In a recent decision which could have significant implications for settlements with the United States Securities and Exchange Commission (SEC), the United States Court of Appeals for the First Circuit affirmed a decision by the United States District Court for the District of Massachusetts that “the right to judicial review of [an] SEC order” may be waived. Jalbert v. SEC, No. 18-2043 at 2 (1st Cir. Dec. 20, 2019).
Often when individuals, funds, corporations or other entities are investigated by the SEC, they will enter into settlements to avoid lengthy litigation and to limit the amount they pay in penalties. These settlements sometimes include disgorgements, which are usually intended to repay the victims of a fraud the amount they have lost, and civil penalties. Under the Supreme Court’s recent ruling Kokesh v. SEC, disgorgement is a penalty where it is applied in a punitive manner or to deter. Kokesh v. SEC, 137 S.Ct. 1635 (2017). It is this last point under which Craig Jalbert sought to challenge a settlement with the SEC.
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