SEC ordered to pay $1.8 million in Legal Fees after US Judge dismisses Debt Box Case
A United States judge has ordered the Securities and Exchange Commission (SEC) to pay almost $1.8 million in legal fees after the case against Digital Licensing Inc., doing business as Debt Box, was dismissed. The SEC's lawsuit against Debt Box was dismissed by the federal judge without prejudice, which means it might be reopened at a later time.
In an order filed on May 28, Utah District Court Judge Robert Shelby ruled that the SEC needs to pay approximately $1 million for attorney fees and relevant legal fees. In addition, the judge ordered $750,000 for receiver fees and costs amounting to just over $1.82 million. "The court guarantees in this order that the final amount of fees requested by the defendants and the receiver is reasonable."
Judge Shelby, in a separate filing on Tuesday, granted the SEC's request to have the case dismissed without prejudice. " The filing stated that the SEC believes that dismissal without prejudice is the right thing to do as it will protect investors and the public interest and won't result in legal prejudice for the defendants."
The commission was mandated to pay "all attorney fees and costs arising from the improvidently entered ex parte relief" as part of the sanctions against the SEC. Judge Shelby basically decided that, with the exception of one $649 fee, all costs requested by the defendants in the case were "appropriate."
In a tweet, DEBT Box shared the news, referring to the case's dismissal as a victory for the company and stating that the announcement means the SEC cannot proceed with the case as it is closed; any future action by the commission would have to go through Judge Shelby.
🚀 We have some fantastic news to share with our D.E.B.T. Box community today!
— D.E.B.T. (@TheDebtBox) May 28, 2024
The U.S. District Court for the District of Utah has officially dismissed the SEC's case against us without prejudice. This means the case is closed, and any future action by the SEC would have to go… pic.twitter.com/aGiNVxMYbz
The SEC claimed in its August 2023 lawsuit that DEBT Box sold unregistered securities to investors, defrauding them out of almost $49 million. Also, the regulator was able to freeze the company's assets through the acquisition of an ex parte restraining order, which prevented the company from challenging the order in court.
Judge Shelby concluded in a March filing that the SEC had made "false, mischaracterized, and misleading" statements in order to obtain the restraining order, thereby "engaging in bad faith conduct." He ordered the regulator to reimburse the defendants' legal costs as well as other penalties. Two attorneys for the SEC who were leading the Debt Box case reportedly quit in April after the Utah judge declared the case to be “marred by false statements and misrepresentations.”
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