Hickey

This case presents us with the important and intriguing question of when a court may freeze assets of a nonparty to effectuate relief granted in a securities fraud enforcement action. We conclude that the inherent equitable power of a district court allows it to freeze the assets of a nonparty when that nonparty is dominated and controlled by a defendant against whom relief has been obtained in a securities fraud enforcement action.

I

These consolidated appeals arise from a scheme that defrauded investors in a limited partnership of $15 million. Legal proceedings began in September 1994 when the Securities and Exchange Commission (“SEC”) filed a complaint against John Hickey, Mamie Tang, and several corporate entities controlled by Hickey and Tang. This matter has traveled a long and winding path since 1994, and the trail continues to lengthen as Hickey is currently awaiting trial on a related federal criminal indictment.

Hickey and Tang collected money from investors by promising to develop property in California’s Napa and Sonoma Valleys. The SEC complaint alleged that Hickey and Tang offered unregistered limited partnerships in Continental Capital Income Fund II…