S.E.C. v. Stewart
- Loretta Preska
- 1:98-cv-02636
- U.S. District Court · Southern District of New York
- 2
In S.E.C. v. Stewart, Judge Preska directed the parties to address a prior appellate ruling at an upcoming evidentiary hearing.
The Securities and Exchange Commission and the defendants in the case, including the relief defendants whose asset ownership may be relevant to disgorgement.
What happened
In S.E.C. v. Stewart, the court told the parties to be prepared to discuss how a 2023 Court of Appeals decision affects an earlier opinion in this case. The dispute concerns whether assets nominally held by relief defendants were actually owned by a defendant and therefore could be taken through disgorgement.
The appellate decision held that the Securities and Exchange Commission must prove that the defendant was the true owner of each asset. It also said the district court should make specific findings and should not shift that burden to the relief defendants.
Judge Loretta A. Preska ordered the parties to discuss the impact of that appellate ruling at an evidentiary hearing scheduled for February 10, 2025. The order did not resolve the asset-ownership or disgorgement questions.
The detailed version
- S.E.C. v. Stewart · No. 1:98-cv-02636
- Loretta Preska
- Feb. 8, 2025
Background
The Securities and Exchange Commission is the plaintiff, and George Wallace Stewart and other defendants are named in the case. The order refers to the court’s February 7, 2023 Opinion and to an appellate decision, Securities and Exchange Commission v. Ahmed, 72 F.4th 379 (2d Cir. 2023).
Appellate ruling discussed
The Court of Appeals stated that an asset nominally owned by a relief defendant may be disgorged if the asset was actually owned by the defendant. It also held that the SEC bears the burden of proving that the defendant was the true owner of each asset. According to the quoted appellate decision, the district court had improperly shifted that burden to the relief defendants and should have made specific findings about ownership.
What the court ordered
The court directed the parties to attend the evidentiary hearing on February 10, 2025, prepared to discuss how the appellate ruling affects the court’s February 7, 2023 Opinion. This order did not itself decide whether any particular asset was owned by the defendant or whether any asset could be disgorged.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.