However, it is this court's opinion that only the non-bankruptcy court that presided over the underlying claim has the jurisdiction to make the liability determination for a 523(a)(19) claim. See infra p. 18; see also Nusse v. Jafari (In re Jafari), 401 B.R. 494, 497-98 (Bankr. D. Colo. 2009) (stating that both courts have concurrent jurisdiction to determine the dischargeability of a § 523(a)(19) claim, but only the non-bankruptcy court has the jurisdiction to make the liability determination). Section 523(a)(19) was adopted on July 30, 2002, as part of Title VII of the Sarbanes-Oxley Act of 2002.

However, it is this court's opinion that only the non-bankruptcy court that presided over the underlying claim has the jurisdiction to make the liability determination for a 523(a)(19) claim. See infra p. 18; see also Nusse v. Jafari (In re Jafari), 401 B.R. 494, 497–98 (Bankr.D.Colo.2009) (stating that both courts have concurrent jurisdiction to determine the dischargeability of a § 523(a)(19) claim, but only the non-bankruptcy court has the jurisdiction to make the liability determination). Section 523(a)(19) was adopted on July 30, 2002, as part of Title VII of the Sarbanes–Oxley Act of 2002.

Thus, only pre-existing (that is to say, pre-bankruptcy) determinations of securities fraud violations were given preclusive effect. See Faris v. Jafari (In re Jafari), 401 B.R. 494, 496-97 (Bankr. D. Colo. 2009). The judicial proceeding or order referenced in § 523(a)(19) was thus necessarily a non-bankruptcy proceeding or order.

They acknowledge the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA") "invited debate as to whether § 523(a)(19) now allows a bankruptcy court to render its own determination of liability for securities law violations ... or whether the liability determination must still be made outside of the bankruptcy court." Faris v. Jafari (In re Jafari) , 401 B.R. 494, 496 (Bankr. D. Colo. 2009). Nonetheless, they urge this Court to conclude a determination must be made by a different tribunal.There is a clear split in authority as to "whether a bankruptcy court may itself determine whether a violation of securities laws occurred or whether the bankruptcy must rely [sic] upon another tribunal for such determination."

See Sarbanes–Oxley Act of 2002, Pub.L. No. 107–204, § 803(3), 116 Stat. 745. Essentially, a debtor cannot discharge his or her debt if two conditions are satisfied: first, the debt must stem from a violation of securities laws or a fraud in connection with the purchase or sale of a security, and second, the debt must be memorialized in a judicial or administrative order or settlement agreement. 11 U.S.C. § 523(a)(19); see also In re Jafari, 401 B.R. 494, 496 (Bankr.D.Colo.2009). Here, the two-part test is satisfied. Mr. Welch's debt stems from a violation of securities laws as set forth-and deemed true-in Mr. Tripodi's complaint, and Mr. Welch's debt was memorialized in a default judgment.

Id. The Anderson court looked to Faris v. Jafari (In re Jafari), 401 B.R. 494, 496-97 (Bankr. D. Colo. 2009), for guidance. In Jafari, the Colorado bankruptcy court compared the subsections of § 523(a).

In re Bundy, 468 B.R. 916, 921 (Bankr.E.D.Wash.2012) (“The existence of subsection (B) to § 523(a)(19) leads to the conclusion that the bankruptcy court, once some regulatory or other judicial tribunal has determine[d] a violation of securities laws exists, may determine whether the debt at issue resulted from the violation and is thus not subject to discharge”); In re Anderson, 2012 WL 3133827, at *4 (Bankr.D.Idaho Aug. 1, 2012) (denying motion for summary judgment for damages from securities violation as “[o]ne of the required elements of § 523(a)(19) is that a liability determination be made in a non-bankruptcy forum ‘before, on or after’ the date of the filing of a debtor's petition”); In re Pujdak, 462 B.R. 560, 574 (Bankr.D.S.C.2011) (“The inclusion of § 523(a)(19)(B) strips the bankruptcy court of its ability to determine whether the debtor did in fact violate the securities law”); In re Jafari, 401 B.R. 494, 499–500 (Bankr.D.Colo.2009) (“[A]bsent a settlement agreement or other consensual determination of liability, Subsection B evidences a conscious choice to have the liability determinations occur outside of the bankruptcy forum, whether it occurs pre- or post-bankruptcy”) (emphasis in original); In re Zimmerman, 341 B.R. 77, 80–1 (Bankr.N.D.Ga.2006) (allowing plaintiffs to present liability claims in arbitration proceeding prior to dischargeability determination, stating “Section 523(a)(19) expressly contemplates a postpetition determination of liability by a nonbankruptcy forum for debts resulting from securities law violations....§ 523(a)(19) and § 362(c)(1) express a Congressional determination that creditors asserting a debt of this nature have the right to pursue their claims under nonbankruptcy law in other courts, notwithstanding the bankruptcy filing”). Under either view of jurisdiction, these causes may be determined in the bankruptcy court or in another court of competent jurisdiction.

Pursuant to FED. R. BANKR. P. 7056, Defendant's Motion for Summary Judgment seeks entry of an order dismissing Plaintiff's Second Claim for Relief under § 523(a)(19). In support, Defendant relies on the plain statutory language in § 523(a)(19)(B) and In Nusse v. Jafari (In re Jafari), 401 B.R. 494 (Bankr. D. Colo. 2009) for the proposition that bankruptcy courts lack the authority to determine liability under applicable securities laws in adjudicating a § 523(a)(19) dischargeability claim. Defendant asserts the Plaintiff cannot comply with Subsection (B) without obtaining the requisite judgment, order or settlement agreement from a non-bankruptcy court.

          TABLE OF AUTHORITIES FEDERAL CASES Addison v. U.S. Department of Education (In re Addison), 240 B.R. 47 (C.D. Cal. 1999) 10, 11 Granfinanciera, S.A. v. Nordberg, 495 U.S. 33 (1989) 2, 13 In re Baldwin-United Corp., 57 B.R. 751 (S.D. Ohio 1985) 2, 7 In re Castlerock Properties, 781 F.2d 159 (9th Cir. 1986) 10 In re Cinematronics, Inc., 916 F.2d 1444 (9th Cir. 1990) 3, 13 In re Healthcentral.com, 504 F.3d 775 (9th Cir. 2007) 3, 14 In re Jafari, 401 B.R. 494 (Bankr. D.Colo. 2009) 9 In re James, 2012 WL 4849618 (Bankr. D. Colo. 2012) 9 In re Molina, Number CV 10-0575 SBA, 2010 WL 3516107 (N.D. Cal. Sept. 8, 2010) 9 In re National Consumer Mortg., LLC, Number 09-792, 2009 U.S. Dist. LEXIS 92064 (C.D. Cal. Sept. 14, 2009) 3 In re National Consumer Mortg., LLC, No. 09-792, 2009 U.S. Dist. LEXIS 92064 (C.D. Cal. Sept. 14, 2009) 14 Langenkamp v. Culp, 498 U.S. 42 (1990) 2, 13 Orion Pictures Corp. v. Showtime Networks, 4 F.3d 1095 (2d Cir. 1993) 10 Sec. Farms. v. International Brotherhood Of Teamsters, Chauffeurs, Warehouseman & Helpers, 124 F.3d 999 (9th Cir. 1997) passim Sec. Investor Prot. Corp. v. Bernard L. Madoff Investment Sec. LLC, 454 B.R. 307 (S.D.N.Y. 2011) 9 Stern v. Marshall, 131 S.Ct. 2594 (2011) 12          

The Ninth Circuit has not addressed this issue, and at least two Circuit Courts—the Tenth and Eleventh Circuits—have held that the debt must first be memorialized in a settlement or order/judgment from a nonbankruptcy forum.SeeFaris v. Bahram Amir Jafari (In re Bahram Amir Jafari) , 401 B.R. 494, 496 (Bankr. D. Colo. 2009) ; Tripodi v. Welch , 810 F.3d 761, 766 (10th Cir. 2016) ; Creech v. Viruet (In re Creech) , 782 Fed. Appx. 933, 938 (11th Cir. 2019). These courts rely on the legislative history and purpose of § 523(a)(19).