Commodity Futures Trading Commission v. Topworth International, Ltd.

The Commodities Futures Trading Commission brought suit against Top-worth International, Inc., and two related companies for violations of the Commodities Exchange Act. Topworth defaulted, and the district court entered an order permanently enjoining Topworth from continuing operation, and requiring Topworth to disgorge the money obtained in violation of the Act. The district court appointed a permanent receiver, who filed a plan distributing any remaining assets to investors pro rata according to their net investment. Neil Advani, an individual investor, appeals this method of apportionment. After settlement negotiations failed, the permanent receiver brought an application for a restraining order and an order to show cause why funds held in the trust account of Topworth’s attorney should not be turned over to the permanent receiver. The district court granted the order, and Topworth, Topworth’s attorney, and a shareholder appeal the turnover of funds. FACTS

On February 28, 1994, the Commodities Futures Trading Commission (“CFTC”) and the California Department of Corporations filed a complaint for a restraining order, preliminary injunction, and other relief against three…