In a securities fraud action, district court's order of disgorgement of appellants' profits from the sales of a stock tip, imposition of civil penalties, and injunction against future violations of section 10(b) of the Securities Exchange Act and Rule 10b-5 is affirmed where: 1) the district court correctly found that appellants' conduct constituted a violation of Section 10(b) and thus, appellants cannot avoid application of the statute by invoking constitutional concerns because the text and purpose of the section admit of no exception for disinterested publishers; 2) appellants' First Amendment claim fails as punishing fraud, whether it be common law fraud or securities fraud, simply does not violate the First Amendment; and 3) the injunction does not constitute an unlawful prior restraint because it only enjoins appellants from engaging in securities fraud which is unprotected speech.
Argued: December 2, 2008
Decided: September 15, 2009
Per Curiam Opinion
For Appellant: Bruce D. Brown, Baker & Hostetler, LLP., of Washington, DC.
For Appellees: Michael Conley, United States Securities & Exchange Commission, Washington, DC.