## Facts

- The Securities and Exchange Commission (SEC) filed a civil enforcement action alleging that Parker R. Hallam operated multiple energy-related entities and violated federal securities antifraud and registration provisions, including Exchange Act § 10(b) and Rule 10b-5.
- Hallam entered a consent judgment without admitting or denying liability; he agreed the district court would later determine the amounts of (1) disgorgement of ill-gotten gains, (2) prejudgment interest at the IRS underpayment rate, and (3) a civil penalty, and would also decide whether to impose a permanent injunction limiting his securities dealings to his own account.
- Nearly three years later, the SEC moved for remedies based on a forensic accounting analysis, seeking disgorgement of $1,901,480 and prejudgment interest of $424,375.38, and requesting a highest-tier civil penalty and a permanent injunction.
- After the Supreme Court’s decision in Liu v. SEC, Hallam opposed the motion, arguing Liu invalidated or materially altered the agreed disgorgement framework and that the SEC’s figure exceeded net profits and included non-tainted amounts.
- The district court granted the SEC’s requested relief, ordering disgorgement, prejudgment interest, a highest-tier civil penalty, and a permanent injunction.
- Hallam appealed, challenging only the remedies (not liability).

## Issues

1. Whether Liu v. SEC invalidated or required reopening a pre-Liu consent judgment authorizing disgorgement of “ill-gotten gains.”
2. Whether the disgorgement award complied with Liu’s limits by approximating net profits and excluding amounts not causally tied to the misconduct.
3. Whether prejudgment interest at the IRS underpayment rate was permissible and equitable under the consent judgment and post-Liu standards.
4. Whether the district court abused its discretion in imposing a highest-tier civil penalty.
5. Whether Hallam was entitled to an evidentiary hearing on remedies and whether the permanent injunction was properly imposed on the record presented.

## Decision

- The Fifth Circuit affirmed the district court’s remedies order in full.
- The court held that Liu did not nullify Hallam’s consent judgment; it constrained how disgorgement must be applied, not whether disgorgement could be ordered under the consent decree.
- The court upheld disgorgement of $1,901,480, concluding the SEC provided a reasonable approximation of ill-gotten gains within the limitations period and Hallam did not carry his burden to show the approximation was unreasonable or included legitimate amounts.
- The court upheld prejudgment interest of $424,375.38 calculated using the IRS underpayment rate specified in the consent judgment.
- The court upheld the highest-tier civil penalty as within statutory discretion given the nature of the conduct.
- The court upheld the permanent injunction and rejected the claim that an evidentiary hearing was required, finding the paper record and opportunity to respond were sufficient under the consent framework.

## Legal Principles

- A party who consents to a judgment authorizing specified categories of relief generally cannot withdraw from that agreement solely because later precedent changes the governing standards; later precedent may limit implementation but does not, by itself, void consent.
- Post-Liu, SEC disgorgement must be limited to a wrongdoer’s net profits and cannot operate as a punitive sanction; the SEC must offer a reasonable approximation, after which the defendant must show the estimate is not tied to net profits or includes non-tainted amounts.
- Prejudgment interest may be awarded on disgorgement to prevent unjust enrichment and may follow a rate specified in a consent judgment, including the IRS underpayment rate.
- Civil penalties are distinct from equitable disgorgement and are governed by statutory tiers; district courts have broad discretion within the statutory framework when the record supports severity-based findings.
- When liability is resolved by consent and the defendant has an opportunity to contest remedy calculations, a district court may decide remedies on the written record without a separate evidentiary hearing.

## Conclusion

The Fifth Circuit affirmed disgorgement, prejudgment interest, a highest-tier civil penalty, and a permanent injunction imposed under a consent judgment, holding that Liu limits how disgorgement is calculated (net profits), but does not undo remedies to which the defendant previously agreed and that were reasonably supported on the record.


Sec. & Exch. Comm’n v. Hallam, 42 F.4th 316 (5th Cir. 2022)