Securities and Exchange Commission v. James B. Panther, Jr.

Background

The Securities and Exchange Commission filed a civil enforcement complaint against James B. Panther, Jr., alleging that he participated in a fraudulent scheme involving the unlawful distribution and manipulation of Biozoom, Inc. stock. The complaint asserted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as Sections 17(a) and 5 of the Securities Act of 1933.

During the civil case, Panther pleaded guilty in the District of Arizona to one count of conspiracy to commit securities fraud and wire fraud, principally involving a pump-and-dump scheme relating to Biozoom shares. The plea agreement included a factual statement supporting his guilty plea. The Commission moved for summary judgment, arguing that the plea and related admissions prevented Panther from disputing the facts underlying the civil claims.

Summary-Judgment Ruling

Panther conceded liability in his opposition to summary judgment and did not challenge entry of a permanent injunction against future violations. He disputed the length of the Commission’s proposed penny-stock bar and its proposed $320,000 civil penalty.

The court reviewed the summary-judgment record and concluded that, because of issue preclusion— a rule that can prevent a party from relitigating an issue already established—and Panther’s unchallenged admissions during the criminal plea proceedings, no reasonable fact finder could fail to find in the Commission’s favor. The court therefore granted the Commission’s motion for summary judgment.

Remedies and Final Judgment

The court considered Panther’s acceptance of responsibility in the criminal case, his age of 51, his impaired financial condition, sealed submissions, and factors identified in earlier precedent. Those factors included the seriousness of the securities violation, whether the defendant was a repeat offender, the defendant’s role in the fraud, the degree of intentional wrongdoing, the defendant’s financial stake, and the likelihood of future misconduct. The court noted that Panther’s role and personal financial stake were less than those of other participants; it found that he was not an architect or main participant and that his personal profit was limited.

The final judgment permanently restrained and enjoined Panther from violating specified antifraud provisions of Section 10(b) and Rule 10b-5, Section 17(a) of the Securities Act, and Section 5 of the Securities Act. The injunctions also bind certain people who receive actual notice and act for, or in concert with, Panther as described in Federal Rule of Civil Procedure 65(d)(2).

The court barred Panther for ten years from participating in penny-stock offerings, including activities with a broker, dealer, or issuer involving the issuance, trading, or attempted inducement of purchases or sales of penny stock. It also ordered Panther to pay a $100,000 civil penalty to the Commission within 90 days after entry of the final judgment. The judgment provides for collection procedures and post-judgment interest on amounts unpaid after 30 days.