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Disgorgement Order for Securities Fraud Not Discharged by Bankruptcy
Description Appeals court rejected arguments that securities fraud is not common law fraud so that the disgorgement debt owed from a securities violation could be discharged in bankruptcy.
Topic Securities Law
Key Words Disgorgement; Fraud; Double Jeopardy; Bankruptcy
C A S E   S U M M A R Y
Facts Bilzerian was convicted of securities fraud for his failure to properly report stock transactions involving tender offers. He was ordered to disgorge fraudulently obtained profits of $33 million plus interest. After that judgment, he filed bankruptcy. The SEC sought to except the disgorgement award from discharge in bankruptcy on the ground that it was a debt obtained by fraud. Bilzerian appealed.
Decision Affirmed. Bankruptcy does not allow discharge of debt obtained by fraud. Securities fraud is the same as common law fraud for purposes of bankruptcy. Bilzerian cannot avoid disgorgement by filing bankruptcy. His claim that holding the disgorgement judgment nondischargeable is a violation of the Double Jeopardy Clause is rejected.
Citation Securities and Exchange Comm. V. Bilzerian, F.3d (1998 WL 574307, 11th Cir.)
153 F.3d 1278 (11th Cir., 1998)

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