Last year, a district court sided with the SEC in a dispute with Imran Husain, who allegedly ran a scheme to profit off the sale of shell companies after public offerings. Husain was ordered to pay a $1.75 million penalty, which he claims exceeded his personal gains from the scheme. This led to a dispute over the SEC’s authority to hold a single defendant liable for all ill-gotten proceeds from an illegal entity.
Husain argued that a large amount of the enterprise’s earnings went to other parties, and he should not have to pay a penalty beyond the amount he individually profited. But lawyers for the SEC argued that this is just an attempt to dodge fines. Litigation & enforcement partner Jeremiah Williams commented in Bloomberg Law that if the court were to agree with Husain’s interpretation of the cap on securities law violation penalties, “it could make quite a difference. In many cases, you can show that the money went elsewhere.”
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