Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—1st Cir.: Relief defendant sat on right to defend against SEC disgorgement claim, (Aug 20, 2026)

By Mark S. Nelson, J.D.

A foreign national relief defendant won a prior appeal but then failed to respond when the SEC renewed summary judgment and disgorgement proceedings on remand.

A German national from whom the SEC sought to obtain disgorgement because of the actions of that person’s son, a U.S. resident, was held to have waited too long to appear in the latest appeal to defend against the agency’s disgorgement claim. On remand from a prior appeal, which the relief defendant won, the district court granted the SEC’s request for discovery and, ultimately summary judgment and disgorgement. Because the relief defendant failed to respond in the second district court proceeding, that court also sanctioned the relief defendant. On appeal for the second time, the First Circuit said the relief defendant waited too long to re-enter the case as an appellant seeking to contest the SEC’s second win in the district court (SEC v. Gastaur, No. 25-1194 (1st Cir. Aug. 19, 2026)).

The case arose from an underlying SEC enforcement action against the relief defendant’s son, whom the agency alleged had facilitated an insider trading scheme that sought to skirt SEC regulations. The relief defendant is a German national while the relief defendant’s son is a U.S. resident.

In a prior appeal to the First Circuit, a panel held that the Due Process Clause barred the SEC’s theory that personal jurisdiction could be imputed from the son, based on the son’s forum contacts, to the relief defendant father who merely unilaterally received $3.3 million in funds from the son.

But on remand from the first appeal, the relief defendant father failed to appear and defend against the SEC’s renewed claim for disgorgement. Upon the second appeal to the First Circuit, the panel took as given that the relief defendant’s argument was that the court should look past the relief defendant’s forfeiture of arguments that could have been raised below (the relief defendant, the panel noted, did not otherwise characterize the delay in seeking to defend). Under the applicable appellate standard of review (“somewhat inconsistent precedent,” according to the panel), the argument was either that forfeited arguments should be heard or the that the lower court engaged in plain error. The panel opted for the forfeiture route.

The panel first declined to mull the relief defendant’s theory that the lower court was bound to drop the relief defendant from the case per the terms of the First Circuit mandate in the first appeal. The panel described the relief defendant’s actions as forfeiture by silence and further observed that the equities did not support any argument regarding the forfeited-mandate rule theory.

The panel also said that the relief defendant’s argument that a prior motion to dismiss applied to the second set of proceedings in the lower court conflated a motion to dismiss for lack of personal jurisdiction (which the relief defendant never tried to extend into the second lower court proceeding) and an objection to jurisdictional discovery.

Lastly, the panel declined to mull the relief defendant’s objections to jurisdictional discovery based on multiple theories, including the application of the Hague Convention, because those issues had not been preserved for appeal.

The case is No. 25-1194.

Judge: Kayatta, W.

Attorneys: Jonathan R. Allen for the SEC. Timothy M. Cornell (Cornell Dolan PC) for Raimund Gastauer.

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