Securities & Exchange Commission v. Andrescu
Opinion of the Court
SUMMARY ORDER
Reversing the ancient adage, this case demonstrates that sometimes the sins of the child are visited upon the father, and even the mother.
There is no claim that Jon or Ana participated in their son’s wrongdoing, but there is also no dispute that the money they are required to disgorge is part of the money that was obtained by their son from the defrauded investors.
Jon and Ana contend that the distributions to them represent partial repayment of a loan to their son. Even if they loaned money to their son, they are not entitled to have that loan partially repaid with money that he fraudulently obtained from others. Apparently their son’s fraudulent conduct has already had unfortunate consequences for the parents, and we can understand their distress at being required to return the money they received. But the money is the proceeds of fraud to which they have no valid claim, and the Securities and Exchange Commission is entitled to have it disgorged. See SEC v. Cavanagh, 155 F.3d 129, 136 (2d Cir. 1998). The District Court already extended some leniency to the parents by running prejudgment interest only from the date of the complaint, instead of the earlier dates when the funds were received.
Finally, as the SEC points out (Br. for Appellee at 7), if the parents lack assets to
. See Exodus 20:5 ("I the Lord thy God am a jealous God, visiting the iniquity of the fathers upon the children unto the third and fourth generations of them that hate me.”); Euripides, Phrixus, Fragment 970 ("The gods visit the sins of the fathers upon the children.”) (quoted in John Bartlett, Familiar Quotations 18a (13th ed. 1955)); William Shakespeare, The Merchant of Venice, Act III, scene V, line 1 ("Yes, truly; for, look you, the sins of the father are to be laid upon the children.”).
Reference
- Full Case Name
- SECURITIES AND EXCHANGE COMMISSION v. Ana ANDRESCU and Jon Andrescu
- Cited By
- 4 cases
- Status
- Published