ICAN Gives SEC Opportunity to Correct Misrepresentation to 2nd Circuit

Elderly Investor's Financial Devastation Highlights Flaws in Outdated Securities Law

FOR IMMEDIATE RELEASE April 29th, 2025

WASHINGTON D.C. —  Investor Choice Advocates Network (ICAN) has filed a petition for certiorari with the U.S. Supreme Court in Mona v. Microbot Medical, challenging the Second Circuit's ruling and highlighting a concerning omission in the SEC's previous representations about the central issue in the case.

The petition invites the Supreme Court to request an amicus brief from the SEC to clarify a critical constitutional issue that the agency previously misrepresented. In the recent Packer v. Raging Capital case, the SEC filed an amicus brief in the Second Circuit supporting the position that short-swing profit plaintiffs should not have to show "tangible harm" to companies to obtain disgorgement. To support this claim, the SEC twice cited the Supreme Court's Gollust decision, while conspicuously omitting Gollust's explicit statement that "Art. III's requirement remains: the plaintiff still must allege a distinct and palpable injury to himself." This misrepresentation allowed the Second Circuit to sidestep fundamental constitutional standing requirements – an error repeated by the Second Circuit in Mr. Mona’s appeal.

"In their amicus brief to the Second Circuit in Packer, the SEC engaged in a troubling misrepresentation of Supreme Court precedent," said Nicolas Morgan, President of ICAN. "The agency twice cited the Gollust decision to argue that short-swing profit plaintiffs shouldn't have to show 'tangible harm,' while conspicuously omitting Gollust's clear statement that 'Art. III's requirement remains: the plaintiff still must allege a distinct and palpable injury to himself.' This selective citation effectively misled the court about fundamental constitutional standing requirements."

The case involves Joseph Mona, an elderly grandfather whose life has been financially devastated by this litigation. Despite no allegations of insider trading or harm to any party, Mr. Mona faces a $480,000 disgorgement judgment after briefly exceeding 10% ownership in a small-cap stock while day trading for his retirement–a ruinous sum for this retired investor.

At the conclusion of the district court proceedings, Mr. Mona had spent nearly $400,000 in legal fees and exhausted his ability to pay counsel. He was forced to take out a home equity loan to cover his expenses, while his son pledged his house as collateral.

Mr. Mona's case is not an isolated one. A growing industry of specialized attorneys now uses sophisticated software to target retail investors who inadvertently exceed ownership thresholds, creating a cottage industry of lawsuits against traders who pose no threat to market integrity.

"Behind the legal technicalities of this case is the story of a real family whose financial security has been destroyed," Morgan emphasized. "Mr. Mona's experience reveals how Section 16(b) of the Securities Exchange Act – a Depression-era provision meant to prevent insider abuse – has instead become a weapon that punishes innocent retail investors who pose no threat to market integrity."

ICAN's petition asks the Supreme Court to resolve the conflict between circuits on this fundamental Article III standing question and seeks to reform how courts apply this 90-year-old rule in today's high-speed digital trading environment.

"This case presents a rare opportunity to address whether companies can pursue disgorgement from traders when the companies have suffered no actual harm," Morgan added. "The constitutional question at stake affects countless unsuspecting investors who could find themselves in similar situations, with devastating personal consequences."

This petition reflects ICAN's commitment to defending ordinary investors against predatory securities litigation while holding the SEC accountable to its core mission of protecting investors, not punishing them. By addressing fundamental questions of constitutional standing, ICAN seeks to ensure that securities laws serve their intended purpose of maintaining market integrity without destroying the financial lives of innocent investors who pose no threat to the markets.

ICAN thanks co-counsel Aaron Morris, Andrew Robertson, and Jonathan Voegele of Morris Kandinov LLP for their help on this exceptional petition, which is available at https://www.icanlaw.org/cases-microbot-v-mona.

For more information about ICAN's work, visit www.icanlaw.org or contact: info@icanlaw.org

About ICAN: The Investor Choice Advocates Network (ICAN) is a nonprofit organization dedicated to breaking down barriers to entry to capital markets and pushing back against regulatory overreach. ICAN advocates for fair and transparent regulatory practices, ensuring all individuals have equal access to investment opportunities and due process in the financial markets.

Contact Information: Investor Choice Advocates Network (ICAN) Email: info@icanlaw.org Website: www.icanlaw.org