[00:00:02] Speaker 03:
Good morning, everyone, and welcome to the Ninth Circuit.

[00:00:05] Speaker 03:
We have two matters on calendar today for argument.

[00:00:09] Speaker 03:
As I always say when I start calendar, you have your time allotted, but there are no bonus points or extra credit for using all of your time.

[00:00:16] Speaker 03:
So if you have made your points and you're not getting any questions from us, it is OK to sit down.

[00:00:25] Speaker 03:
And with that, we'll call it the first case, SEC versus the script hedge.

[00:00:30] Speaker 03:
OK, come on up.

[00:00:31] Speaker 03:
I actually got that right.

[00:00:33] Speaker 03:
Oh, good.

[00:00:34] Speaker 03:
Okay.

[00:00:37] Speaker 04:
Good morning and may it please the court.

[00:00:39] Speaker 04:
My name is Tyler Creekmore and I represent the appellant on corrupt strip.

[00:00:42] Speaker 04:
Uh, and before I begin, I'd just like to note if I may reserve three minutes of my time.

[00:00:48] Speaker 04:
You may.

[00:00:50] Speaker 04:
Your honors, this case presents you with the opportunity to weigh in on a question that has quite frankly flow mixed

[00:00:57] Speaker 04:
and divided several other circuits.

[00:00:59] Speaker 04:
And that question is whether the SEC is required to make an affirmative showing of investors' pecuniary harm before a disgorgement order can be awarded in light of the Supreme Court's holding in lieu and the addition of subsection D7.

[00:01:14] Speaker 04:
The appellant suggests that the answer is yes, obviously yes.

[00:01:18] Speaker 04:
Given the second circuit's rationale in Goevel, we suggest that the absolute answer to that question is they must show pecuniary harm before disgorgement order can be entered.

[00:01:32] Speaker 04:
For its part, the government suggests that the Fifth Circuit and the First Circuit are the proper approach.

[00:01:38] Speaker 04:
And in so doing, I would just note that what really at the bottom of that argument the government is suggesting is that discouragement should be a default remedy.

[00:01:48] Speaker 04:
Simply because they have filed an enforcement action, the discouragement should be ordered.

[00:01:54] Speaker 04:
We urge you not to take that path.

[00:01:56] Speaker 00:
So in lieu, the court, of course, spoke about returning disgorged funds to victims.

[00:02:03] Speaker 00:
But where did the court tell us that victims have to have been people who suffered a pecuniary loss?

[00:02:10] Speaker 00:
Because I don't see that in the decision.

[00:02:12] Speaker 04:
Yes, I believe, and I can find it for you, and I can provide that site on rebuttal, but there is a site where they discuss what pecuniary harm is, and just the fact that the government has brought a case forward is not good enough to show that it's for investor benefit.

[00:02:31] Speaker 02:
I mean, I agree generally, but I mean, they also say

[00:02:36] Speaker 02:
the court at the very beginning the court today holds that a disgorgement award that does not exceed a wrongdoers net profits and is awarded for the victim is equitable relief permissible and they certainly didn't add the caveat or the condition that you're suggesting we had.

[00:02:54] Speaker 04:
Yes your honor they did not but however there can be no benefit for the investors if the investors were not harmed.

[00:03:00] Speaker 04:
And the harm that they discuss, that we believe that they discuss, and what the Goval Court discusses, is that it's the financial harm that it really comes down to.

[00:03:09] Speaker 04:
Appellant does not dispute that there was some harm on investors in this case, but it was a more generalized investment harm that these investors purchased these offerings without full knowledge of Mr. Sirpich's positions.

[00:03:22] Speaker 04:
That's the fraud that we're discussing in this case today.

[00:03:25] Speaker 04:
The Lew courts, though, they focused on the puny area and the vester harm, and they decided that, yes, the SEC, they were called upon, first of all, to answer a question whether or not discouragement power even existed for the SEC.

[00:03:39] Speaker 04:
They answered that question affirmatively when they reviewed the language in subsection D5, and the statute is 15 U.S.C., 78 U.,

[00:03:48] Speaker 04:
Without having to say that each time.

[00:03:50] Speaker 04:
I'm just going to simply refer to the subsection very good Subsection D5 Requires the SEC can seek discouragement or can seek any relief and any equitable relief I should say that may be appropriate and necessary for the benefit of the investors That's the language of the lew court The court also says decisions from this court confirm that a remedy tethered to a wrongdoers net unlawful profits whatever the name

[00:04:18] Speaker 02:
has been a mainstay of equity courts.

[00:04:22] Speaker 02:
And what the government is seeking, I understand your argument, but the way the government says we should move forward is certainly consistent with the sentence I just read, is it not?

[00:04:34] Speaker 02:
It's not tethered to a wrongdoers net on lawful profits.

[00:04:39] Speaker 04:
Respectfully, I think there needs to be more.

[00:04:43] Speaker 04:
We can't understand what a wrongful profit is without understanding what the investors lost.

[00:04:48] Speaker 04:
And that's where the punyary harm comes into play.

[00:04:51] Speaker 04:
So they're tethered together almost.

[00:04:54] Speaker 04:
The discouragement can't go beyond net profits after deducting legitimate expenses, and it must be for the benefit of the investors.

[00:05:01] Speaker 04:
They're tethered together, and that's how we understand what the net profits are.

[00:05:07] Speaker 04:
What the government and the SEC are suggesting is that we can uncouple those two and still have a valid discouragement order, which we suggest is not proper.

[00:05:18] Speaker 04:
If you simply just read the Lew decision, it may come out one way or the other.

[00:05:23] Speaker 04:
But there is, and this is where the wrinkle comes in, six months after Lew, there was the NDAA passed that added subsection D7, which explicitly gave the SEC discouragement powers.

[00:05:35] Speaker 04:
Now, some may argue, as the Fifth and the First Circuit do, that that has removed the Lew decision and that the government has the power to simply seek discouragement without the

[00:05:48] Speaker 04:
the traditional bounds of equity that the Lue Court discussed.

[00:05:51] Speaker 04:
We think that's a misreading and we urge you to follow the Second Circuit's rationale behind this.

[00:05:57] Speaker 04:
And the reason is simply because this language in D7 was drafted before the court's decision in Lue.

[00:06:05] Speaker 04:
So there can be no overturning of the Lue decision when this language was drafted before the decision even was given.

[00:06:12] Speaker 03:
So, Council, I just want to give you a hypothetical so I can better understand

[00:06:16] Speaker 03:
Your position on this so let's take take your case your client your client admits to committing securities fraud and There were proceeds from that securities fraud so the hypothetical would be let's say the securities fraud in this case was only a thousand dollars But from that thousand dollars he gets a thousand dollars he goes across the street to a liquor store and buys ten lottery tickets and one of them hits powerball so from the thousand dollars all of a sudden now he has a billion and

[00:06:46] Speaker 03:
In terms of your theory for the SEC, could they get just back the thousand dollars and he would get to keep the billion, or would he have to give back the billion?

[00:06:54] Speaker 04:
Well, that's certainly not the case that we're discussing.

[00:06:56] Speaker 04:
I think what happened here is that Mr. Sripich was ordered to get back what we calculated to be his net profits.

[00:07:03] Speaker 04:
And that included the Powerball portion of that, if you will, Your Honor.

[00:07:08] Speaker 04:
However, what we're saying is that that is not a correct reading of it.

[00:07:11] Speaker 04:
We think that

[00:07:13] Speaker 04:
before you can even discuss the Powerball portions, you have to discuss what was the ill-gotten part of that.

[00:07:21] Speaker 04:
And to understand that, we have to know how investors were harmed.

[00:07:25] Speaker 04:
That's the real issue.

[00:07:26] Speaker 03:
So if we can show that an investor spent $1,000, let's say on a stock that was completely bogus.

[00:07:32] Speaker 03:
I'm going to make this hypothetical a little clearer.

[00:07:34] Speaker 03:
So someone tells me this is Qualcomm stock.

[00:07:39] Speaker 03:
It's really not.

[00:07:40] Speaker 03:
So I paid $1,000 for 50 shares of Qualcomm stock.

[00:07:43] Speaker 03:
It's not Qualcomm stock.

[00:07:45] Speaker 03:
Then from that $1,000, they buy the Powerball ticket and get a billion.

[00:07:49] Speaker 03:
So I'm the investor.

[00:07:50] Speaker 03:
I gave them $1,000.

[00:07:51] Speaker 03:
That was worthless.

[00:07:52] Speaker 03:
So I should at least get my $1,000 back, correct?

[00:07:54] Speaker 04:
We don't dispute that, Your Honor.

[00:07:55] Speaker 04:
But what your hypothetical presupposes is that you have identified an investor who has been harmed and an amount in which they've been harmed.

[00:08:03] Speaker 04:
That's not this case here the SEC the government have had six years now to identify investors and identify how much they've been harmed and to this day We don't know one name of those investors or how much but in my hypothetical assume.

[00:08:17] Speaker 03:
We do know the investor Would under your theory of the case could your client keep the billion dollars from the Powerball?

[00:08:25] Speaker 03:
Yes, correct

[00:08:27] Speaker 04:
Perhaps, Your Honor, it depends.

[00:08:28] Speaker 03:
Well, I mean, it can't be perhaps.

[00:08:30] Speaker 03:
I mean, it's either they can keep it or they can't.

[00:08:32] Speaker 04:
I think what we're discussing here is the ill-gotten gains portion of it.

[00:08:36] Speaker 04:
That's the other bounds that Lou discussed this year.

[00:08:39] Speaker 04:
What we're really focused on is the pecuniary harm.

[00:08:41] Speaker 04:
Can the government get a discouragement order without showing pecuniary harm?

[00:08:47] Speaker 04:
And in your hypothetical, you've already shown the $1,000 of pecuniary harm.

[00:08:51] Speaker 04:
So theoretically, then you could go to the billions in the power vault.

[00:08:56] Speaker 03:
that under your reading of the law, your client would have to give the billion dollars back.

[00:09:02] Speaker 04:
I think the coupling of the two bounds that Lou discusses is the most important part.

[00:09:09] Speaker 04:
Once that is done and once the government is held to their burden, then we can calculate what should or should not be discouraged.

[00:09:16] Speaker 04:
We don't necessarily have an issue with that in this case.

[00:09:19] Speaker 04:
What we're talking about in this case and the issue for us is that the government has not shown any investor pecuniary harm.

[00:09:26] Speaker 04:
And so because of that, we don't think that there should even have been a discouragement order.

[00:09:32] Speaker 02:
Asked this to your friend too, but how much is the government holding right now?

[00:09:38] Speaker 04:
The disgorgement order I know what it says, but how much money is there right now that they're holding I do not know all right, and I'll ask your friend so Your honors getting back to the NDA language the subsection D7

[00:09:56] Speaker 04:
explicitly gives the SEC the discouragement power, and it also does not include the benefit of the investors.

[00:10:04] Speaker 04:
And this is where the question has sort of flummoxed other circuits.

[00:10:09] Speaker 04:
Does that mean that disgorgement is now not an equitable power because D7 is present?

[00:10:14] Speaker 04:
That's the position of the Fifth and the First Circuit and what the government is arguing today.

[00:10:18] Speaker 04:
We argue opposite because, one, there is no indication that the NDA in language D7 was in response to Liu.

[00:10:27] Speaker 04:
It was drafted, when you look at the legislative history, before the Liu decision.

[00:10:31] Speaker 04:
It was drafted in response to another Supreme Court decision from 2018.

[00:10:35] Speaker 04:
the Kokesh case, which called into question whether the SEC even had discouragement powers.

[00:10:40] Speaker 04:
It was a reaction to that case, not the Lew case.

[00:10:44] Speaker 04:
And if you just look at the explicit language of D7, there's no indication that Congress intended to overturn the Lew decision as well.

[00:10:51] Speaker 04:
And because of that, it's essentially become a belt and suspenders provision.

[00:10:57] Speaker 04:
It did not remove disgorgement from the bounds of equity.

[00:11:00] Speaker 04:
It's still there, and it is still subject to those playing fields that Lew put in place.

[00:11:06] Speaker 04:
And even the SEC in their brief admits that disgorgement is still an equitable power.

[00:11:11] Speaker 04:
And because of that, the

[00:11:12] Speaker 04:
the bounds, the traditional bounds that Lou discussed are in play here.

[00:11:17] Speaker 04:
And when you apply all of that to the facts of this case, we believe that the district court erred in ordering Mr. Sirpec any disgorgement here.

[00:11:27] Speaker 04:
There was no evidence of who was harmed, how much they were harmed, when they purchased any of these securities, and when they sold any of these securities.

[00:11:36] Speaker 04:
Without that, we just cannot tell whether or not there is investor harm, and it's that decoupling

[00:11:42] Speaker 04:
of investor harm from net profits, that is the problem here.

[00:11:47] Speaker 04:
So with that, I'll reserve the remainder of my time.

[00:11:50] Speaker 04:
Sure.

[00:11:51] Speaker 04:
Thank you.

[00:12:06] Speaker 01:
Good morning, Your Honor.

[00:12:07] Speaker 01:
It may please the Court.

[00:12:08] Speaker 01:
I'm Carrie Dingell on behalf of the Securities and Exchange Commission.

[00:12:12] Speaker 01:
The district court acted within its discretion in ordering disgorgement here based on any fair reading of the record and case law.

[00:12:20] Speaker 01:
This was a fraud case.

[00:12:21] Speaker 01:
Mr. Sripich made money from fraud.

[00:12:24] Speaker 01:
Investors were harmed, and the commission intends to disperse any disgorgement collected to those victims.

[00:12:31] Speaker 01:
Discorgement of Mr. Sripich's ill-gotten gains is therefore a proper remedy, and this court should affirm the judgment.

[00:12:36] Speaker 01:
And I'd like to start by answering Judge Bennett's question.

[00:12:41] Speaker 01:
Simple question.

[00:12:42] Speaker 01:
Currently, the government holds $1.2 million.

[00:12:44] Speaker 01:
About $800,000 of that is from frozen assets from Mr. Sherpich.

[00:12:50] Speaker 01:
The remainder is from co-defendants in the case.

[00:12:58] Speaker 01:
Now, I think this court can decide this case without reaching any of the admittedly complex questions about disgorgement raised in the briefing that arise from recent case law and changes to the statutory authority for disgorgement.

[00:13:11] Speaker 01:
Mr. Shibich admitted that he engaged in a fraudulent pump and dump scheme to manipulate the prices of 20 different issuer stock and then sell them into the market at inflated prices to unsuspecting investors.

[00:13:24] Speaker 01:
He admits that he and his co-conspirators made $6 million from their scheme.

[00:13:29] Speaker 01:
And he admits that his malfeasance caused harm and that investors were duped and tricked by his actions.

[00:13:34] Speaker 01:
And in the parallel criminal proceeding, he admitted that his scheme caused investors to suffer financial troubles

[00:13:41] Speaker 01:
because they invested their money in empty companies with no future, so Sherpich and his partners could buy nice cars and houses.

[00:13:49] Speaker 01:
So his only argument on appeal is that he should be permitted to keep more than $2 million of ill-gotten gains, simply because the district court did not specify that the harm that it found was financial.

[00:14:00] Speaker 01:
Now, such a finding's not required under this court's case law.

[00:14:03] Speaker 01:
I think, Judge Thomas, you are exactly right that even under Lou setting aside the NDAA amendments, pecuniary loss or harm

[00:14:11] Speaker 01:
was not a requirement under Liu.

[00:14:14] Speaker 01:
Liu makes it very clear that disgorgement remains a profits-based remedy intended to deprive the wrongdoer of ill-gotten gains, which is exactly what we're seeking here.

[00:14:24] Speaker 01:
So that finding's not required under this court's case law, but even if it were, even if the court were to apply Goebbels holding that pecuniary harm is required,

[00:14:34] Speaker 01:
The idea that there's not harm here in a securities fraud case involving multiple pump and dumps defies logic.

[00:14:40] Speaker 02:
Council, if we were to hypothetically decide that pecuniary harm was required, does that mean that the government would need to show that it was more than one cent but wouldn't need to offer any evidence as to how much it was?

[00:15:02] Speaker 01:
Yes, Your Honor, I think that's the fairest reading of the Govel case.

[00:15:07] Speaker 01:
Even Govel says that the purpose of disgorgement is to deprive the wrongdoer of ill-gotten gains and not to compensate victims.

[00:15:13] Speaker 01:
So even under Govel, the canary harm is sort of a threshold requirement that Govel has, the Second Circuit has decided you must show, but it doesn't say that you have to figure out what the amount of that loss was or that disgorgement is capped at that amount.

[00:15:29] Speaker 02:
Would you agree that the government did not offer

[00:15:32] Speaker 02:
an argument or evidence of quantifying particular amounts that any particular investor suffered?

[00:15:42] Speaker 01:
That's true, Your Honor.

[00:15:44] Speaker 01:
And just a point on that, because the defendant has referenced the Dura matter, which involves damages under private securities law actions.

[00:15:56] Speaker 01:
And so I just want to make a point about how damages are different from disgorgement.

[00:16:00] Speaker 01:
This is a very old distinction.

[00:16:02] Speaker 01:
In the case law, the Supreme Court in Lew cited an 1888 patent case called Tillman v. Proctor for the proposition that disgorgement has to take into account what would be fair compensation to the victim.

[00:16:21] Speaker 01:
Now, Mr. Sherpich claims that that fair compensation language, reading it out of context, means that disgorgement is then somehow tied to a loss.

[00:16:30] Speaker 01:
But that Tillman case makes it very clear this distinction between damages on one hand and disgorgement on the other.

[00:16:39] Speaker 01:
It says, in an action at law, the plaintiff can recover a verdict only for the actual damage which she has sustained, but upon a bill in equity by the owner against infringers of a patent, the plaintiff is entitled to recover the amount of gains and profits that defendants have made by use of his invention.

[00:16:55] Speaker 01:
Now, on the fair compensation point, the court concludes that

[00:16:59] Speaker 01:
It's focused on what's fair.

[00:17:01] Speaker 01:
It's not focused on compensating the victim for a loss.

[00:17:04] Speaker 01:
And it concludes that what's fair is that the infringer is liable for actual not possible gains.

[00:17:10] Speaker 01:
So what he actually made from using the patent, not what he could have made.

[00:17:14] Speaker 03:
So just to kind of go back to the hypothetical I asked before, I'll do it another way.

[00:17:18] Speaker 03:
So in like 1982, Bill Gates convinced IBM to allow them to keep the copyright for DOS

[00:17:27] Speaker 03:
And they would license DOS to IBM and then therefore now we have Microsoft and IBM is not what it once was.

[00:17:34] Speaker 03:
Let's say when Bill Gates did that, he completely lied to IBM and tricked them into this deal.

[00:17:40] Speaker 03:
Just under your theories, does that mean so they got, basically they defrauded IBM,

[00:17:46] Speaker 03:
They got the rights to DOS and now they're this trillion-dollar empire.

[00:17:50] Speaker 03:
Under your theory, would IBM be entitled to the trillion-dollar empire that was built because it was based on this initial fraud?

[00:17:57] Speaker 01:
Not necessarily, Your Honor, if there were sort of intervening causes of the harm.

[00:18:01] Speaker 01:
So one of the things that Lou says is that there has to be a causal connection between the wrongdoing, the violation, and the ill-gotten gain.

[00:18:10] Speaker 01:
That's where the net profits idea comes in, that you have to limit it to what the

[00:18:16] Speaker 01:
Defendant actually made from the violation and so to the extent that the defendant gets money But then uses it in other ways to make more money or talking about a profits-on-profits scenario, right?

[00:18:27] Speaker 01:
That's not the issue in this case I mean with the money that mr. Sherpich made was just money that he took from He stole really from investors, but under judge on says hypothetical

[00:18:38] Speaker 02:
If we were looking at it, you'd suggest we would need to look at some variant of proximate cause and attenuation.

[00:18:47] Speaker 01:
Yes, Your Honor, but that's not an issue in this case.

[00:18:49] Speaker 03:
I'm just trying to understand what the limits are, because I understand what you're saying here, but I can, you know, the Supreme Court has, look, I was on the original Ninth Circuit panel in Lew, right?

[00:18:58] Speaker 03:
So, I mean, I've been down this road before.

[00:19:01] Speaker 03:
So, the Supreme Court does seem to have some concerns about clawing back large amounts of money when the fraud is relatively smaller.

[00:19:09] Speaker 03:
So, what, maybe this case is not the case for that.

[00:19:13] Speaker 03:
Maybe that's your response, but just, if you could help me get a limiting principle

[00:19:17] Speaker 01:
Yes, I think this case is not the case for it because it's such a clear fraud and the amount that we're seeking is undisputedly the amount that he made from the fraud.

[00:19:25] Speaker 01:
In fact, the district court used his own gain figure from his tax returns and did not use the amount that the commission was seeking.

[00:19:34] Speaker 01:
So there's no dispute about that.

[00:19:37] Speaker 01:
Lew talks about these various principles.

[00:19:38] Speaker 01:
It talks about this principle and the Tillman 1888 patent decision, which I would

[00:19:44] Speaker 01:
encourage the court to read, because I think it's illuminating, talks about this as well.

[00:19:48] Speaker 01:
And then what Lew did was, if you'll recall, Your Honor, listed three limitations that needed to be applied to ensure that the disgorgement remedy satisfied equity.

[00:20:01] Speaker 01:
And those three limitations were the net profits limitation.

[00:20:03] Speaker 01:
So you have to take legitimate business expenses and make sure you're only seeking profits that are connected to the harm.

[00:20:10] Speaker 01:
That's not an issue here.

[00:20:11] Speaker 01:
The second was that you're only seeking disgorgement as against that individual for the profits that he made, which limits joint and self-reliability, which is not an issue here.

[00:20:23] Speaker 01:
The commission apportioned out the money that came into the fraud and looked at to which defendant it went.

[00:20:31] Speaker 01:
So that's not an issue.

[00:20:32] Speaker 01:
And the third was the court said, generally, equity requires returning the funds collected to known victims.

[00:20:42] Speaker 01:
That was a comment on how the money is distributed once it comes in.

[00:20:45] Speaker 01:
So disgorgement remains measured by ill-gotten gains.

[00:20:49] Speaker 01:
But then, generally, Lew says the commission needs to distribute.

[00:20:54] Speaker 01:
And what it was concerned about, I think, was what it saw as a commission practice of sometimes sending the money to Treasury when there were known victims to whom we could have distributed.

[00:21:06] Speaker 01:
That's not an issue in this case because the commission represented to the district court that it will distribute these funds.

[00:21:12] Speaker 01:
And there's a declaration in the record at ER 76, Peter Mellie from FINRA describes the blue sheets that we can get from brokerage firms that sort of list out who was investing in these stocks.

[00:21:28] Speaker 01:
The commission can use those blue sheets to create a distribution plan, which is the next step.

[00:21:34] Speaker 01:
And so really all of the Lew limitations are met here.

[00:21:39] Speaker 01:
And Lew told us, Lew told courts what they needed, what limitations needed to apply.

[00:21:44] Speaker 01:
This pecuniary loss limitation confuses damages with disgorgement and applies a brand new limitation that's not in Lew.

[00:21:55] Speaker 01:
I think Your Honor will recall in the Lew remand, the panel looked at these three limitations, applied them to the Lew case,

[00:22:01] Speaker 01:
Without ever saying that pecuniary harm was required If there are no further questions, we would ask the district court to affirm.

[00:22:13] Speaker 03:
Thank you counsel.

[00:22:14] Speaker 04:
Thank you Briefly your honors I think

[00:22:22] Speaker 04:
What we've discovered here today is essentially that the government agrees that disgorgement is still an equitable equitable principle bounded by the Lou decision.

[00:22:30] Speaker 04:
And so what this case really comes down to is what

[00:22:35] Speaker 04:
limitations on that power are there.

[00:22:38] Speaker 04:
And what it comes down to is this, is that there can be no calculation, proper calculation of net profits, meaning ill-gotten gains, without understanding how those gains were ill-gotten.

[00:22:51] Speaker 04:
Who were they taken from?

[00:22:53] Speaker 04:
Without understanding who they were taken from, how much they lost, there can be no disgorgement order.

[00:22:59] Speaker 04:
That's what we talk about when we say this coupling between net profits and ill-gotten, excuse me, for the benefit of the investors.

[00:23:06] Speaker 04:
That's the key here.

[00:23:08] Speaker 04:
The government has failed to couple these two in this case.

[00:23:11] Speaker 04:
There has been zero evidence of who's harmed, how much they were harmed by, and where this money will go after it's collected from Mr. Sirpech.

[00:23:20] Speaker 04:
The government suggests that they're going to do their best to find these investors and distribute this money, but it's been six years and nobody has been identified.

[00:23:30] Speaker 04:
Essentially, what they're asking for is a very low bar in this case.

[00:23:34] Speaker 04:
The appellant is not hiding.

[00:23:35] Speaker 04:
He pled guilty in the criminal case.

[00:23:38] Speaker 04:
He entered into a consent agreement in this case.

[00:23:40] Speaker 04:
He is not making it difficult on them, but all we're asking for is to hold the government to its burden before a disgorgement order is entered.

[00:23:48] Speaker 04:
And when you look at the facts of this case, there is no evidence of investor harm beyond the fact that they invested without proper knowledge of Mr. Srebich's positions.

[00:24:00] Speaker 04:
There's no information whatsoever about their pecuniary harm.

[00:24:04] Speaker 04:
And because of that, the disgorgement order falls apart, and we believe it was an abuse of discretion.

[00:24:09] Speaker 04:
So if there's no other questions, I'll sit.

[00:24:12] Speaker 03:
Thank you, counsel.

[00:24:14] Speaker 03:
Thank you both for your briefing and argument in this very interesting case.

[00:24:18] Speaker 03:
This matter is submitted, and we'll