Judge tosses SEC civil complaint against Texas attorney general; criminal case is pending
Texas Attorney General Ken Paxton.
Texas Attorney General Ken Paxton has one less legal problem related to his recruitment of investors for a technology company.
A federal judge in Texas on Thursday dismissed a civil securities fraud complaint filed against Paxton by the Securities and Exchange Commission, report the Austin American-Statesman, Courthouse News Service and the Houston Chronicle.
The civil suit had alleged that Paxton should have disclosed he was compensated for promoting the stock of Servergy Inc. But U.S. District Judge Amos L. Mazzant said Paxton “had no plausible legal duty” to reveal the payments.
“As alleged, Paxton’s conduct simply does not give rise to liability under the federal securities laws as they exist today,” Mazzant wrote in an opinion for the suit (PDF). “And it is not the province of the court to stretch federal securities laws beyond their scope to prescribe liability based on moral considerations or policy concerns.”
Paxton said in a statement that the decision confirms that the charges were baseless. “I have maintained all along this whole saga is a political witch hunt,” Paxton said. “Someone needs to hold the SEC accountable for this travesty.”
Paxton still is facing state criminal charges of securities fraud and failure to register with the state securities board. His lawyer in the criminal case, William Mateja of Polsinelli, said the focus now is on full exoneration in the state case “where the special prosecutor’s burden is even higher and the fraud allegations in the SEC case mirror those in the state case.”
