United States Seventh Circuit

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Sec. & Exch. Comm'n v. Wealth Mgmt. LLC, 09-4090

In the Securities and Exchange Commission's (SEC) enforcement action against a Wisconsin-based investment firm and its principals alleging a host of securities law violations arising from the failure of the firm's six unregistered investment vehicles - similar to hedge funds - for investing in unconventional and illiquid assets, district court's approval of the receiver's proposal to distribute the diminished assets to investors on a pro rata basis and imposing a cutoff date after which any redemption distributions would be offset against the investor's total distribution is affirmed where: 1) the district court did not abuse its discretion in its oversight of the receiver's planned distribution of receivership assets as, where a receivership trust lacks sufficient assets to fully repay investors and the investors' funds are commingled, a distribution plan may properly by guided by the notion that "equality is equity," and pro rata distribution is appropriate; and 2) in approving the receiver's proposed plan for distribution, the district court properly considered and rejected the objectors' contrary arguments, primarily their argument that they were really creditors and not equity holders and therefore entitled to preferential treatment.

Appellate Information

  • Argued 05/26/2010
  • Decided 12/01/2010
  • Published 12/01/2010



  • United States Seventh Circuit


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