"But the Lord is with me as a mighty, awesome One.
Therefore my persecutors will stumble, and will not prevail.
They will be greatly ashamed, for they will not prosper.
Their everlasting confusion will never be forgotten."
FANTASTIC; from Watchdog:
SHERMAN, Texas — The Securities and Exchange Commission’s fraud case against Texas Attorney General Ken Paxton could be dismissed within the next 30 days, after a federal judge subjected the commission’s attorneys to harsh questioning Friday morning.Empower Texans has more:
“You’re basically asking me to create a new general rule” requiring disclosure of compensation, Federal District Judge Amos L. Mazzant, III told SEC attorney Matt Gulde.
The SEC’s lawsuit against Paxton is based on its contention such a requirement already exists somewhere in federal law, but the commission had a hard time pointing out to Mazzant just where that might be.
The SEC argues Paxton had a duty to disclose to potential investors in a company called Servergy he would receive a commission if they bought stock. The basic argument is that omitting that information amounts to fraud because it misleads investors, who might make another decision if they knew.
Paxton’s attorney Matt Martens cited a host of cases involving brokers from the Supreme Court on down that established a general rule there is no positive duty to disclose one’s compensation.
That didn’t seem to sway Mazzant, but he did wonder aloud if the SEC wasn’t trying to fit a “square peg in a round hole.”
“Are we stretching the securities law to cover something it wasn’t meant to?” Mazzant asked.
But Mazzant was unimpressed by Gulde’s argument that Paxton was a fiduciary for any of the people he’d told about Servergy.
“The only thing that even comes close is the investment club” Paxton had formed with Byron Cook, a politician and former friend who is now Paxton’s accuser, along with others. “I’m not sure even that creates a fiduciary duty.”
The SEC doesn’t allege at all that Paxton ever said anything untrue. The commission is basing its case on a prohibition in securities law on telling half-truths. The law in this area requires one to clear up any misleading “half-true” statements one has made by speaking completely on the subject.
A woefully unprepared prosecutor for the Obama Administration’s Securities and Exchange Commission exposed in federal court the frailty of the politically driven charges against Texas Attorney General Ken Paxton.Read the whole thing here and here.
Following a complaint mirroring the trumped up allegations levied by State Rep. Byron Cook (R-Corsicana), the SEC accused Paxton of misleading “investors” (the very wealthy Cook and one of his business partners). The SEC argues that Paxton committed securities fraud by failing to disclose to Cook that he received a commission.
A hearing Friday in Sherman centered around Paxton’s Motion to Dismiss the SEC civil charges, and was presided over by Judge Amos Mazzant, II.
The defense focused on legal precedent from both the 9th and 2nd federal circuits in which those courts of appeals found registered brokers have “no duty” under the law to “disclose transactional commissions” they stand to earn from investments they solicit.
According to the long-standing court precedent, if a registered broker solicits investors and receives a commission – just as Paxton did – they would not be required to disclose their commission to investors. Nor would “failure to disclose” be considered misleading or fraudulent under existing law or SEC regulations.
In other words, if the SEC levied identical charges against a registered broker, they would have no case. The only difference is that Paxton is not a registered broker.
Paxton’s team argued the SEC is asking the court to hold him to a stricter standard than registered brokers.