Daniel Walfish and Rachel Penski Fissell Score Rare Appellate Reversal in SEC Enforcement Case
Katsky Korins partners Daniel Walfish and Rachel Penski Fissell have obtained a significant precedential ruling from the Ninth Circuit in a case raising questions about how to compute and assess a civil money penalty in SEC enforcement actions brought under the 1933 and 1934 Acts. Walfish and Fissell (at their prior firm, Walfish & Fissell PLLC) represented appellant Imran Husain, who was ordered by a district court to pay a $1,757,000 penalty for creating and overseeing the sale of “shell companies” without adequate disclosure of his role. The case involved an issue of first impression: the meaning of “gross amount of pecuniary gain to [the] defendant” under the applicable statutory caps. While the district court equated Husain’s gain to the scheme’s proceeds, the Ninth Circuit reversed, agreeing with Husain that the statute requires an inquiry into a defendant’s individual gain. In a 2-1 decision handed down on June 13, the Ninth Circuit ruled that there was insufficient evidence, at the summary judgment stage, that the scheme proceeds went to the defendant, as opposed to his co-defendant and third parties. The Ninth Circuit remanded the case to the district court for further proceedings.
The decision is here.
A video of Walfish presenting oral argument in the case is here.