Texas Attorney General Ken Paxton on Friday asked a federal judge to once again dismiss a U.S. Securities and Exchange Commission complaint accusing him of defrauding investors in private business deals in 2011.
U.S. District Judge Amos Mazzant III dismissed the SEC’s original complaint on Oct. 7, saying it contained allegations that weren’t supported by federal securities law. The SEC responded two weeks later with a revised complaintthat added details to the allegations that Paxton committed fraud by soliciting investors in Servergy Inc. without disclosing that the tech company was paying him to hawk its stock.
Paxton lawyer Matthew Martens said the new complaint still falls short.
“As the court said four weeks ago, the SEC’s original complaint had no legal basis. Our motion to dismiss filed today explains why the SEC’s new complaint fares no better. The reason is simple — Mr. Paxton did not commit securities fraud,” Martens said.
Paxton’s lawyers told Mazzant that the SEC’s revised complaint failed, again, to show that Paxton had a legal duty to tell potential investors about his sales commission deal with Servergy.
“The commission to date has been unable to cite a single example where a court has recognized such a disclosure duty,” they told the judge.
See here and here for the background, and here for a copy of the Paxton motion. I’m not a lawyer, but I have a hard time imagining what the SEC could have added that they didn’t include in the first place that might make a difference. But what do I know? We’ll see what the judge says this time. The DMN and the Chron have more.