When defendants argue in federal court against the SEC’s calculation of a disgorgement figure, they hear a lot of this:
- “A district court has broad discretion to order disgorgement of profits obtained through violation of federal securities laws and, if ordered, in calculating the disgorgement amount. SEC v. First Jersey Sec., Inc., 101 F.3d 1450, 1474-75 (2d Cir. 1996).
- “[B]ecause of the difficulty of determining with certainty the extent to which a defendant’s gains resulted from his frauds . . . the court need not determine the amount of such gains with exactitude.” SEC v. Razmilovic, 738 F.3d 14, 31 (2d Cir. 2013).
- “The amount of disgorgement ordered need only be a reasonable approximation of profits causally connected to the violation. . . . [A]ny risk of uncertainty in calculating disgorgement should fall upon the wrongdoer whose illegal conduct created that uncertainty.” SEC v. Contorinis, 743 F.3d 296, 305 (2d Cir. 2014).
No fun for the defendants, right? With the playing field tilted that way, it almost seems like the SEC should never lose on the disgorgement calculation analysis. Put another way, if the SEC throws up almost anything rational, it should be able to convince the court to accept its calculation and impose that figure on a litigating defendant.
But not always. Just last week in SEC v. McGinn, Smith &...
