The 10th U.S. Circuit Court of Appeals recently ruled that a defendant was bound by a consent order with the SEC, rejecting the defendant's argument that he wasn't bound by it because his attorney didn't properly explain it to him.
The SEC sued Brian Fox, a promoter of oil and gas investments, for violating the securities laws during the offer and sale of shares in certain oil and gas leases. During his deposition, "which allegedly did not go well for him", Fox consulted with his attorney and consented to a proposed judgment against him that enjoined him from future violations and also imposed a monetary penalty.
When the SEC moved to enter judgment and to order disgorgement, interest and civil penalties, Fox, who no longer had an attorney, opposed the monetary relief. Fox told the court that he did not understand the consent order when he signed it, and blamed his lawyer for not properly explaining it.
The District Court rejected his position and entered judgment against him, requiring him to pay $320,000 in disgorgement, plus a $100,000 civil penalty. Fox appealed, and the 10th Circuit, expressing skepticism of Fox's position, affirmed, finding that the consent order's terms were "clear and unambiguous" and that there was no record that his attorney coerced him into quickly signing the agreement.
The takeaway? The immediate signing of a written consent agreement on the belief that its terms are not ironclad is, perhaps, not the best way to handle a deposition that isn't going very well.
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