"And let us not grow weary while doing good, for in due season we shall reap if we do not lose heart."
This case was always a legal fiction that was only intended to run up Ken and Angela's legal bills, but FANTASTIC news nevertheless:
In the Court’s order, the Judge Amos L. Mazzant, III (an Obama appointee) wrote, “This case is not about whether Paxton had a moral obligation to disclose his financial arrangement with Servergy to potential investors. This case is also not about whether Paxton had some general obligation to disclose his financial arrangement to his investor group. The only issue before the Court is to determine whether the facts as pleaded give rise to a plausible claim under federal securities laws. With that limitation in mind, the Court has determined that under the facts pleaded by the Commission, Paxton did not have a legal obligation to disclose his financial arrangement.”Read the whole thing here.
The Court concluded “that the Complaint has not alleged facts sufficient to support a plausible claim under Sections 17(a) and 17(b) of the Securities Act or Sections 10(b) and 15(a) of the Exchange Act.”
The SEC asked the Court to give it an opportunity to amend its Complaint and the federal judge responded saying that “While this request does not satisfy the requirements of Federal Rule of Civil Procedure 15, the Court is inclined to allow the Commission to plead additional facts, if any, before it grants the motion and dismisses the Commission’s claims against Paxton.”
The Court ordered that Paxton’s Motion to Dismiss was conditionally granted “pending the Court’s review of the Commission’s submission of additional facts.” He granted the Commission “leave to amend its allegations against Paxton to the extent that it has additional facts that might support a claim under the statutes alleged in the Complaint.”
“This is a victory for Ken Paxton. Obviously, we are pleased with the Court’s ruling today,” said Matthew Martens.
Bill Mateja, a lawyer on both Paxton’s SEC and criminal defense teams added “now we turn our attention to Ken’s exoneration in the state matter where the prosecutor’s burden is even higher. The fraud allegations in the SEC case mirror those in the state case.”
Any amendment to the Complaint by the Commission was ordered to be filed within 14 days of the October 7th order.