this case relies May In after SEC advised 504(b)(l)(iii), is Rule 17 C.F.R. Kahlon considering charges 230.504(b)(l)(iii), § Capital the Seed Ex- him, against he stopped conducting this emption, for small designed com- form of transaction. August 2012, In panies to capital raise limited amounts of complaint filed a in United States easily by selling unregistered more securi- District Court for the Eastern District of to ties accredited investors. against Texas Kahlon for unregis- TJM’s owner, officer, later, Yossef Kahlon is sales. Two both years the ’sole the SEC tered employee Management and for Group Appellants and TJ filed motions summary (“TJM”), judgment. granted a New York liability limited district court com- pany summary judgment in SEC’s motion for created In as to TJM ac- motion, quired liability, property of vacant in denied Kahlon’s acres or- and Dallas, Texas, briefing dered on damages. which has never been The district used operations. That then held that TJM’s same Kahlon and TJM year, registered requisite geographic Kahlon lacked the TJM in Texas as a for- connection eign liability limited to take company, reg- аdvantage hired a to Texas the state’s Texas, laws. The court agent blue-sky istered in reach the and obtained a theory SEC’s mailing Texas Kahlon Kah- address TJM. lon and were operations administered TJM’s TJM underwriters and there- with New unregistered York bank account out of his fore the either office securities.were City freely Long New York or his on transferable. The SEC moved for home summary judgment on Island. and damages, granted jn September relief Kahlon unregis- then invest in started permanent 2016. The court in- ordered a through tered stocks on TJM based violations, junction against future 504(b)(l)(iii) corresponding Rule and disgorgement of million gross over $7.7 exemption, Texas state 7 Tex. Admin. Code interest, trading plus prejudgment § Kahlon identify penny 109.4. would $200,000 penalty, first-tier civil companies that investment needed funds against bar lifetime via financing. alternative means of Kahlon and TJM. purchase large would blocks of shares at a discount, signing subscription agree- while timely appeal filed this and TJM provided purchases ments that were assert that erred 504(b)(l)(iii), judgment Appellants rely on Rule granting summary offerings awarding which sales to avoid its discretion allows abused when registration if are con- damages. requirements “[e]xclusively according to ducted state DISCUSSION exemрtions permit general general advertising solicitation and review a We district court’s long so as sales are made ‘accredit- summary judgment liability de grant of 230.501(a).” §in ed investors’ defined novo, “may this court affirm the dis 230.504(b)(l)(iii). Texas law any present trict court’s decision basis exempts registration offer and court” and argued ed sale of institutional ac- Family district court. Am. Assurance Life investors, credited as defined Biles, Co. v. Columbus F.3d Tex. 107.2; qualified institu- 2013). The evidence is viewed Admin. Code buyers, tional as defined federal light most non-mov- favorable 144A(a)(l) under promulgated the Securi- ants all reasonable inferences drawn Act; corporations ties or to other enti- Jose, in their favor. Distribuidora Mari greater ties with a worth than net Transmaritime, Inc., $5 S.A. de C.V. (West million. 109.4 7 Tex. 2013). Admin. Code *5 2017). court’s damages The district and penalty are for an determinations reviewed court held that Rule The district v. abuse of SEC discretion. 583 504(b)(l)(iii) requires compliance with 1325, 1978) (5th 1334 Cir. re (injunctive exemptions “those state-law where the se lief); AMX, Int’l, Inc., v. SEC 7 F.3d It curities or found “no sold[.]” are offered (5th 1993) (disgorgement); Cir. v.Wolf took evidence that the transactions issue (5th 1973)
Frank,
477 F.2d
Cir.
place exclusively under Texas
The
law[.]”
interest);
(pre-judgment
R&W Tech. Servs.
identical
court discussed the recent
hold
CFTC,
Ltd. v.
205 F.3d
court,
ing of
which had
аnother
2000) (civilpenalties).
principle
cited the established
that state
laws)
(blue-sky
sur
securities laws
have
50I(b)(l)(iii)
I.
Rule
Compliance with
challenges
vived constitutional
because
that
To establish
Appellants—
“they only
transactions
regulated
occur
registration
Kahlon and
TJM—violated
ring
regulating
within the
States”
be
provisions of
5 of
Section
the Securities
protected
cause
are to that extent
Act,
prima
must make out a
facie
SEC
28(a)
from
preemption
“(1) no
showing
registration
that
statement
Exchange Act. See
v.
SEC
(2)
securities,
was in
as to the
effect
Bronson,
402, 408, 415
F.Supp.3d
or
defendant sold
offered to sell these
(S.D.N.Y. 2014) (citing Edgar v. MITE
(3)
securities,
interstate transportation
624, 641,
Corp.,
102 S.Ct.
457 U.S.
or
communication and
mails were used
(1982)).Accordingly,
an inves
L.Ed.2d
in connection with the sale or offer of
advantage of
tor can
a state’s
take
Co.,
sale.”
Tobacco
SEC Cont’l
463 F.2d
exemption if
power
that state has
1972).
137, 155
Because
regulate
begin
with.
the transaction
undisputed,
are
shifts
elements
burden
that
Appellants
Appellants complain
to show
enforce-
that the sales
“to ‘imply’
fell
is an effort
an
exception
registration
proceeding
under an
ment
into the
requirements.
requirement
exemp-
at 156.
additional
Id.
tion,”
not,
impermissible
“an
use of
If
enforce-
one
exempt
state would be able to
not,”
rulemaking
ment to what
nationwide,
do
transactions occurring
despite
Compliance
that
Guide issued
another
differing regulatory re-
state’s
govern.
Compliance
The SEC
should
gime.
Supreme
has
Court
indicated
herein,
Guide was issued after the events
general
otherwise.3 Thus
principles of fed-
event,
does more harm than
language
eralism and the
regulation
of the
good
position.
guide requires
for
support the Bronson holding.
must
with
comply
“[i]ssuers
state se-
Appellants argue,
obligations
that “the
regulations
curities
in the
laws
states
‘implied’ by
adopted by
SEC and
or
the.
securities
sold.”
offered
impossible
follow,”
district court are
Comm’n,
U.S. Sec. & Exch.
Rule 504 of
amounting
repeal
to “a
of the
Regulation
exemp-
A
Entity Compliance
D:
Small
504(b)(l)(iii)
(Jan. 20, 2017)
While Rule
tion[.]”
erects
Guide
Issuers
(emphasis
added).
higher bar than simply allowing a
seller
adhere to a particular
exception
state’s
504(b)(l)(iii)
exemption
allows an
unregistered
then resell
any-
registration
“offers
sales of
where, it is
anot destruction of the rule—
.,.
...
are made
[exclu-
purchasers
may
hold the
sively according
exemptions
to state law
stock, may
exclusively
resell
within the
permit general
solic-
state, or may
compliance
resell in
general advertising
long
itation and
so
purchaser’s
rules
state
only to
sales are made
‘accredited inves-
504(b)(1).
subdivisions Rule
230.501(a).”
§in
tors’ as defined
230.504(b)(l)(iii).2
The Bronson court
Only
company
issued
regulation’s
held that the
use of the term
TJM and Kahlon in this case
“exclusively” “plainly require[s] that
exempt
issuing
in each
located
Texas. The other
[be]
offers
sales
state
ten
*6
they
at
F.Supp.3d
companies
occur[ ].”
where
were
located
other'states
exemptions
registered
2. There are three
in 17 C.F.R.
have
been
in at least
230.504(B)(1),
only
provides
registra-
§
onе
while
the third is in
state that
for such
and
tion,
public filing
dispute
helpful
delivery
in this
it is
to view
and
before
all
sale, offers and sales are made in
put
three to
relevant
in context.
the
provisions,
state
accordance with such
conditions,
(1)
qualify
General
To
for ex-
and the
document is delivered
disclosure
230.504,
emption
§
under this
offers and
purchasers (including
before sale to all
satisfy
sales must
the terms and conditions
those in the states that have no such
(a), (c)
(d),
§§of
230.501 and 230.502
and
procedure); or
(c)
except
provisions
§
that the
of 230.502
(iii)Exclusively
according
state law
to
(d)
apply
and
will not
to offers and sales of
exemptions
registration
permit
from
securities under
230.504 that are
general
general
solicitation and
advertis-
made:
ing
long
so
sales
made
(i) Exclusively in one or more states that
“accredited investors” as defined
provide
registration of the
for the
securi-
230.501(a).
ties,
require
public filing
and
delivery
to investors of a substantive dis-
Supreme
3. Since a
of cases in
trio
sale,
closure document before
and are
upheld
authority
“has
of
Court
States
pro-
made in accordance with those state
‘blue-sky’
against
enact
laws
Commerce
visions;
challenges
Clause
on several occasions.
...
(ii) In onе or
upholding blue-sky
more states that have no
The Court's rationale for
provision
registration
only regulated
for the
the secu-
laws
of.
transactions
public filing
delivery
occurring
regulating
rities or the
of a
within
Ed-
States.”
sale,
gar,
disclosure document before
if the
When a lists lacked scienter. The district of factors rejected argument this generally such as in both in its Patel are not exclu- opinion sive, the one on nor reme- always is each factor relevant. both, dies. In the court wrote: can alter Circumstances what facts should be guide evaluated. Factors meant to Defendant fact contends that courts as consider evidence in a case the SEC requested had-interviewed and quoted remedies. one of form We documents from Kahloii in connection lists the district court used it is investigations because two other but did nоt adopted by bring articulation this enforcement action until much opinion, with instructions to trial later somehow “ex- means the SEC courts that they were plicitly permitted]” consider these his conduct. Defen- deciding “factors in put showing whether issue has no dant evidence forth injunction light of past violations” of previously interpreted the SEC had regulations exemption and related statutes. on which he relies in man- Blatt, 583 at 1328 & n.29. Blatt ner that is contrary interpretation appropriate list is ques- use here “As asserts here. stated it injunction. court, tion of -formof good faith belief that ‘neither question offers or sales wеre le- analyzed The district court some of the gal, nor reliance of coun- advice taken, six factors ultimately,' from the Sec- sel, complete provides a defense to ond Circuit Patel 'opinion, , charge violating 5 of the Secu- discuss those that differ from the list we *8 ”, Act.’ rities adopted presumably in Blatt they because The court that Kahlon acted no concluded had relevánce. The court concluded that intentionally either or with reckless permanent a bar on disre- in (cid:127) gard requirements. legal for the appropriate. expla- stocks was The written nation not was extensive: support at recklessness and least To. intent,
The court finds that penny stock bar perhaps a court also de- warranted “for essentially Kahlon, the same argument rea- that scribed the SEC’s 508 Curshen, Fed. attorney here. SEC v. 372 seeking opinion
in letter bless- occurred (10th 2010) (“Curshen’s actions, in ing Appx. his had not candid 875 been § to counsel. Particular- explaining plans 78j(b) his violated 15 U.S.C. conduct (“§ in the reme- ly, 10(b)”), 77q(a) as the district court found U.S.C. TJM had failed opinion, (“§§ 17(a)(1)-(3)”), dies 77q(b) 15 U.S.C. “(1) publicly intent to distrib- explain (“§ 17(b)”), 240.10b-5 (2) possible, as soon Simmons, ute shares (“Rule 10b—5”).”); SEC v. operations suggestion that the Defendants’ (“Sicili- 2007) Fed.Appx. decisions were based and invеstment ano had committed securities fraud and Though the court did not Texas.” district registration provisions of the violated the facts, rely on explicitly those then laws.”). Here, Kahlon TJM’s securities supported that the court find evidence did to one of vio misconduct was limited kind intentionally that Kahlon had acted Still, lation. court had a choice district recklessly. expressed court a The district injunction form of fact on the based opinion liability. similar concern parties particular that these had violated pointed misrepre- It out that Kahlon had conducting particular rule when kind brokerage hоuses others sented court con Perhaps transaction. district presence him who dealt that he had that Kahlon evi sidered and TJM had purchasing he Texas and that was in conduct sophistication denced sufficient as an investment. The found penny-stock ing transactions as raise both characterizations to be contradicted legitimate concerns other limits deposition. his might those transactions be violated in the give us future. court did district if it is fair to characterize
Even on, go finding but it make a much did “technical,” meaning sup violations as we potentially intentional miscon reckless specific рose lead engaging trans duct while anyone, they economic are still loss actions. quite likely knowing reckless and viola straying
tions.
no innocent
across
We see
no
We find
abuse
discretion
bar-
well-planned
hidden limits but instead
ring all future transactions.
beyond
march
the boundaries
were
sufficiently marked
investors.
Injunction
B.
from future
review,
acknowledge
In our
we
law violations
that the
Kahlon and
found
in
permanent
also affirm
We
liable
for violations of
TJM
junction from future
law viola
yet
transactions of
barred further
injunction
This permanent
tions.
is tailored
Despite
argument
stocks.
Kahlon’s
that a
precise
proscribes
misconduct as
bar on Rule 504 transactions
suffi
violating
TJM “from
Kahlon and
cient, the district court
determined
Corp.,
Act.”
v. Zale
of the Securities
penny-
for a
all
request
the SEC’s
bar on
1981).
Cir. Unit A
F.2d
appropriate.
was more
transactions
ordering
no abuse of
We find
discretion
injunction
Our review
details of the
permanent injunction.
is for an abuse of
discretion.
Disgorgement
C.
all
We find few clear limits on the district
Turning
to the district
arguably
next
court’s discretion.
cases
Some
dis-
present
violations than
court’s order that Kahlon
*9
wide-ranging
more
gorge
gross
all
revenues and the
acknowledges
corre
The SEC
that
this is a
interest,
sрonding prejudgment
strict
we affirm.
violation for
proof
which no
power
disgorgement
Moreover,
“The court’s
of scienter was required.
order
only
meaningful
precedent,
extends
to the amount with interest
by
postdated
trades,
profited
appellants’
which the
from
these
defendant
his
spoke
required
wrongdoing.
location of the
Any further sum would con
trans-
504(b)(l)(iii)
Blatt,
controlling
actions
the Rule
penalty
stitute a
assessment.”
exemption.
panel
majority must
purpose
disgorge
F.2d at 1335. “The
stretch to infer from the
ment is not to
district court’s
compensate the victims of
opinions that Kahlon and
fraud,
deprive
wrongdoеr
but to
committed
quite likely knowing
“reckless and
viola-
ill-gotten gain.”
his
in
question
Id. The
this
tions” of
majority
the Rule. The
admit that
case is whether
erred
findings
the district court’s
were not “ex-
determining
profit
that
was best measured
tensive,”
“explicit,”
not
give
and “did not
gross
profit.
net
“[T]he
us
to go
much
on.” Because SEC was not
overwhelming weight
authority
hold[s]
required to bear a
of proving
burden
that
may
violators
offset
violation,
scienter for the initial
no
evi-
disgorgement
liability with business
dentiary hearing took place, it is at best
expenses.”
Energy
United
Part
conjecture
in-
that
and TJM were
ners, Inc.,
Fed.Appx.
tentional or willful violators. There is no
2004) (quoting
Caрital,
SEC v. Kenton
they
repeat
evidence
have been
secu-
Ltd.,
(D.D.C. 1998)).
69 F.Supp.2d
rities law
they
offenders: while
used this
We hold
the district court did not
exemption
Rule’s
in the
way many
same
its
abuse
discretion.
times, once the SEC notified him
AFFIRMED.
considering charges,
Kahlon and TJM
immediately
engaging
ceased
these Rule
JONES,
EDITH H.
Judge,
Circuit
504 transactions. There is no evidence that
dissenting:
such misconduct will recur
now
adjudicated
transactions have been
defi-
I respectfully
majori
dissent
significance,
cient. Also of
was no
there
ty’s decision to throw the book at these
proof
upon
committed
fraud
entities
defendants—approving
injunction,
purchased
which Kahlon and TJM
trades,
“penny
lifetime ban on all
stock”
upon
stock or
sophisticated
markets
penalty,
disgorgement
civil
sum,
were,
which they sold. There
no
injury
revenues.
no
Yet
fraudulent
oc
egregious underlying securities violations.
sophisticated
curred
actors with
For
the technical violations that oc-
whom
or the
stock
traded
mar
curred, however, I agree that several sanc-
ket
generally.
more
The district court’s
tions, including
permanent
injunction
perfunctory analysis of
six
factors
against further
securities law violations
justify
penalties
used to
such
is in
harsh
civil penalty,
upheld.
and thе
should be
justification
sufficient.
is no
There
for a
lifetime
against
appellants’
bar under the circum
But the ban
trades,
Finally,
stances of this case.
require
engaging
my
ever
view,
disgorging gross
ment of
revenues con
far exceeds the
court’s
dis-
flicts with
Disturbingly,
panel majority
SEC v.
In to the addition compatible cretion.2 with bar fu-. impact Penny governing-what "The of a Stock is regulation
1. The a Bar ' qualifications entirely acting stock in the pro- includes a individual is barred from as (17 240.3a51-l(g)), moter, finder, of the issuer C.F.R. hands agent or consultant or other- purchase example, stock For Kahlon could broker, wise in activities a engaging year million a one old issuer with two dealer, purpose or for the issu- issuer assets, tangible year if in in net dollars stock, trading any penny ance or or induc- dips two net two the below million issuer purchase ing or attempting to. induce assets, tangible stock becomes a Hamilton, any penny Brenda stock.” sale stock, qualifications entirely Other left Bar?, Penny What is Law- Stock (240.3a51-l(d)). marketplace the hands 2, 2014), yer (August https://www. Finally, qualify pen- a stock can whether .com/2014/penny-stock- securitieslawyer 101 may ny stock be certain determined securi- bar/, David'Smyth, also See Don't Evеn Think exchanges, e.g., if the stock ties is'removed Bar, Penny Violating That Stock About exchange, exchange if the decides from the (June 13, 2016), https:// Review National Law information, stop reporting certain www.natlawreview.com/article/don-t-even- ongoing qualification fails to meet other stock (Wise' think-about-violating-penny-stock-bar (e)). (240.3a51-l(a), Obviously, requirements he bar when "solicited violated purchased $6/ if Kahlon valued private companies publicly issue several $4/share, share, but he would be it declined shares, offerings pitched to a New trying selling or But it. his barred sell fund, hedge helped pri- York-based beyоnd goes risk well fluctua- market value offer companies prepare to vate shares to governing rules tions stocks, public.”). *11 any imply, only prevent the relevant factors ban ban them from engag- As would degree to ing any must be tailored the on Rule 504 transactions. This not a of misconduct. is case where Next, disgorgement I turn to systematically
Kahlon and TJM have calculation, prejudgment interest which offerings, resulting in abused stock profits are not on based lost but on violations; instead, regulatory numerous gross by the appellants. revenues received exploited one rule conduct their only unpub This cоurt an observed cases, transactions. In other the defen lished, non-precedential decision “the of multiple provisions dants violated overwhelming weight authority of hold[s] Act, Exchange nota Act and the may that securities law violators not offset fraud, including of bly allegations while disgorgement liability their with business stocks, trading penny aso broad expenses.” v. Energy SEC United Part bar See S.E.C. v. stock was warranted. ners, Inc., (5th 744, Fed.Appx. 88 746 129, Gillespie, Fed.Appx. 349 130 Cir. 2004). is This statement overbroad at best: 2009) 17(a) (“Gillespie Section of violated “overwhelming majority” of SEC en 10(b) Act of the Securities fraud, forcement involve actions where Aсt.”); Curshen, Exchange v. S.E.C. 372 proven has an scienter and SEC offender’s 2010) (“Mr. (10th Cir. Fed.Appx. 875 the harm done to others. point Even more conduct violated Curshen’s U.S.C. case, edly, Blatt majority on which the (“ 10(b)”), 78j(b) 77q(a) § § 15 U.S.C. relies, in disgorgement result (“§§ 17(a)(1)-(3)”), 77q(b) U.S.C. on by based revenue achieved a se (“§ 17(b)”), and 17 C.F.R. 240.10b-5 violator, only on prof curities “the (“Rule 10b-5”).”); Simmons, v. S.E.C. through its that he violation had realized 2007) (“Sicili- Fed.Appx. Blatt; Act...” 583 F.2d at [SEC] committed fraud and ano had securities (Compare noting Id. at the sale registration provisions of violated the $375,000,yielding of Pullman’s stock for an laws”). In the securities Offill $315,000; only the approximate profit of ban, tailored a (cid:127) required be latter amount dis limiting it to some years seven defen if appropriate at gorged.) Disgorgement, public without dants “over- protect all, for reduction in should be remanded ....” these S.E.C. v. punishing defendants line with Blatt. 3:07-CV-1643-D, No. Offill, WL aside, appears As an 5, 2012). (N.D. Apr. *5 at Tex. on adopted relying have the un- remedies imposed permanent penny case, on of which it theory derwriter only lawyer ban the former rule, than the did not Rule rather experience “knowledge as a whose actually it lia- transactions found him regulator especially make bility. prose- and TJM been Had Kahlon investing dangerous public.” Id. at cuted and held liablе underwriters findings balancing *6. No nuanced oc range sweeping punishment have would curred here. all, Underwriters, made more sense. after responsible distributing Because Kahlon and violated one fraud, guilty large. into the dis- were not found Because provision, market immediately based on a transactions trict court decision ceased violation, SEC, I being strict consider singled out technical after penalties aggregate agreed engage further abuse have rule, based discretion. transactions tailored I it Finally, troubling find that Kahlon America, UNITED STATES present never
and TJM had a chance Plaintiff-Appеllee, orally case before the district court. leading A pretrial order set the timetable on, remedies, to the trial fol- and was Larry ADAMS, Ernest Defendant-
lowed until about before trial. Then week *12 Appellant. parties for both informed the court counsel only argu- planning were to offer No. 16-2786 remedy phase, ments at the but no addi- only Appeals, tional evidence. United States Court trial, Sixth Circuit. Kah- cancelled but also denied request specific permit argument, lon’s October Decided Filed: accepted every punitive bit of SEC’s injunction civil penalty, remedies—a violations,
against disgorge- future SEC gross gained
ment of plus inter-
est, and the lifetime trade
ban. panel on this majority’s insistence punishments, including
plethora dis-
gorgement plus revenues interest case, inappositely,
treats this ifas Kahlon TJM had stolen from widows and re- Equally inapt, light
tirees. lim- nostrum “there are few clear
its on the court’s If discretion.” propor-
federal courts decline to exercise regulatory
tionality penalizing technical
violations, hope one can that a then power agency
federal such enormous will learn to fit the SEC better
punishments respectfully the crime. I
dissent.