A tale as old as time. Woman meets Man. Woman marries Man. They have a child. They divorce. Woman assumes full custody of the child. Man agrees to pay child support and buy a new car for Woman every three years until their child turns nineteen. Years later, Man is sued by the SEC for securities fraud. And for good measure, the SEC also sues Woman as a “relief defendant” from whom to recover assets attributable to fraud so as to disgorge the $134.5k Man spent buying her the car. Plus $35,304 in pre-judgment interest. SEC: You're darn right we are. It's not like she provided valuable consideration in exchange for that car. First Circuit: Um, sure seems like agreeing "to be fully responsible for every aspect of their son's life for the next five to six years" counts as providing value in exchange for that car. “Our conclusion rests not only on a practical understanding of the realities of raising a child but also on decades of research and legal recognition of what caring for a child entails.”
The case is SEC v. Sanchez-Diaz Monge, No. 23-1290 (1st Cir. Dec. 7, 2023).