Brief Fact Summary. The district court order First City Financial (Defendant) to surrender earnings gained from its violation of Â§ 13(d) of the Securities Exchange Act.
Synopsis of Rule of Law. As a resolution for a Â§ 13(d) of the Securities Exchange Act violation, a court may order surrender of earnings.
The burden then shifts to the defendants to demonstrate that the disgorgement figure was not a reasonable approximation.View Full Point of Law
Issue. Could a district court order surrender of earnings as a resolution for a violation of Â§ 13(d) of the Securities Exchange Act?
Held. (Silberman, J.) Yes.A district court could order surrender of earnings as a resolution for violating S 13(d) of the Securities Exchange Act. Although the section fails to explicitly offer a resolution for a violation of this type, it is not necessary. Surrender is an equitable resolutioncalculated to remove all illegally gotten goods from an offender and to discourageimpendingtransgression. Under a district court’s jurisdiction, it may employ all obtainable equitable powers. The district court’s jurisdiction over this dispute is the foundation of its ability to order surrender. An equivalent to this is a district court’s abilities in cases based on 10b-5 violations. Surrender is arecognized resolution though it is not statutorily authorized, which is the case here. [The court went on to discuss First City’s task to the degree of gains, with the court holding that issues of proof prohibited a trial court from attaining a inevitably accurate degree of unlawful gains, however, such accuracy was not needed.] Affirmed.
Discussion. Â§ 13(d) was added to the Securities and Exchange Act by the 1968 Williams Act, the latter’s objective was mainly to control tender offers while the former’s is to stop a prospective acquirer from covertly amassing a bulk of the target’s stock.