Securities and Exchange Commission v. First City Financial Corp., Ltd. case brief

Securities and Exchange Commission v. First City Financial Corp., Ltd. case brief summary
890 F.2d 1215 (1989)

CASE SYNOPSIS

Defendants appealed a judgment from the United States District Court for the District of Columbia, which held that they violated § 13(d) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78m(d), enjoined them from further violations of § 13(d), and ordered them to disgorge all profits derived from the violation.

CASE FACTS
The Security Exchange Commission (SEC) claimed that defendants deliberately evaded § 13(d) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78m(d), in their attempted hostile takeover of a company by filing the required disclosure statement after the 10 day period. The district court concluded that defendants had violated the statute, enjoined further action, and ordered the disgorgement of profits. Defendants appealed.

DISCUSSION

• The court affirmed because the district court's account of the evidence was plausible in light of the record viewed in its entirety that was not influenced by a judge's personal bias. 
• All the evidence was properly admitted since defendants had ample opportunity to challenge the statements made during the deposition. 
• Although the district court's reasoning for the injunction was inappropriate, independent grounds existed that indicated future harm was likely to occur. 
• Furthermore, as done with insider trading, a disgorgement of all the profits was reasonable due to the complications of determining the amount of illegal profits.

CONCLUSION
The judgment was affirmed because the district court's findings were not clearly erroneous and not the product of judicial bias. The court found the injunction and disgorgement orders were lawful and appropriate remedies for defendants' security law violations because the amount of illegal profits could not be determined and future harm was likely to occur.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials