The plaintiff would suffer irreparable harm without a temporary restraining order. First, the plaintiff unwittingly participated in a deceptive scheme and could face SEC prosecution, reputation damage, and career-ending penalties. Additionally, the proceeds from stock sales could be transferred offshore, defeating the plaintiff's constructive trust claim and preventing recovery. Finally, the plaintiff would be required to file public forms with the SEC announcing stock sales, further hurting the value of his and other stockholders' shares without means of recovery.
The plaintiff would suffer irreparable harm without a temporary restraining order. First, the plaintiff unwittingly participated in a deceptive scheme and could face SEC prosecution, reputation damage, and career-ending penalties. Additionally, the proceeds from stock sales could be transferred offshore, defeating the plaintiff's constructive trust claim and preventing recovery. Finally, the plaintiff would be required to file public forms with the SEC announcing stock sales, further hurting the value of his and other stockholders' shares without means of recovery.
The plaintiff would suffer irreparable harm without a temporary restraining order. First, the plaintiff unwittingly participated in a deceptive scheme and could face SEC prosecution, reputation damage, and career-ending penalties. Additionally, the proceeds from stock sales could be transferred offshore, defeating the plaintiff's constructive trust claim and preventing recovery. Finally, the plaintiff would be required to file public forms with the SEC announcing stock sales, further hurting the value of his and other stockholders' shares without means of recovery.
Case 8:10-cv-01299-AG -JCG Document 4 Filed 08/24/10 Page 11 of 17 Page ID #:164
The defendants' deceptive and misleading conduct in concealing Crisnic true
2 intentions of funding Yao's loan with proceeds ofYao's stock sale subject Yao to 3 irreparable damages. 4 First, Yao unwittingly participated in Crisnic and Gentile's scheme to 5 remove the legends from Yao's stock. If the Court fails to enjoin Crisnic from the 6 sale ofYao's shares, the SEC could prosecute Yao for his participation in the 7 violation of Section 5 of the Securities Act, a non-scienter based violation. Yao 8 would suffer irreparable reputation damage, including a permanent officer and 9 director bar that would end his chosen career. SEC v. M&A West, Inc., 538 F.3d 10 1043 (9th Cir. Cal. 2008) Further, Yao could be subject to civil penalties and held 11 jointly and severally liable for proceeds of the stock sales even though he did not 12 receive the proceeds. Id. Crisnic, an offshore entity, will be virtually immune from 13 the SEC disgorgement action. 14 In addition, Yao would be irreparably injured if without the issuance ofa 15 temporary restraining order, the trustee defendants are free to transfer the proceeds 16 of the stock sales and/or stock off shore to Costa Rica for little or no value - and 17 thereby dissipate the trust res and defeat Yao's constructive trust claim. Fed. Savs. 18 and Loan Ins. Corp. v. Sahni, 868 F.2d 1096, 1097 (9th Cir. 1989) (asset freeze 19 warranted on constructive trust claim where defendants might dissipate their 20 assets); Heckmann v. Steinberg, 168 Cal. App. 3d 119, 137,214 Cal. Rptr. 177, 21 189 (1985) (asset freeze appropriate to prevent defendants from rendering 22 constructive trust remedy ineffectual by dissipating their assets). Yao would have 23 no realistic chance of recovery from Crisnic, a Costa Rican entity. Further, Yao 24 would be obligated to file public reporting forms with the SEC announcing he had 25 sold stock in China Armco, which would hurt the value of his and other 26 stockholders' interest with not recovery from a Costa Rican entity. 27
Philip Banks v. Donald Wolk, Brad Cohen, Larry Cohen, First Fidelity Insurance Corp., James Weiner, Esquire, First Fidelity Financial Group, 918 F.2d 418, 1st Cir. (1990)
Compagnie Des Bauxites De Guinee, a Corporation v. L'Union Atlantique S.A. D'assurances, Vesta (Uk) Insurance Company, and Chiyoda Fire & Marine Insurance Company, Ltd., Tokyo, 723 F.2d 357, 3rd Cir. (1983)