ICAN Halts SEC's Attempt to Erode Supreme Court Precedent

Federal Court in Massachusetts Rejects SEC's "Due Process Tax" Against Innocent Individual

FOR IMMEDIATE RELEASE April 21st, 2025

LOS ANGELES — The Investor Choice Advocates Network (ICAN) and law firm Dickinson Wright secured a victory in the U.S. District Court for the District of Massachusetts for an everyday American caught in the SEC's regulatory labyrinth despite never being accused of any securities violations or wrongdoing. Judge Richard G. Stearns denied the SEC's fierce attempt to extract $8,826 in prejudgment interest from an individual whose brokerage account was used by her ex-husband without her knowledge.

"This case exemplifies the SEC's troubling pattern that seeks to impose punitive measures against individuals who committed no fraud and caused no investor harm," said Nicolas Morgan, President and Founder of ICAN.

"Our client was merely a relief defendant–not accused of any wrongdoing–whose only connection to the case was that her ex-husband used her brokerage account without her knowledge. After forcing her to surrender over $44,000 from an account funded with her legitimate earnings and where the SEC couldn't identify a single victim, the SEC then attempted to extract additional 'prejudgment interest'–effectively punishing her for exercising her constitutional right to defend herself."

This case goes beyond the unfair treatment of one hard-working American – it represents a troubling misuse of taxpayer resources in an apparent attempt to erode legal guardrails. While media headlines focus on high-profile cases, the SEC often uses these below-the-radar cases to quietly expand its authority beyond statutory limits. Here, the agency appears to be testing the boundaries of the Supreme Court's decision in Liu v. SEC (2020), which explicitly restricted the SEC's ability to obtain disgorgement in the absence of victims. By pursuing prejudgment interest against an innocent relief defendant, the SEC is essentially seeking a workaround to limitations the Supreme Court has placed on its enforcement powers.

"This case exemplifies the disturbing reality of government overreach that could happen to any law-abiding citizen," Morgan continued. "The notion that someone could lose his or her savings or hard-earned wages and then be punished further for trying to defend themselves should concern every American."

The SEC's misallocation of resources was particularly egregious—deploying two Enforcement attorneys and three economists who produced dozens of pages of filings to pursue just $8,826 from someone who had never been accused of wrongdoing. Throughout the investigation, our client cooperated fully with the SEC but proceeded without counsel until late 2024 because she could not afford representation.

"This is an ugly example of the enforcement steamroller that demonstrated disregard for clear legal precedent and disinterest in treating a non-wrongdoer victim fairly," said Jacob Frenkel, Chair of the Securities Enforcement and Government Investigations Practice at Dickinson Wright, who alerted ICAN to the case and brought in ICAN as co-counsel.

"ICAN and Dickinson Wright seized on the SEC's striking admission that it could not identify even one victim of the limited stock trading in our client's account following a multi-year investigation.”

"Teaming up with Nick and ICAN is an honor, privilege, and treat, as we share an aggressive mindset and approach to holding accountable securities industry regulators and embracing creative legal theories in fighting for our clients," Frenkel added.

This victory underscores ICAN's commitment to defending ordinary Americans from regulatory excess and establishing legal guardrails that prevent the SEC from quietly expanding its powers through piecemeal litigation of individual cases.

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