Tag: Second Circuit

Pastore LLC Challenges SEC in High-Stakes Second Circuit Appeal

Posted on by Kelly McElroy

Pastore LLC represents the  CEO of a technology company and the company before the Second Circuit in a high-stakes SEC enforcement appeal. The case challenges a Connecticut federal judge’s reliance on post-trial “new facts” to impose a $441,000 judgment, including disgorgement and civil penalties. Pastore, hired after Cozen O’Connor handled the trial, argued that the district court violated the defendant’s constitutional rights by issuing a permanent industry ban and securities law injunction without jury consideration.

The SEC admitted post-trial that it could not identify harmed investors but later produced a declaration claiming 2,967 traders lost $1.69 million—without linking those losses to the alleged fraud. The agency’s shifting position contradicts the Second Circuit’s precedent in SEC v. Govil, which requires demonstrable pecuniary harm for disgorgement. The trial court’s reliance on financier loans, rather than investor losses, further undermines the judgment.

Pastore asserts that the district court’s process deprived the defendants of due process and exceeded its authority. The firm is aggressively challenging the SEC’s approach and seeking to overturn the ruling before the Second Circuit.

Second Circuit Affirms Jury Verdict Win for Pastore’s Hedge Fund Clients

Posted on by Kelly Somers

The Second Circuit Affirms Jury Verdict Win for Pastore’s Hedge Fund Clients in Multimillion-dollar Securities Fraud Case Brought by Billionaire Family Office

On November 15, 2021, the Second Circuit affirmed a jury verdict obtained by Pastore in a federal securities fraud case. This concluded a contentious, multi-year litigation, defeating claims of fraudulent inducement and securities fraud brought against two hedge fund executives by a billionaire family office special purpose investment vehicle. The billionaire family office, the heirs to and founders of a well-known apparel store, had invested in the fund’s General Partner limited liability company.

In 2018, The United States District Court for the District of Connecticut granted a summary judgment in favor of the defendants. The summary judgment was subsequently appealed up to the United States Court of Appeals for the Second Circuit, before being remanded back to, and concluding with, a jury trial in the United States District Court for the District of Connecticut. Pastore LLC was hired for the trial. After two weeks of evidence and 7 hours of jury deliberation, Pastore LLC was able to secure a favorable jury verdict for the clients. The jury had found in favor of the defense on a federal securities claim.

Then, the billionaire family office appealed the jury verdict to the Second Circuit and argued that it was entitled to a new trial because, it alleged, the district court’s abuse of discretion had a prejudicial impact on the jury’s verdict. Among other alleged errors, the billionaire family office alleged that evidence concerning a billion-dollar company investment agreement with one of the world’s largest private equity funds should be excluded. The Second Circuit stated, “the district court instructed the jury ‘the entity that holds an interest in a security suffers an economic loss if the investment experiences a decline in value.’ App’x 559. In other words, the district court instructed the jury that it should find that…suffered an economic loss if it determined that…owned the investment interest in…, regardless of the source of investment funds, and that this investment declined in value.”