U.S. Securities and Exchange Commission v. Kleyman
- Wilhelmina Wright
- 0:21-cv-01943
- U.S. District Court · District of Minnesota
- 7
In SEC v. Kleyman, Judge Wright approved a consent judgment requiring an injunction, payments, and continuing court oversight.
The order directly affects the SEC and Howard S. Kleyman. It also concerns investor protection and the integrity of the securities markets through the approved injunction, payments, and enforcement provisions.
What happened
In U.S. Securities and Exchange Commission v. Kleyman, the Securities and Exchange Commission asked the court to approve an agreement resolving its allegations that Howard S. Kleyman violated federal securities laws. Kleyman did not oppose the request.
The approved judgment permanently bars Kleyman from violating specified securities laws and regulations. It also requires him to pay $12,499.12 in disgorgement, $1,250.37 in prejudgment interest, and a $50,000 civil penalty.
Judge Wilhelmina M. Wright granted the SEC’s motion and approved the proposed consent judgment. The court found that the agreement was procedurally fair, substantively fair, reasonable, and consistent with governing law, and retained jurisdiction to enforce it.
The detailed version
- U.S. Securities and Exchange Commission v. Kleyman · No. 0:21-cv-01943
- Wilhelmina Wright
- Oct. 7, 2021
Background
The Securities and Exchange Commission (SEC) sued Howard S. Kleyman, alleging in two counts that he engaged in securities fraud in violation of the Securities Exchange Act of 1934 and related federal regulations. The SEC filed a proposed consent judgment at the same time as its complaint and moved for the court to enter it. Kleyman did not oppose the motion.
Terms of the Consent Judgment
The proposed judgment permanently enjoins Kleyman from violating specified provisions of the Exchange Act and related regulations. It requires him to pay $12,499.12 in disgorgement, meaning repayment of alleged ill-gotten gains, plus $1,250.37 in prejudgment interest. It also requires him to pay a $50,000 civil penalty. The judgment sets out how these amounts are to be paid and provides that the court will retain jurisdiction to enforce the judgment.
Court’s Analysis
Because the case implicated important public interests, the court reviewed the proposed settlement rather than treating it as merely a private agreement. The court considered whether the proposed judgment was procedurally fair, substantively fair, reasonable, and consistent with governing law.
For procedural fairness, the court relied on Kleyman’s signed consent stating that he entered the agreement voluntarily and that the SEC had not used threats, promises, offers, or inducements. For substantive fairness, the court concluded that the judgment held Kleyman accountable for the alleged violations and required penalties, disgorgement, and interest.
The court also found that the judgment was legal, clear about enforcement, addressed the claims in the complaint, and was not tainted by improper collusion or corruption. It concluded that the relief served the public interest and that the Exchange Act authorized the injunction, disgorgement, interest, and civil penalty.
Disposition
Judge Wilhelmina M. Wright granted the SEC’s motion for entry of the proposed consent judgment and approved the judgment. The court retained jurisdiction over the matter as provided in the judgment. The order approved the parties’ resolution; it did not describe a trial or make an independent finding after litigation on whether Kleyman committed the alleged violations.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.