Willfulness in a Post-Robare World: Evidence of Subjective Intent, Not Negligence Conduct, is Needed to Show Willful Violations of Securities Laws

Authors

Kevin Aguirre, Fordham University School of Law

Keywords

Robare, Student Note, Securities Enforcement

Abstract

The D.C. Circuit's holding in Robare Group, Ltd., v. SEC, potentially marks the end of at least twenty years of permissive judicial interpretation of the term "willful," as found in various provisions of securities laws-including the Investment Advisers Act of 1940. Traditionally, willful violations of securities laws only required evidence that defendants were aware of their conduct, not that they knew that their conduct was unlawful. This low burden of proof operates in practice as a negligence standard. However, Robare makes a key distinction between evidence of negligent conduct and "subjectively intentional" violations under section 207 of the Advisers Act to prove that a defendant willfully violated securities laws. The Court's analysis has not yet been fully applied in decisions by the SEC and administrative law judges. In addition, a close reading of Robare reveals that evidence indicating a defendant's good-faith belief of compliance with securities laws is a viable defense against claims of willful violations under the Securities Act, the Exchange Act, and Advisers Act.

Recommended Citation

Kevin Aguirre, Willfulness in a Post-Robare World: Evidence of Subjective Intent, Not Negligence Conduct, is Needed to Show Willful Violations of Securities Laws, 25 Fordham J. Corp. & Fin. L. 501 (2020).
Available at: https://ir.lawnet.fordham.edu/jcfl/vol25/iss2/5