Securities Fraud and Federal Equity Receivers

By: Dennis L. Roossien, Jr.
Dallas Bar Association's Headnotes
February 1, 2008

When a victim of a securities fraud seeks legal advice, it often seems that there is little that can be done. The perpetrator is holding the victim’s money and is generally spending it rapidly. In the most serious cases, there are no real assets available to pay a judgment even if the victim obtained one, and so once the cash is spent, the victim is left with nothing.

Under these circumstances, counsel may wish to consider efforts to obtain an equity receiver, whether by persuading federal authorities to seek one in connection with an enforcement action or by ancillary to private litigation.  As the Securities and Exchange Commission has consistently shown, a federally appointed equity receiver will effectively stop a fraudulent scheme in progress, and will seize the fruits of the fraud before they are lost forever.

Halting the Scheme & Seizing Assets
Two cases from the Northern District of Texas illustrate how a receiver can halt an ongoing fraud and seize the existing assets for the benefit of the victims of the scheme.
 

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