The Eleventh Circuit casts doubts on "obey the law" injunctions

The Eleventh Circuit Court of Appeals last month dealt a blow to the Securities and Exchange Commission (SEC) and its long-standing practice of seeking broad federal court injunction orders directing defendants to refrain from any future violations of securities laws, often referred to as "obey the law" injunctions. In SEC v. Goble, the Eleventh Circuit vacated the "obey the law" injunctions entered against defendant Richard Goble, the founder of North American Clearing Inc (North American), because the injunctions did not satisfy Federal Rule of Civil Procedure 65(d)(1), which requires that injunctions describe, "in reasonable detail ... the act or acts sought to be restrained or required." The SEC brought a civil enforcement action against Goble and others in 2008 alleging that Goble, the founder and owner of North American, had orchestrated a scheme to manipulate the amount of money required to be set aside in North American's reserve account to protect the assets of its customers in the event the firm failed.