Dena Kaufman | Bloomberg Law Sherman v. SEC, No. 09-55880, 2011 BL 238983 (9th Cir. Sept. 19, 2011) The United States Court of Appeals for the Ninth Circuit reversed the district court's holding that a debt was excepted from discharge pursuant to 11 U.S.C. § 523(a)(19) for violation of securities laws despite the fact that the debtor was not found guilty of any securities law violations. In so ruling, the Ninth Circuit held that 11 U.S.C. § 523(a)(19) prevents the discharge of a debt for securities law violations only in instances where the debtor is found liable for the securities violation creating such debt.
Debtor's Bankruptcy Filing
The Lower Courts' Rulings
Section 523(a)(19) Discharge Exception Is Only Applicable to Debt Where Debtor Himself Is Culpable for Securities Law Violation
Ninth Circuit Reverses District Court Ruling
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