SEC v. Dean, et al., No. 12-2780 (8th Cir. 2013)
Annotate this CaseThis case stemmed from the SEC's civil enforcement action against former infoUSA financial officers, including defendant. A jury found that defendant violated various securities laws and the district court imposed several civil penalties. Defendant subsequently appealed. The court concluded that defendant could not challenge the sufficiency of the evidence against him because he failed to file a postverdict motion under Federal Rule of Civil Procedure 50(b) after the district court denied his Rule 50(a) motion. The court also concluded that the district court did not err in admitting the testimony of the SEC's expert witness where the expert's use of the primary-purpose test as a means for applying the integrally-and-directly-related standard did not misconstrue a legal issue or alter the legal standard that defendant was required to apply as CFO. The court held, however, that it was not clear whether the jury made the finding necessary for the SEC's section 13(b)(5) of the Securities Exchange Act, 15 U.S.C. 78m(b)(5), claim and, based on the claims the SEC asserted against defendant, the bad-faith finding was unnecessary to a final resolution of the matter. Accordingly, the court vacated the conclusion that defendant violated section 13(b)(5) and the finding that defendant acted in bad faith, remanding for further proceedings. The court affirmed the case in all other respects.
Court Description: Civil case - SEC Enforcement Action. Defendant waived any challenge to the sufficiency of the evidence because he failed to file a postverdict motion under Rule 50(b) after the district court denied his Rule 50(a) motion; challenges to admission of SEC's expert's testimony regarding whether defendant's company misstated perquisite compensation paid to its CEO and related party transactions involving the CEO's separate business interests rejected; the jury was properly instructed regarding the SEC's Rule 13b2-1 and 13b2-2 claims; the SEC's request that the court vacate the judgment against defendant regarding the SEC's 13(b)(5) claim is granted, as the jury instruction set forth conflicting standards for evaluating defendant's conduct, and it is not clear whether the jury made the necessary findings to support the 13(b)(5) verdict; the the district court erred by finding defendant acted in bad faith toward the company's shareholders as this issue was not before the jury and was not raised by either the SEC nor defendant's company. Because the court has vacated this finding and the Rule 13(b)(5)verdict, the matter must be remanded to the district court for reconsideration of the civil penalties imposed.
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