WILLFULNESS IN A POST-ROBARE WORLD: EVIDENCE OF SUBJECTIVE INTENT, NOT NEGLIGENCE CONDUCT, IS NEEDED TO SHOW WILLFUL VIOLATIONS OF SECURITIES LAWS

The D.C. Circuit's holding in Robare Group, Ltd., v. SEC, potentially marks the end of at least twenty years of permissive judicial interpretation of the term "willful," as found in various provisions of securities laws-including the Investment Advisers Act of 1940. Traditionally, wil...

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Bibliographic Details
Published in:Fordham journal of corporate & financial law 2020-04, Vol.25 (2), p.501-527
Main Author: Aguirre, Kevin
Format: Article
Language:English
Subjects:
Administrative law
Attorneys
Case law
Disclosure
Enforcement
Federal court decisions
Fines & penalties
Investment advisors
Investments
Judges & magistrates
Negligence
Professionals
Sanctions
Scandals
Securities industry
Securities markets
Securities regulations
State court decisions
Tax liens
Violations
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Summary:The D.C. Circuit's holding in Robare Group, Ltd., v. SEC, potentially marks the end of at least twenty years of permissive judicial interpretation of the term "willful," as found in various provisions of securities laws-including the Investment Advisers Act of 1940. Traditionally, willful violations of securities laws only required evidence that defendants were aware of their conduct, not that they knew that their conduct was unlawful. This low burden of proof operates in practice as a negligence standard. However, Robare makes a key distinction between evidence of negligent conduct and "subjectively intentional" violations under section 207 of the Advisers Act to prove that a defendant willfully violated securities laws. The Court's analysis has not yet been fully applied in decisions by the SEC and administrative law judges. In addition, a close reading of Robare reveals that evidence indicating a defendant's good-faith belief of compliance with securities laws is a viable defense against claims of willful violations under the Securities Act, the Exchange Act, and Advisers Act.
ISSN:1532-303X