Securities & Exchange Commission v. CMKM Diamonds, Inc.

These consolidated appeals arise out of a civil enforcement action brought by the Securities and Exchange Commission (“SEC”) against numerous defendants allegedly involved in a scheme to sell unregistered securities of CMKM Diamonds, Inc. (“CMKM”). The district court granted summary judgment in favor of the SEC, ruling that 1st Global Stock Transfer, LLC (“Global”), Helen Bagley, and Brian Dvorak (collectively, “Defendants”) participated in an unregistered distribution of securities in violation of Section 5 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77e. The district court ordered Defendants to disgorge proceeds from the illegal sales, plus prejudgment interest. Prior to the district court’s ruling on summary judgment, Dvorak brought a motion to stay the civil proceedings until the conclusion of his criminal proceedings involving the same conduct, which a magistrate judge denied.

Global and Bagley appeal the district court’s entry of summary judgment and the disgorgement order; Dvorak appeals the magistrate judge’s order denying his motion to stay and the district court’s disgorgement order. We conclude that the district court erred in granting…