SEC v. Albert Fase Kaleta, et al. (Receivership Court’s Equitable Powers)

Securities and Exchange Commission v. Albert Fase Kaleta, et al, 2013 WL 3030300 (C.A.5 (Tex)) (June, 19, 2013). This is an interlocutory appeal arising from receivership proceedings. The appellants are investors who were allegedly defrauded by receivership entities in violation of securities laws. Appellants challenged the district court’s approval of a negotiated settlement between the court appointed receiver and certain third parties affiliated with the receivership entities, and challenged the court’s bar order enjoining them and other investors from commencing or continuing any legal action against the third parties. The Fifth Circuit upheld that the district court’s decision stating that the district court has “broad powers and wide discretion to determine the appropriate relief in an equity receivership.” This power includes the court’s “inherent equitable authority to issue a variety of ancillary relief measures in actions brought by the SEC to enforce the federal securities laws. Such ‘ancillary relief’ includes injunctions to stay proceedings by non-parties to the receivership.”