Securities & Exchange Commission v. Global Express Capital Real Estate Investment Fund, I, LLC

MEMORANDUM *

Connie S. Farris and Dawn M. Reese appeal the district court’s grant of summary judgment in favor of the Securities and Exchange Commission (“SEC”), the remedies ordered by the court, and the court’s disposition of several additional motions.

I

The district court properly granted summary judgment against Farris, holding that she had violated section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a); section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78j(b); and Rule 10b-5 thereunder, 17 C.F.R. § 240 .10b-5, in the sale of Global Express Capital Real Estate Investment Fund I, LLC (“Global Capital”) securities.

In order to prove securities fraud under section 17(a), section 10(b), and Rule lob-5, the SEC must first establish that the defendants made a material misstatement or omission in connection with the offer or sale of a security. Basic Inc. v. Levinson, 485 U.S. 224, 231 , 108 S.Ct. 978 , 99 L.Ed.2d 194 (1988). A defendant may violate these provisions by making a statement and failing to include facts that would be necessary to make the statement not misleading. SEC v. Fehn, 97 F.3d 1276 , 1290 n. 12 (9th Cir.1996). A…