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The case that inspired ICAN: SEC v PacWest
In their decades of litigating cases for and against the Securities and Exchange Commission and other agencies, ICAN’s founders noticed some troubling patterns. The cost of litigation could be so high that people would have to settle with the SEC despite not having done anything wrong. That was true even in cases involving technical violations and not involving fraud. And often there was no suggestion of investor harm or investor complaints. In fact, sometimes an SEC lawsuit caused more harm to investors than the underlying technical issue the SEC was trying to enforce.
In response to these patterns, ICAN’s founders began taking on occasional pro bono cases at no cost to the client because of the nature of the case.
One such matter is SEC v PacWest in which ICAN’s founders represent Eric Cannon, Brenda Barry, and Caleb Moody, who worked for PacWest, a company selling an investment offering called life settlements. The SEC alleged the life settlements investment offering should have been registered and that Eric, Brenda, and Caleb should have been registered brokers. The SEC did not allege that any investor was harmed, that any investor complained, or that Eric, Brenda, or Caleb misled anyone about the investment. And the basis of the SEC’s complaint – that life settlements are securities requiring registration – is far from settled. At the very least Eric, Brenda, and Caleb (non-lawyers certified to sell investment products under California law) had no reason to believe they were violating any law. Nevertheless, the SEC sued in federal court seeking enormous amounts of money from Eric, Brenda, and Caleb. The cost to defend such a suit would have been formidable had the representation not been undertaken pro bono.
Sadly, these circumstances are not unique. Cases involving precedent-setting legal issues in which defendants not accused of fraud or investor harm cannot afford representation are far too common. Parties accept unfair settlement terms, investors reap no benefits, and the SEC and other agencies accumulate litigation “wins” the agencies later point to in support of their interpretation of the law. For-profit law firms are not set up to handle these cases on a pro bono basis.
ICAN is here to help.
As a nonprofit, public interest law firm, ICAN identifies cases where it can have an impact and works to ensure that its clients have high quality representation at little or no cost.
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