Securities Industry Commentator by Bill Singer Esq

From at least 2016 through 2019, RINFRET engaged in a scheme to defraud potential and actual investors in an entity called Plandome Partners L.P. for his own personal gain and for the gain of his family members.  RINFRET offered potential investors the ability to invest in Plandome Partners through the purchase of limited partnership interests.  In soliciting investments, RINFRET falsely represented to potential and actual investors (the "Victims") that he would use all of their investment funds to trade futures contracts tied to the Standard & Poor's 500 index using a propriety trading algorithm he had developed, taking for himself a fee equivalent to 25% of the net profits on the trades. 

Through his fraudulent scheme, RINFRET obtained approximately $19 million in total from approximately six Victims on the false claim that he would utilize their investment funds for trading.  RINFRET's lies and misrepresentations were varied and many.  For example, RINFRET claimed that Plandome Partners traded through certain brokerage accounts, one of which simply did not exist, and two of which were not open at a time when RINFRET claimed to be trading in those accounts. 

Further, RINFRET used only a small portion of the Victims' invested funds to engage in actual trading.  Instead, RINFRET used most of the Victims' money to purchase luxury goods and high-end vacation rentals for himself and family members.  For example, RINFRET used the Plandome Partners account to spend almost $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on the event venue where his son held his engagement party. 

When RINFRET did actually engage in trading with Victims' funds, he generated losses.  But, to prevent his Victims from seeking a return of their money, and to induce additional investments, RINFRET falsely reported excellent investment performance results to the Victims through false and fraudulent monthly account statements that RINFRET typically emailed to the Victims.  RINFRET also sent fabricated brokerage account statements to the Victims.  

MS. KARLAN: Thank you, Mr. Chief Justice, and may it please the Court: 

When a employer fires a male employee for dating men but does not fire female employees who date men, he violates Title VII. The employer has, in the words of Section 703(a), discriminated against the man because he treats that man worse than women who want to do the same thing. And that discrimination is because of sex, again in the words of Section 703(a), because the adverse employment action is based on the male employee's failure to conform to a particular expectation about how men should behave; namely, that men should be attracted only to women and not to men. 

There is no analytic difference between this kind of discrimination and forms of discrimination that have been already recognized by every court to have addressed them. For example, discrimination against men who are a effeminate rather than macho. Like the discrimination here, that discrimination is because of non-conformity with an expectation about how men should behave. 

The attempt to carve out discrimination against men for being gay from Title VII cannot be administered with either consistency or integrity. In the words of the en banc Second Circuit, it forces judges to result -- resort to lexical bean counting where they count up the frequency of epithets, such as "fag," "gay," "queer," "real man," and "fem," to determine whether or not discrimination is based on sex or sexual orientation. 

That attempt is futile because when a man is discriminated against for being gay, he is discriminated against for not conforming to an expectation about how men should behave. Finally, the possibility that some employers, but not the employers here, may have policies of denying employment opportunities both to gay men and to lesbians does not change the unlawfulness of what was alleged by the employees here. 

Labeling those policies under an umbrella phrase like "sexual orientation discrimination" cannot hide the fact that such an employer is a double discriminator. It discriminates against men who do not conform to a male stereotype, and it discriminates against women who do not conform to an expectation about female --

GENERAL FRANCISCO: Mr. Chief Justice, and may it please the Court: 

The issue is not whether Congress can or should prohibit employment discrimination because of sexual orientation. The issue, rather, is whether it did so when it prohibited discrimination because of sex. 

It did not for two reasons. First, sex means whether you're male or female, not whether you're gay or straight. So if you treat all gay and men -- gay men and women exactly the same regardless of their sex, you're not discriminating against them because of their sex. 

Second, any doubt is removed by the history of Title VII and related statutes since, in the face of unanimous interpretation by the courts and the executive branch that persisted for decades, Congress has repeatedly extended other statutes to specifically cover sexual orientation, yet has refused to do so with respect to Title VII. 

The employee's position would nullify that conscious choice. 

And Justice Gorsuch, if I could first address your question about our -- my friend on the other side's argument about the literal meaning of the statute, well, there are essentially two responses to that argument. And they're related.

The first is that under that interpretation, you actually couldn't fire a man for using the woman's restroom because in some metaphysical sense, that man's sex is a but-for cause for his firing. The reason --

[T]he SEC's new Strategic Plan establishes goals and initiatives to ensure that, as the markets change rapidly and new technology, innovation, and global risks evolve, the SEC appropriately adapts its operational focus and remains an effective regulator. We describe further below challenges to the SEC's ability to (1) keep pace with changing markets and innovations; (2) ensure sufficient examination coverage of registered investment advisers and timely enforcement investigations; and (3) leverage technology and analytics to meet mission requirements, while operating with limited resources.

Although in FY 2019, the SEC received an appropriation of about $1.675 billion-a $23 million (or 1.4 percent) increase over the FY 2018 appropriation-for several years, the SEC's annual appropriation was essentially flat, requiring a number of difficult operational choices, including cuts to contracts and a hiring freeze. The SEC implemented the hiring freeze in FY 2017, which resulted in a decrease of more than 400 positions over the last 2 FYs. In 2018 and 2019, divisions and offices reported specific challenges created by staffing levels that have fallen or have not kept pace with workload demands. For example, in its 2018 annual report, the Division of Enforcement (Enforcement) reported that the combined number of positions in the Division and the number of contractors supporting Enforcement's investigation and litigation efforts fell by about 10 percent between FY 2016 and FY 2018. Although the Division continued to exhibit significant enforcement-related activity, Enforcement management reported that, with more resources, the SEC could focus more on individual accountability, and support two key Enforcement priorities: (1) protecting retail investors, and (2) combating cyber-related threats. 

The Office of the Investor Advocate also reported that, because of the hiring freeze, efforts to devote additional resources to the organization's Ombudsman and research functions were hindered, which delayed the ability to build out these programs. Notably, in FY 2018, the Ombudsman-who, among other things, acts as a liaison in resolving problems that retail investors may have with the Commission or with self-regulatory organizations-received 449 new matters, which represented a 99-percent increase over the previous FY. 

• Securities Industry Commentator
• Bill Singer