After a verdict-free period that spanned three months, my SEC Trial Scorecard is finally back in action to report on yesterday's verdict in the SEC's case against former NFL wide receiver Willie Gault. This running SEC Trial Scorecard tracks the SEC's trials and outcomes for FY 2015.
To date in FY 2015, which began on October 1, 2014, the SEC has now had four trials in federal court reach a verdict (see the full list below). The most recent verdict was reached yesterday by a federal jury in the Central District of California in the case of SEC v. Heart Tronics. The case has received a fair amount of press coverage because it includes charges against former Chicago Bear Willie Gault, who previously served as Heart Tronics' co-CEO.
The jury found that Gault was not liable on any of the four fraud-related charges against him, but that he was liable on three less serious charges alleging violations of certification requirements and internal control rules. The split decision allowed both sides to claim some measure of victory. Gault's attorney, George B. Newhouse, told reporters that Gault "exited the courtroom cleared of any serious misconduct and with the equivalent of a securities parking ticket."
Andrew Ceresney, Director of the SEC's Division of Enforcement, stated that the agency was "pleased" with the jury’s verdict. "As proved at trial, as CEO of a public company, Willie Gault filed false certifications with the SEC and knowingly circumvented the company’s internal controls,” he said.
Overall, the SEC's scorecard in FY 2015 now includes four trials. In two trials, the SEC won on all of its claims, and in two trials the verdict was mixed. Here is the list as it currently stands:
SEC v. iShopNoMarkup.com, Inc.: VERDICT—FOR SEC (Oct. 2014)
SEC v. Kokesh: VERDICT—FOR SEC (Nov. 2014)
SEC v. BankAtlantic Bancorp, Inc. and Alan B. Levan: VERDICT—MIXED (Dec. 2014)
SEC v. Heart Tronic: VERDICT—MIXED (March 2015)