The Times of Israel: ‘Why So Little?’ Victim Asks, as SEC Settles US$5m. Israel Fraud Case for US$1.2 Million

September 08, 2020

O’Melveny lawyer and former senior counsel at the SEC Bill Martin is quoted in this article, which discussed Lbinary’s settlement with the SEC. The company has agreed to pay US$1.2 million out of the US$5 million they allegedly defrauded from victims.

The Times of Israel asked Martin why the settlement sum was so small. Martin told the publication that the SEC may have taken several factors into consideration, including the strength of the evidence and the challenges of enforcing judgment overseas.

“The SEC’s complaint alleged that the two men committed securities fraud and obtained over US$5 million. But if the case had proceeded to trial, any judgment would have depended on whether the evidence shows that these two individuals were actually responsible for that amount of money,” Martin said. “Plaintiffs often need to evaluate the strength of their evidence and other factors to decide whether to settle for less than they believe they are due.”

Martin also commented on whether the US Supreme Court’s decision in Liu vs. the SEC, which held that in cases of fraud the SEC can only demand disgorgements of the wrongdoer’s net profits, may have been a factor.

“Each year, the SEC publishes enforcement statistics, including the number of cases that are filed and the amount of judgments obtained,” Martin said. “When those statistics are published after the end of this fiscal year, it may be possible to analyze those to draw some conclusions about the impact of Liu.”

Read the full article here.