Henke

MEMORANDUM **

Chan Desaigoudar, the former Chief Executive Officer and Chairperson of the board of directors of California Micro Devices (CMD), pled guilty to a single count of insider trading. At the conclusion of the subsequent civil suit brought by the SEC, the district court ordered Desaigoudar to, inter alia, disgorge an amount equal to his unlawfully avoided losses ($572,996.66) and pay prejudgment interest on the disgorged amount ($308,428). Desaigoudar appeals, challenging only the imposition of prejudgment interest on the disgorged funds.

Whether prejudgment interest will be awarded in a securities fraud case is a question of “fairness, lying within the court’s sound discretion....” Wessel v. Buhler, 437 F.2d 279, 284 (9th Cir.1971).

The district court did not abuse its discretion in awarding prejudgment interest on the avoided loss amount. When a defendant commits securities fraud, the disgorgement remedy should “include all gains flowing from the illegal activities.” SEC v. Cross Fin. Servs., Inc., 908 F.Supp. 718, 734 (C.D.Cal.1995), aff'd sub nom. SEC v. Colello, 139 F.3d 674 (9th Cir.1998). Such “gains include prejudgment interest to ensure that the wrongdoer does…