SEC v. Credit Bancorp, Ltd., No. 99 Civ. 11395 (RWS), 2002 WL 31422602, at *1 (S.D.N.Y Oct. 29, 2002) (citation omitted); see SEC v. Jadidian, No. 08 Civ. 8079 (PGG), 2011 WL 1327245, at *8 (S.D.N.Y. Mar. 31, 2011) (“The purpose of these [civil] penalties is to create meaningful financial disincentives to participating in fraudulent conduct.”)
Courts have recognized that permanent injunctive relief may be imposed if “the defendant's past conduct indicates . . . that there is a reasonable likelihood of further violation in the future.” SEC v. Aly, No. 16 Civ. 3853 (PGG), 2018 WL 4853031, at *2 (S.D.N.Y. Oct. 5, 2018) (omission in original) (quoting SEC v. Jadidian, No. 08 Civ. 8079 (PGG), 2011 WL 1327245, at *5 (S.D.N.Y. Mar. 31, 2011)).
, 4 No. 99 Civ. 11395 (RWS), 2002 WL 31422602, at *1 (S.D.N.Y. Oct. 29, 2002) (citing SEC v. Moran, 944 F.Supp. 286, 296 (S.D.N.Y. 1996)); see also SEC v. Jadidian, No. 08 Civ. 8079 (PGG), 2011 WL 1327245, at *8 (S.D.N.Y. Mar. 31, 2011) (“The purpose of these penalties is to create meaningful financial disincentives to participating in fraudulent conduct. Congress and the courts have recognized that disgorgement alone is frequently not sufficient[.]”).
"Section 20(b) of the Securities Act and Section 21(d) of the Exchange Act provide for the imposition of permanent injunctive relief when 'the defendant's past conduct indicates . . . that there is a reasonable likelihood of further violation in the future.'" SEC v. Jadidian, No. 08 Civ. 8079 (PGG), 2011 WL 1327245, at *5 (S.D.N.Y. Mar. 31, 2011) (quoting SEC v. Commonwealth Chem. Sec., Inc., 574 F.2d 90, 99 (2d Cir. 1978)); see also SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1100 (2d Cir. 1972) ("The critical question for a district court in deciding whether to issue a permanent injunction in view of past violations is whether there is a reasonable likelihood that the wrong will be repeated."). To determine whether a permanent injunction is appropriate, a court should consider:
Civil penalties are punitive in nature: Their purpose is "to create meaningful financial disincentives to participating in fraudulent conduct." SEC v. Jadidian, No. 08 Civ. 8079 (PGG); 2011 WL 1327245, at *8 (S.D.N.Y. Mar. 31, 2011). As the House Report on the Remedies Act notes, civil penalties are "necessary for the deterrence of securities law violations that otherwise may provide great financial returns to the violator."
"Given that the SEC has not offered proof of other violations committed by [Bent II], this Court must conclude that the [this] episode . . . was an 'isolated occurrence.'" SEC v. Jadidian, No. 08 Civ. 8079 (PGG), 2011 WL 1327245, at *6 (S.D.N.Y. Mar. 31, 2011). Finally, Bent II has left the investment field, and it appears unlikely that he will be in a position to violate securities laws in the future.
In determining whether to impose a bar, courts consider "(1) the egregiousness of the underlying securities law violation; (2) the defendant's repeat offender status; (3) the defendant's role or position when he engaged in the conduct; (4) the defendant's degree of scienter; (5) the defendant's economic stake in the violation; and (6) the likelihood that misconduct will recur." SEC v. Jadidian, No. 08 Civ. 8079, 2011 WL 1327245, at *7 (S.D.N.Y. Mar. 31, 2011) (quoting SEC v. Patel, 61 F.3d 137, 141 (2d Cir. 1995)). Many of the factors for the imposition of a penny stock bar are similar to those for a permanent injunction and the Court will not repeat its reasoning here: the violation was egregious, defendants acted with a high degree of scienter and the violations occurred over 900 times.
Accordingly, courts have considered those factors in determining whether to impose a penny stock bar. See SEC v. Jadidian, No. 08 Civ. 8079, 2011 WL 1327245, at *7 (S.D.N.Y. Mar. 31, 2011); Becker, 2010 WL 2710613, at *1. 2.
Accordingly, courts have considered those factors in determining whether to impose a penny stock bar. See SEC v. Jadidian, No. 08 Civ. 8079, 2011 WL 1327245, at *7 (S.D.N.Y. Mar. 31, 2011); Becker, 2010 WL 2710613, at *1. 2.