SEC Charges Against Nicor Gas Executives Reduced to Fraud Claims

The Securities and Exchange Commission must provide more than “rank speculation” to support allegations that executives accused of fraud should pay civil penalties and / or be barred from acting as a director or officer of a public company. From attorneys Michael Tu, Christin Hill, and Matthew Tolve at law firm Orrick:

“A federal judge in Illinois hollowed out much of the SEC’s case against two former executives of Nicor Gas… Although the court allowed the SEC’s substantive Section 10(b) and 17(a) fraud claims to proceed, the court granted summary judgment to the executives with respect to all claims for civil penalties and injunctive relief. The Order makes clear that to survive summary judgment on injunctive relief, like any other claim, the SEC must put forth concrete evidence, not just ‘rank speculation’… 

[T]he court concluded that all but a handful of the statements at issue were time-barred under 28 U.S.C. §2462, and those still otherwise actionable were not misleading… Accordingly, all claims for civil penalties were dismissed. The court also did not take kindly to the SEC’s arguments in favor of injunctive relief or a director and officer bar, noting for example that the SEC put forth nothing but ‘rank speculation’ that defendants – one of whom was retired – might return to a public company and no evidence that either defendant was recidivist.”

Read the full update, Federal Court Concludes Much of SEC Claims Against Nicor Gas Executives Are Full of Gas – Orrick