UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT U.S. SECURITIES & EXCHANGE No. 21-55859 COMMISSION, D.C. No. Plaintiff-Appellee, 2:16-cv-03250- ODW-E v. IMRAN HUSAIN, OPINION

Defendant-Appellant, and GREGG EVAN JACLIN,

Defendant.

Appeal from the United States District Court for the Central District of California Otis D. Wright II, District Judge, Presiding

Argued and Submitted September 21, 2022 Pasadena, California

Filed June 13, 2023 2 USSEC V. HUSAIN

Before: Kim McLane Wardlaw and Sandra S. Ikuta, Circuit Judges, and Kathryn H. Vratil,* District Judge.

Opinion by Judge Vratil; Dissent by Judge Wardlaw

SUMMARY**

Federal Securities Law

The panel reversed the district court’s imposition of a civil penalty in the amount of $1,757,000 against Imran Husain in the Securities and Exchange Commission’s civil enforcement action against Husain and his attorney for violations of federal securities laws. The district court held that Husain had violated federal securities laws and imposed equitable statutory remedies, including a civil penalty of $1,757,000. The parties disagreed what standard of review applied to the factual findings which underlay the district court’s determination of the amount of the civil penalty in this case. The panel held that the Fed. R. Civ. P. 56 principles that applied to requests for injunctive relief and whether to assess a second-tier penalty for violation of the securities laws applied equally to the district court’s determination of * The Honorable Kathryn H. Vratil, United States District Judge for the District of Kansas, sitting by designation. ** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. USSEC V. HUSAIN 3

the amount of a civil penalty. As with all relief under the Securities Act of 1933 and the Securities Exchange Act of 1934, this court reviews the district court’s choice of remedy for abuse of discretion. But on a summary judgment motion, the district court can impose a civil penalty only if it determines that no genuine issues of material fact exist, and all factual uncertainty is resolved in favor of the non-moving party. The panel concluded that the district court necessarily abuses its discretion in granting summary judgment on the amount of a civil penalty if material issues of fact are in dispute. Husain argued that the district court did not correctly determine the amount of his gross pecuniary gain under 15 U.S.C. §§ 77t(d)(2), 78u(d)(3)(B). The district court determined that Husain’s gross pecuniary gain of $1,757,000 was undisputed. The panel held that Husain’s declaration that legal fees of $287,500 were paid from the proceeds from the sale of five shell companies established a genuine issue of material fact whether such proceeds should be attributed to his—rather than his attorney’s—gross pecuniary gain. Because Husain established a genuine issue of material fact whether he received or controlled the entire amount of the proceeds, the district court erred in finding on summary judgment that his gross pecuniary gain was $1,757,000. The panel further held that Husain identified genuine issues of material fact on two additional factors that the district court considered in imposing the civil penalty: the degree of Husain’s scienter and his recognition of the wrongful nature of his conduct. Ultimately, the district court may conclude that Husain’s statements are not credible and that the Assistant U.S. Attorney’s assessment in his criminal case was incorrect, but the dis