I must admit I am looking forward to the results of this case:
The Supreme Court agreed Friday to hear the case of two people ordered to repay $26 million they bilked out of Chinese investors through a program that gives U.S. visas in exchange for foreign investment in the United States.
In 2016, the Securities and Exchange Commission accused Charles Liu and Xin Wang of pocketing millions of dollars paid by a group of Chinese investors who were seeking to take advantage of the EB-5 visa program, which offers U.S. visas and a chance at citizenship to people who invest a certain amount in qualifying U.S. business ventures. …
In 2017 a California federal judge found Liu and Wang had violated federal securities law through the scheme and ordered them to pay back the full $26.4 million they brought in through their operation, a remedy known as disgorgement.
Before the two could appeal the order, the Supreme Court ruled in the case Kokesh v. SEC that disgorgement qualifies as a penalty. Liu and Wang cited Kokesh on appeal to the Ninth Circuit, saying that disgorgement is not among the punishments SEC is authorized to seek under federal securities laws, and that the District Court had been wrong to order it.
With the federal appeals court relying on pre-Kokesh, however, it ruled against them, setting the stage for Liu and Wang’s petition for certiorari. [Courthouse News Service]
The key for me is the classification of disgorgement as a punishment, which in standard English doesn’t pass the smoke test – making a victim whole should not be considered a punishment for the malefactor, but an obligation, a step on the path to rejoining society.
However, too often standard English can’t be used when interpreting legalese, so I don’t put my above opinion forward with any great enthusiasm, even if the idea that those convicted in Liu v SEC may retain the money they apparently illegally scammed from the Chinese. I’ll just note that it looks like the Kokesh v SEC decision was a mistake.
A big mistake.
Made not by five or even six justices.
By all nine Justices.
