SEC and Other Permanent Injunctions - Standards for Their Imposition, Modification, and Dissolution

Abstract

The enforcement of federal statutes, particularly the securities laws, often requires appropriate federal agencies or departments to procure permanent injunctions against violators. Such Injunctions, which are generally imposed as equitable measures to prevent future violations, may cause inconvenience and hardship to the subject parties. To alleviate these consequences, many of which are of a collateral nature, a violator may seek to have the injunction dissolved or modified.

The standards a court should apply when considering whether to grant relief from an injunction are of paramount importance. Although an injunction may have the effect of stigmatizing the subject party, the government has a countervailing interest in deterring future violations by the threat of criminal contempt. Far from being punitive, according to the government, the injunction merely requires that the law be obeyed.

The central purpose of this Article is to examine the circumstances under which injunctions obtained by the Securities and Exchange Commission (SEC) and other government entities should be susceptible to dissolution or modification. Although the thrust of the Article is directed toward injunctions procured by government entities, much of the discussion is pertinent to privately obtained injunctions as well. For background reasons and to buttress the principal focus of the Article, standards for the imposition of SEC and other government permanent injunctions will be discussed from a general perspective. Thereafter, the Article will focus on dissolution and modification issues.

Keywords: Securities law, Securities and Exchange Commission, SEC, Government injunctions, SEC injunctions, United States v. Swift & Co.