Securities & Exchange Commission v. Interlink Data Network of Los Angeles, Inc.

The Securities and Exchange Commission (“SEC”) brought this civil enforcement action against several defendants, including Interlink Data Network of Los Angeles, alleging securities fraud involving the sale of unregistered securities. In the early stages of the litigation, the SEC obtained a temporary restraining order and preliminary injunction that, inter alia, froze the defendants’ assets. Ultimately, the SEC obtained a judgment against Interlink requiring, in relevant part, the disgorgement of over $12 million (representing the funds of defrauded investors) and the deposit of Interlink’s assets in the court registry for disbursement.

After entry of the judgment, the district court determined that certain funds paid in advance by Interlink to its attorneys, Lewis, D’Amato, Brisbois & Bisgaard, were earned by Lewis, D’Amato upon payment. Thus, the court concluded that the funds were not encompassed by the asset freeze in the temporary restraining order or the preliminary injunction and therefore need not be deposited in the court registry for disbursement pursuant to the judgment against Interlink. The SEC appeals this order of the district court. We have jurisdiction under 28…