SEC v. Ahmed

21-1686 (L)
SEC v. Ahmed
United States Court of Appeals
for the Second Circuit
August Term 2022
Argued: January 18, 2023
Decided: June 28, 2023
Nos. 21-1686, 21-1712
UNITED S TATES S ECURITIES AND E XCHANGE C OMMISSION,
Plaintiff-Appellee,
v.
IFTIKAR A. AHMED, S HALINI AHMED, I.I. 1, A MINOR CHILD, BY AND
THROUGH HIS NEXT FRIENDS I FTIKAR AND S HALINI AHMED, HIS
PARENTS, I.I. 2, A MINOR CHILD, BY AND THROUGH HIS NEXT FRIENDS
IFTIKAR AND S HALINI AHMED, HIS PARENTS, I.I. 3, A MINOR CHILD, BY
AND THROUGH HIS NEXT FRIENDS IFTIKAR AND S HALINI AHMED, HIS
PARENTS, I-C UBED D OMAINS, LLC, S HALINI AHMED 2014 G RANTOR
RETAINED ANNUITY TRUST , DIYA H OLDINGS, LLC, DIYA REAL
H OLDINGS, LLC,
Defendants-Appellants,
v.
J ED H ORWITT ,
Receiver-Appellee.*
* The Clerk of Court is respectfully directed to amend the caption
accordingly.

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On Appeal from the United States District Court
for the District of Connecticut
Before: W ALKER, RAGGI , and P ARK, Circuit Judges.
Defendant Iftikar Ahmed defrauded his former employer and
its investors of some $65 million over the span of a decade. His
scheme ended in 2015 when he was indicted on unrelated insider-
trading charges and a subsequent internal investigation revealed the
full breadth of his wrongdoing. The Securities and Exchange
Commission (“SEC”) brought this civil enforcement action against
Ahmed for various violations of the securities laws.
To secure a potential disgorgement judgment, the SEC joined
Ahmed’s family and related entities as Relief Defendants, and the
district court (Arterton, J.) froze Ahmed’s and the Relief Defendants’
assets. Ahmed is currently a fugitive from justice, apparently
residing in India, so the district court excluded him from discovery of
the SEC’s investigative file. Due to a lack of excess frozen funds, the
district court also denied Ahmed access to funds to hire counsel.
The district court granted the SEC’s motion for summary judgment
and awarded disgorgement, supplemental enrichment (including
prejudgment interest and actual gains), and civil penalties against
Ahmed. The district court also adopted the SEC’s theory that
Ahmed is the equitable owner of assets held in the name of the Relief
Defendants as “nominees.”
On appeal, Ahmed and the Relief Defendants challenge the
district court’s judgment and calculation of disgorgement. The
Relief Defendants also move to stay the liquidation of frozen assets
by the Receiver-Appellee pending resolution of these consolidated
appeals. We affirm the district court’s (1) exclusion of Ahmed from
discovery and denial of his access to frozen funds to hire counsel;
(2) calculation of Ahmed’s disgorgement obligation; and
(3) retroactive application of the 2021 amendments to the Securities
Exchange Act of 1934 to Ahmed’s disgorgement obligation. We

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conclude, however, that the district court (4) failed to assess whether
actual gains on the frozen assets were unduly remote from Ahmed’s
fraud, and (5) should have applied an asset-by-asset approach to
determine whether the Relief Defendants are in fact only nominal
owners of their frozen assets.
The district court’s order is AFFIRMED in part and VACATED
AND REMANDED in part. In a separate order, we dismiss as moot
Defendants’ appeals from the district court’s liquidation orders. The
Relief Defendants’ motion for a stay is DENIED as moot, and all stays
are VACATED.
V INCENT L EVY (Gregory Dubinsky, Andrew C. Indorf, on
the brief), Holwell Shuster & Goldberg LLP, New York,
NY, for Defendant-Appellant Iftikar A. Ahmed.
ADAM G. UNIKOWSKY (Zachary C. Schauf, on the brief),
Jenner & Block LLP, Washington, DC, for Defendants-
Appellants Shalini Ahmed, I.I. 1, a minor child, by and
through his next friends Iftikar and Shalini Ahmed, his
parents, I.I. 2, a minor child, by and through his next friends
Iftikar and Shalini Ahmed, his parents, I.I. 3, a minor child, by
and through his next friends Iftikar and Shalini Ahmed, his
parents, I-Cubed Domains, LLC, Shalini Ahmed 2014 Grantor
Retained Annuity Trust, DIYA Holdings, LLC, DIYA Real
Holdings, LLC.
S TEPHEN G. YODER, Senior Litigation Counsel, for Dan M.
Berkovitz, General Counsel, and John W. Avery, Deputy
Solicitor, Securities and Exchange Commission,
Washington, DC, for Plaintiff-Appellee Securities and
Exchange Commission.

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John L. Cesaroni, Christopher H. Blau, Stephen M.
Kindseth, Zeisler & Zeisler, P.C., Bridgeport, CT, for
Receiver-Appellee Jed Horwitt.
P ARK, Circuit Judge:
Defendant Iftikar Ahmed defrauded his former employer and
its investors of some $65 million over the span of a decade. His
scheme ended in 2015 when he was indicted on unrelated insider-
trading charges and a subsequent internal investigation revealed the
full breadth of his wrongdoing. The Securities and Exchange
Commission (“SEC”) brought this civil enforcement action against
Ahmed for various violations of the securities laws.
To secure a potential disgorgement judgment, the SEC joined
Ahmed’s family and related entities as Relief Defendants, and the
district court (Arterton, J.) froze Ahmed’s and the Relief Defendants’
assets. Ahmed is currently a fugitive from justice, apparently
residing in India, so the district court excluded him from discovery of
the SEC’s investigative file. Due to a lack of excess frozen funds, the
district court also denied Ahmed access to funds to hire counsel.
The district court granted the SEC’s motion for summary judgment
and awarded disgorgement, supplemental enrichment (including
prejudgment interest and actual gains), and civil penalties against
Ahmed. The district court also adopted the SEC’s theory that
Ahmed is the equitable owner of assets held in the name of the Relief
Defendants as “nominees.”
On appeal, Ahmed and the Relief Defendants challenge the
district court’s judgment and calculation of disgorgement. The
Relief Defendants also move to stay the liquidation of frozen assets

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by the Receiver-Appellee pending resolution of these consolidated
appeals. We affirm the district court’s (1) exclusion of Ahmed from
discovery and denial of his access to frozen funds to hire counsel;
(2) calculation of Ahmed’s disgorgement obligation; and
(3) retroactive application of the 2021 amendments to the Securities
Exchange Act of 1934 to Ahmed’s disgorgement obligation. We
conclude, however, that the district court (4) failed to assess whether
actual gains on the frozen assets were unduly remote from Ahmed’s
fraud, and (5) should have applied an asset-by-asset approach to
determine whether the Relief Defendants are in fact only nominal
owners of their frozen assets.
I. BACKGROUND
A. Factual Background
In 2004, Ahmed joined Oak Management Corporation (“Oak”),
a venture-capital firm. Ahmed was responsible for identifying and
recommending “portfolio companies” in which Oak might invest and
negotiating the terms of those investments.
Over the course of a decade, Ahmed stole over $65 million from
Oak and ten portfolio companies, identified as Companies A to J in
the pleadings, using the same basic scheme in each fraudulent
transaction. First, Ahmed opened bank accounts that he personally
controlled ostensibly in the name of Oak and its portfolio companies.
Second, he used those accounts to divert monies intended for Oak
funds and portfolio companies into bank accounts that he and his wife
controlled. To cover his tracks, Ahmed submitted fraudulent
invoices and contracts to Oak, misrepresenting things like the size of
investments, the currency exchange rates applicable to transactions,
and the need to make payments to tax authorities or to reimburse

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legal and other fees. As one example of Ahmed’s fraud, in 2013, he
negotiated an Oak entity’s investment in Company C that was
conditioned on Company C redeeming shares of an entity that,
unbeknownst to Oak, was owned by Ahmed. Ahmed pocketed
more than $8 million from this particular scheme.1
In April 2015, Ahmed was arrested on criminal charges in an
insider-trading case. See United States v. Kanodia, No. 15-cr-10131 (D.
Mass. Apr. 21, 2015), ECF 19.2 Following his arrest, Oak conducted
1 This transaction is described more fully in Section II.B.3.a, infra.
2 Ahmed has been involved in at least four other cases relating to his
conduct at Oak. First, Ahmed and a codefendant were indicted for the
aforementioned insider trading, which remains pending against Ahmed
given his fugitive status. See United States v. Kanodia, No. 15-cr-10131 (D.
Mass.). The First Circuit affirmed the conviction of Ahmed’s codefendant,
see United States v. Kanodia, 943 F.3d 499 (1st Cir. 2019), as well as the district
court’s order of a default judgment of forfeiture on Ahmed’s appearance
bond, see United States v. Ahmed, Nos. 21-1193, 21-1194, 2022 WL 18717740,
at *1 (1st Cir. Nov. 1, 2022). Second, the SEC and Ahmed settled a civil
enforcement action based on the same insider-trading conduct in 2019, and
the district court entered a corresponding consent judgment. See Final J.
as to Def. Iftikar Ahmed & Relief Def. Rakitfi Holdings, LLC, SEC v. Kanodia,
No. 15-cv-13042 (D. Mass. July 8, 2019), ECF 198. Third, Ahmed was
indicted in a separate fraud and criminal money-laundering prosecution,
which remains pending. See Indictment, United States v. Ahmed, No. 16-cr-
10154 (D. Mass. June 1, 2016), ECF 34. Fourth, Oak’s former client NMR
E-Tailing LLC sued Oak and Ahmed. See Decision After Trial on Damages
at 3, NMR E-Tailing LLC v. Oak Inv. Partners, No. 656450/2017 (N.Y. Sup. Ct.
June 21, 2021), ECF 406. Oak and NMR settled, but Ahmed proceeded to
trial on damages (with liability established by default) pro se and as a
fugitive, resulting in a judgment against him for $7.5 million in
compensatory damages, $500,000 in punitive damages, and prejudgment
interest. See id. at 1-3, 11. On appeal, the trial court’s judgment was

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an internal investigation, which revealed that Ahmed had
misappropriated approximately $67 million between 2005 and 2015.
Oak terminated Ahmed for cause and denied Ahmed “carried
interest”—effectively a bonus tied to Oak’s performance—based on a
provision of its General Partnership Agreement.
B. Procedural Background
1. Preliminary Injunction
On May 6, 2015, the SEC filed a civil complaint against Ahmed,
alleging violations of the Securities Exchange Act of 1934, the
Securities Act of 1933, and the Investment Advisers Act of 1940. The
SEC also named the Relief Defendants3 as the recipients of ill-gotten
gains and joint owners of accounts receiving such gains. To secure
a potential judgment, the district court granted a temporary
restraining order, freezing $55 million in assets. After the SEC
moved for a preliminary injunction to continue the TRO, Ahmed fled
the United States and remains a fugitive.
After a two-day hearing, the district court granted a
preliminary injunction, freezing approximately $65 million for
disgorgement, $9.3 million for potential prejudgment interest, and
$44 million for potential civil penalties ($118.3 million in total). We
affirmed the order. See SEC v. I-Cubed Domains, LLC, 664 F. App’x
affirmed. See Decision and Order, NMR E-Tailing LLC v. Oak Inv. Partners,
No. 2021-1883 (N.Y. App. Div. 1st Dep’t May 25, 2023), ECF 53.
3 The Relief Defendants are Shalini Ahmed (Ahmed’s wife),
Ahmed’s three minor sons, and several companies held in the Ahmeds’
names or for their benefit: Iftikar Ali Ahmed Sole Proprietorship; I-Cubed
Domains, LLC; Shalini Ahmed 2014 Grantor Retained Annuity Trust; DIYA
Holdings, LLC; and DIYA Real Holdings, LLC.

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53, 55-56 (2d Cir. 2016). The district court later denied Ahmed’s
request for $6 million from frozen funds to hire counsel. In addition,
during discovery, Ahmed requested access to confidential
information in the SEC’s possession, but the district court denied his
request, citing the fugitive-disentitlement doctrine.
2. Summary Judgment
Although Ahmed’s fugitive status has remained unchanged,
the legal landscape has not. Before proceeding to summary
judgment, the district court held the case pending the Supreme
Court’s decision in Kokesh v. SEC, 137 S. Ct. 1635 (2017). Kokesh held
that “[d]isgorgement in the securities-enforcement context is a
‘penalty’ within the meaning of [28 U.S.C.] § 2462, and so
disgorgement actions must be commenced within five years of the
date the claim accrues.” Id. at 1639. Kokesh did not address,
however, “whether courts possess authority to order disgorgement in
SEC enforcement proceedings.” Id. at 1642 n.3. After the decision,
the parties proceeded to summary judgment, and Ahmed moved
once more to modify the asset freeze. The district court bifurcated
the case into liability and remedy stages, and applying Kokesh’s five-
year bar, modified the asset freeze to freeze assets up to $89 million.
At the liability stage, the district court entered summary
judgment for the SEC. At the remedies stage, the district court
awarded a permanent injunction, $41,920,639 in disgorgement, $21
million in civil penalties, $1,520,953 in prejudgment interest for the
period before the asset freeze at the IRS underpayment rate, and
“actual returns on the frozen assets” during the pendency of the asset
freeze. Special App’x at SPA-98 to -109. The district court rejected
Ahmed’s argument that Kokesh barred disgorgement, and it denied an

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offset for the “carried interest” that Ahmed forfeited to Oak upon his
termination for “Disabling Conduct” within the meaning of his
contract with Oak.
The district court also adopted the “nominee” theory as to the
assets held in the name of the Relief Defendants. Applying a six-
factor test, the district court concluded that these frozen assets were
equitably owned by Ahmed and that the Relief Defendants had failed
to refute the SEC’s supporting evidence. Although the district court
permitted liquidation of frozen assets to proceed under the
supervision of Receiver-Appellee Jed Horwitt (the “Receiver”), it
stayed distribution pending appeal. In a ruling issued in
conjunction with an amended final judgment, the district court
clarified that the judgment did “not extinguish the SEC’s remaining
alternative theory of liability against the Relief Defendants” under
SEC v. Cavanagh (Cavanagh I), 155 F.3d 129 (2d Cir. 1998). Special
App’x at SPA-162.
3. Initial Appeal
After Ahmed filed a notice of appeal, we held the case in
abeyance pending the Supreme Court’s decision in Liu v. SEC, 140
S. Ct. 1936 (2020).4 Although the Exchange Act did not explicitly
authorize a “disgorgement” remedy, Liu held that disgorgement is a
form of “equitable relief” authorized under 15 U.S.C. § 78u(d)(5)—
answering the question left open by Kokesh. Liu, 140 S. Ct. at 1940.
4 Ahmed also moved for the release of funds to pay for counsel. A
motions panel of this Court construed Ahmed’s motion as seeking
mandamus relief directing the district court to rule on a similar motion then
before it and denied Ahmed’s motion as moot after the district court denied
the motion.

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Shortly after Liu, Congress enacted the William M. (Mac)
Thornberry National Defense Authorization Act for Fiscal Year 2021
(“NDAA”), Pub. L. No. 116-283, § 6501(a)-(b), 134 Stat. 3388, 4625-26
(codified at 15 U.S.C. § 78u(d)(3), (7)-(8)). The NDAA amended the
Exchange Act in three ways relevant here. First, the NDAA
explicitly authorized the SEC to pursue disgorgement in civil actions.
See NDAA § 6501(a), 134 Stat. at 4625-26 (codified at 15 U.S.C.
§ 78u(d)(7)). Second, the NDAA extended the statute of limitations
for “a claim for disgorgement” to “not later than 10 years after the
latest date of the violation” for conduct under certain securities laws.
Id. at 4626 (codified at 15 U.S.C. § 78u(d)(8)). Finally, the NDAA
provided that its amendments “shall apply with respect to any action
or proceeding that is pending on, or commenced on or after, the date
of enactment of this Act.” Id.
The SEC moved to remand for recalculation of Ahmed’s
disgorgement obligation under the NDAA. Ahmed opposed,
arguing that (1) this Court lacked jurisdiction to remand because the
SEC failed to cross-appeal; (2) application of the NDAA would
reopen a final judgment; (3) the NDAA lacks a clear retroactivity
command, and retroactive application would violate the Ex Post
Facto Clause; and (4) the NDAA does not apply to disgorgement
under 15 U.S.C. § 78u(d)(5). A motions panel granted the SEC’s
motion and remanded “for a determination of Appellant’s
disgorgement obligation consistent with § 6501 of the [NDAA], and,
if appropriate, entry of an amended judgment.” SEC v. Ahmed, Nos.
18-2903, 18-2932, 19-102, 19-103, 19-355, 19-2974, 19-3375, 19-3610, 19-
3721, 2021 WL 1171712, at *1 (2d Cir. Mar. 11, 2021).

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4. Remand and Liquidation
On remand, the district court found that the NDAA’s ten-year
statute of limitations applied and increased the disgorgement amount
from $41,920,639 to $64,171,646.14, with $9,755,798.34 in prejudgment
interest. The district court also rejected the same arguments Ahmed
raised before the motions panel. Ahmed and the Relief Defendants
appealed again, giving rise to this action.
The district court also approved the Receiver’s proposed
liquidation plan, which was divided into two phases (“First
Liquidation Order”). Phase 1 would liquidate non-unique assets,
and phase 2 would liquidate unique assets as needed to satisfy the
judgment. The district court denied the Relief Defendants’ motion
for a stay pending appeal. Defendants then appealed the First
Liquidation Order, which this Court held in abeyance pending
resolution of the merits of this appeal.
Phase 1 ended with $118 million in the receivership estate,
which was insufficient to secure the total judgment, then estimated to
be in excess of $125 million. The district court approved most of the
Receiver’s phase 2 plan and rejected the Relief Defendants’ motion to
stay liquidation of the unique assets pending appeal (“Second
Liquidation Order”). Defendants appealed the Second Liquidation
Order, with the Relief Defendants moving to stay liquidation of the
unique assets. This Court held the appeals of the Second
Liquidation Order in abeyance pending our decision in these appeals
from the redetermined amended final judgment. While the Relief
Defendants’ stay motion was pending, the Receiver indicated that he
would begin phase 2 by liquidating a MetLife life-insurance policy on
December 28, 2022, and listing the Ahmeds’ two Park Avenue

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apartments for sale on May 8, 2023. We granted temporary
administrative stays pending our decision on the Relief Defendants’
motion for a stay of liquidation.
II. DISCUSSION
Ahmed first argues that summary judgment was improper
because he was excluded from discovery and denied access to funds
to hire counsel. Ahmed also argues that the district court
miscalculated disgorgement by incorrectly approximating net profits
and erroneously applying the NDAA. The Relief Defendants raise
two additional arguments: first, the district court improperly
calculated prejudgment interest and actual gains, and second, it
misapplied the “nominee” doctrine. Although we are not
persuaded by Ahmed’s arguments, we find merit in some of the Relief
Defendants’ arguments.
A. Summary-Judgment Challenges
Ahmed challenges the district court’s summary-judgment
order, arguing that the district court erred by limiting his access to
discovery and by denying his request to unfreeze assets to hire
counsel. Neither argument is persuasive.
1. Discovery Limitations
The district court did not abuse its discretion by denying
Ahmed extraterritorial access to confidential records in the SEC’s
possession. Drawing on the fugitive-disentitlement doctrine, the
district court reasoned that Ahmed had “removed himself from the
jurisdiction of the [district court],” so the district court had “no ability
to enforce” an “appropriate protective order limiting his use of the
documents produced.” Endorsement Order Denying Def.’s Mot. for

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Full Access to the SEC’s Investigative File at 3, SEC v. Ahmed, No. 15-
cv-675 (D. Conn. Aug. 22, 2016), ECF 286. The district court thus
denied Ahmed access to SEC discovery materials. Ahmed argues
that this denied him “any practical means of defending himself” in
violation of “the adversarial process set forth in the Federal Rules of
[Civil] Procedure” and the Due Process Clause. Appellant’s Br. at
53, 60-61. We disagree.
Federal Rule of Civil Procedure 26(c)(1) permits a district court
to “issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.” See
Degen v. United States, 517 U.S. 820, 826 (1996) (explaining that district
courts have broad authority “to manage discovery in a civil suit,
including the power to enter protective orders limiting discovery as
the interests of justice require”); accord Empire Blue Cross & Blue Shield
v. Finkelstein, 111 F.3d 278, 281 (2d Cir. 1997). We review discovery
orders for abuse of discretion. See Lederman v. N.Y.C. Dep’t of Parks
& Recreation, 731 F.3d 199, 202 (2d Cir. 2013); United States v.
Technodyne LLC, 753 F.3d 368, 378 (2d Cir. 2014).
The district court’s discovery restrictions here were a
reasonable exercise of its broad power to enforce protective orders.
“Courts invested with the judicial power of the United States have
certain inherent authority to protect their proceedings and judgments
in the course of discharging their traditional responsibilities.”
Degen, 517 U.S. at 823. A district court retains “authority to manage
discovery,” including “limit[ing] discovery in the interests of justice.”
Finkelstein, 111 F.3d at 281; see also Degen, 517 U.S. at 827 (“A federal
court has at its disposal an array of means to enforce its orders.”).
The discovery material at issue was subject to a protective order

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under Rule 26 based on the confidential and sensitive nature of the
documents, and the district court determined that the court could not
enforce such an order because Ahmed had removed himself from the
court’s jurisdiction. The district court’s limitation of Ahmed’s
extraterritorial access to the protected materials thus constituted a
reasonable exercise of the court’s “inherent authority to protect” its
own discovery orders to limit Ahmed’s access to civil discovery in
light of his status as a fugitive. Degen, 517 U.S. at 823. Ahmed’s
proposed alternatives, like monetary sanctions, would not ensure the
adequate protection of confidential information in this case.
We affirm the discovery limitations as a reasonable means of
enforcing a protective order, so we do not decide whether the
fugitive-disentitlement doctrine might apply in this case consistent
with due process.5 See Wells Fargo Advisors, LLC v. Sappington, 884
F.3d 392, 396 n.2 (2d Cir. 2018) (“We are free to affirm on any ground
5 Under the fugitive-disentitlement doctrine, “a person who is a
fugitive from justice may not use the resources of the civil legal system
while disregarding its lawful orders in a related criminal action.” United
States v. Eng, 951 F.2d 461, 464 (2d Cir. 1991), abrogated on other grounds by
Degen, 517 U.S. 820. A blunt instrument, the fugitive-disentitlement
doctrine “forbid[s] all participation by the absent claimant.” Degen, 517
U.S. at 826 (emphasis added). Although we do not decide whether the
doctrine applies here, we note that the purposes underlying it are served
by the district court’s order. Disentitlement is rooted in a court’s ability to
enforce a “judgment on review,” “discourage[] the felony of escape,”
“encourage[] voluntary surrenders,” and “promote[] the efficient, dignified
operation of the courts.” Id. at 824 (cleaned up). Ahmed faces several
criminal charges, see supra note 2, and granting him full access to discovery
could further discourage his voluntary return to the United States and grant
him an unfair advantage in those proceedings to the extent they are based
on the same or related underlying conduct.

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that finds support in the record, even if it was not the ground upon
which the trial court relied.” (cleaned up)).
2. Denial of Funds to Hire Counsel
The district court did not abuse its discretion by declining to
unfreeze assets for Ahmed to hire counsel. Ahmed argues that the
district court “over-froze [his] liquid assets, and thus improperly
deprived him of the ability to use his money to hire counsel.”
Appellant’s Br. at 61. For the reasons stated infra, the district court
properly calculated disgorgement, so it did not abuse its discretion by
concluding that there were no frozen funds available for Ahmed to
hire counsel.6 It is well-settled that a defendant has no right to use
tainted assets for his legal defense. See Caplin & Drysdale, Chartered
v. United States, 491 U.S. 617, 626 (1989) (“A defendant has no Sixth
Amendment right to spend another person’s money for services
rendered by an attorney.”). Moreover, Ahmed has no constitutional
right to counsel in this civil enforcement action. See United States v.
Coven, 662 F.2d 162, 176 (2d Cir. 1981). In any event, the Relief
Defendants have hired able counsel who have also represented
Ahmed’s interests throughout these proceedings.
6 Our decision to vacate and remand the district court’s award of
“actual gains” has no bearing on the denial of Ahmed’s motion to unfreeze
funds for two reasons. First, the “actual gains” calculation is part of the
post-judgment liquidation process, whereas Ahmed’s motion to unfreeze
funds relates to the scope of the preliminary injunction. Second, “actual
gains” are calculated based on the growth of disgorged assets regardless of
the size of the judgment. So “actual gains” and disgorgement are
independent for present purposes.

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B. Disgorgement
The district court did not abuse its discretion in calculating
disgorgement. First, the district court accurately estimated net
profits and reasonably declined to offset Ahmed’s forfeited “carried
interest.” Second, the district court properly gave retroactive effect
to the NDAA.
1. Legal Standard
The Exchange Act, as amended, states that “[i]n any action or
proceeding brought by the Commission under any provision of the
securities laws, the Commission may seek, and any Federal court may
order, disgorgement.” 15 U.S.C. § 78u(d)(7). “Disgorgement
serves to remedy securities law violations by depriving violators of
the fruits of their illegal conduct.” SEC v. Contorinis, 743 F.3d 296,
301 (2d Cir. 2014). We review disgorgement orders for abuse of
discretion. SEC v. Warde, 151 F.3d 42, 49 (2d Cir. 1998). “We review
de novo questions of a statute’s interpretation and constitutionality.”
United States v. al Kassar, 660 F.3d 108, 129 (2d Cir. 2011).
2. Equitable Disgorgement After the NDAA
As a preliminary matter, the parties assume, and we agree, that
Liu’s equitable limitations on disgorgement survive the NDAA. In
Liu, the Supreme Court held that although the Exchange Act did not
(at the time) explicitly authorize “disgorgement,” “equitable relief”
under § 78u(d)(5) includes disgorgement. 140 S. Ct. at 1940. The
Court thus held that any disgorgement award must be consistent with
traditional principles of equity. See id. at 1947. Shortly after Liu,
Congress enacted the NDAA, which specifically added
“disgorgement” as a remedy under § 78u(d)(7) while leaving

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untouched “equitable relief” available via § 78u(d)(5). We read
“disgorgement” in § 78u(d)(7) to refer to equitable disgorgement as
recognized in Liu.7
First, § 78u(d)(7) authorizes “disgorgement,” which we have
long understood to refer to “the chancellor’s discretion to prevent
unjust enrichment” at equity. SEC v. Commonwealth Chem. Sec., Inc.,
574 F.2d 90, 95 (2d Cir. 1978); see 15 U.S.C. § 78u(d)(3)(A)(ii)
(explaining that the SEC may seek and courts have jurisdiction to
“require disgorgement . . . of any unjust enrichment by the person
who received such unjust enrichment” as a result of violating the
Exchange Act). This terminology is “consistent with a remedy
rooted in equity, given that ‘unjust enrichment’ is another term of
art—the basis for all restitution, which is often equitable.” Hallam,
42 F.4th at 340. Indeed, as the Supreme Court has observed,
“‘statutory reference[s]’ to a remedy grounded in equity ‘must, absent
other indication, be deemed to contain the limitations upon its
availability that equity typically imposes.’” Liu, 140 S. Ct. at 1947
(alteration in original) (quoting Great-W. Life & Annuity Ins. Co. v.
Knudson, 534 U.S. 204, 211 n.1 (2002)); see also Astoria Fed. Sav. & Loan
Ass’n v. Solimino, 501 U.S. 104, 108 (1991) (“Congress is understood to
legislate against a background of common-law adjudicatory
principles.”). The NDAA’s text evinces no intent to contradict Liu or
to strip disgorgement of “limit[s] established by longstanding
principles of equity” in favor of an unbounded “legal” form of
7 The Fifth Circuit recently held that § 78u(d)(7) “authorize[s] legal
‘disgorgement’ apart from the equitable ‘disgorgement’ permitted by Liu”
and questioned “whether equitable disgorgement . . . survived the 2021
Exchange Act amendments.” SEC v. Hallam, 42 F.4th 316, 341, 343 (5th Cir.
2022). We decline to follow the Fifth Circuit’s approach.

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disgorgement. Liu, 140 S. Ct. at 1947. We thus apply “the strong
presumption that repeals by implication are disfavored and that
Congress will specifically address preexisting law when it wishes to
suspend its normal operations in a later statute.” SEC v. Alpine Sec.
Corp., 982 F.3d 68, 78 (2d Cir. 2020) (brackets omitted) (quoting Epic
Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1624 (2018)).
Second, reading “disgorgement” under § 78u(d)(7) as equitable
disgorgement is consistent with the statutory history. Before the
NDAA, “Congress did not define what falls under the umbrella of
‘equitable relief,’” so “courts . . . had to consider which remedies the
SEC may impose as part of its § 78u(d)(5) powers.” Liu, 140 S. Ct. at
1940. This created some uncertainty about whether, for example, the
Exchange Act authorized disgorgement and the applicable statute of
limitations. See, e.g., Kokesh, 581 U.S. at 461-62 & n.3. The NDAA
then clarified some aspects of this uncertainty. The express addition
of “disgorgement” as a remedy specified under § 78u(d)(7) is thus
best read, not as superfluity, but as a “belt and suspenders”
clarification that equitable disgorgement is available under the
Exchange Act. Moreover, the authorization of a ten-year statute of
limitations under § 78u(d)(8)(A)(ii) is best understood as expressly
overruling Kokesh’s five-year statute of limitations as to certain
securities violations. So we conclude that disgorgement under
§ 78u(d)(7) must comport with traditional equitable limitations as
recognized in Liu.
3. Disgorgement Calculation
The district court properly calculated Ahmed’s disgorgement
obligation. Ahmed argues that the district court (1) miscalculated
“net profits” from two fraudulent transactions involving Company C

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(“C1” and “C2”) and (2) failed to account for the “carried interest”
forfeited to Oak upon his termination for “Disabling Conduct.” He
further argues that any reduction in the district court’s disgorgement
award should also reduce the district court’s civil penalty. We
conclude that both arguments are meritless, so we decline to disturb
the district court’s rulings as to either disgorgement or civil penalties.
a. Net Profits Calculation
The district court did not abuse its discretion in its calculation
of net profits. Disgorgement must “not exceed a wrongdoer’s net
profits and is awarded for victims,” Liu, 140 S. Ct. at 1940, “that is, the
gain made upon any business or investment, when both the receipts
and payments are taken into account,” id. at 1945 (cleaned up). We
have held that the “amount of disgorgement ordered need only be a
reasonable approximation of profits causally connected to the
violation.” SEC v. Fowler, 6 F.4th 255, 267 (2d Cir. 2021) (cleaned up).
Here, the district court reasonably approximated net profits
based on the difference between the sale and purchase prices
involved in the tainted Company C transactions. As to C1,
Ahmed—in his capacity as a member of BVI Company’s board of
directors—“personally negotiated” a $2 million investment in
Company C without BVI Company’s knowledge. When the
unapproved investment was uncovered, Ahmed “purposefully lied
to his fellow BVI Company directors” that the purchase was a
“mistake.” Special App’x at SPA-35. Ahmed then bought the
shares himself, ostensibly to correct for the “mistake,” but left them
in the BVI Company’s name. Ahmed later negotiated another
investment by an Oak entity in Company C that was conditioned on
Company C paying nearly $11 million to redeem BVI Company’s

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shares—which, unbeknownst to the Oak entity, were owned by
Ahmed. Ahmed profited more than $8 million on the sale.
As to C2, Ahmed had invested in Company C via Relief
Defendant I-Cubed Domains, LLC, of which Ahmed was founder and
sole member, without disclosure to Oak. Ahmed then pitched Oak
on a $7.5 million stock-purchase agreement for I-Cubed’s Company
C shares without disclosing his personal stake, even going so far as to
forge the signature of I-Cubed’s former manager on the transaction
paperwork to conceal his personal interest. Ahmed’s fraud may not
have driven Company C’s entire growth, but it permitted him to
realize profits driven by that growth. So it was a reasonable
approximation of net profits to take the difference between “gross
sales revenues from the sale of Company C shares” and Ahmed’s
“initial cost of purchasing the Company C shares.” Id. at SPA-103;
see Fowler, 6 F.4th at 267.
Ahmed’s arguments to the contrary are unavailing. Ahmed
argues that, in calculating net profits, the district court should have
credited him an offset based on C1 and C2 because there was no
evidence that Oak paid inflated prices as opposed to fair market
value. Specifically, as to C1, Ahmed argues that any difference
between the purchase and sale prices of Company C stock was based
on “an increase in the market price of the shares,” not Ahmed’s
“unlawful activity.” Appellant’s Br. at 41. As to C2, Ahmed argues
that the district court failed to account for the fact that the market
value of Company C shares was likely well above the price Oak
actually paid.
These arguments fail. Ahmed’s misconduct with respect to
these transactions was not in misrepresenting the purchase prices but

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in failing to disclose his conflicts of interest, which violated the
Advisers Act. See 15 U.S.C. § 80b-6(3). The C1 and C2 transactions
were thus entirely tainted, and Ahmed’s $14.4 million in profits from
the transactions constituted his “net profits from wrongdoing” under
Liu. See Contorinis, 743 F.3d at 301 (“Because disgorgement’s
underlying purpose is to make lawbreaking unprofitable for the law-
breaker, it satisfies its design when the lawbreaker returns the fruits
of his misdeeds, regardless of any other ends it may or may not
accomplish.”).
Moreover, Ahmed bears the risk of uncertainty affecting the
size of disgorgement. “A wrongdoer’s unlawful action may create
illicit benefits for the wrongdoer that are indirect or
intangible. . . . [T]o require precise articulation of such rewards in
calculating disgorgement amounts would allow the wrongdoer to
benefit from such uncertainty.” Id. at 306; see also Fowler, 6 F.4th at
267 (“If the disgorgement amount is generally reasonable, any risk of
uncertainty about the amount falls on the wrongdoer whose illegal
conduct created that uncertainty.” (cleaned up)). The fact that Oak,
a victim of Ahmed’s fraud, might have gotten a “bargain” on the
share purchase should not redound to the fraudster’s benefit. We
thus find no abuse of discretion in the disgorgement calculation.
b. Carried-Interest Offset
Ahmed next argues that the district court should have offset the
disgorgement award by the “carried interest” he forfeited to Oak
because this forfeiture was “on account of the [unlawful] conduct at
issue in this case.” Appellant’s Br. at 50. We disagree.
Ahmed’s General Partnership Agreement with Oak stated that
“any Member who is removed by reason of having engaged in

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Disabling Conduct shall forfeit for no consideration such Member’s
entire membership interest, Percentage Interest and Capital Account
and shall not become, or shall cease to be, as applicable, a Class B
member.” Special App’x at SPA-120. Part of Ahmed’s
“membership interest” was a “carried interest” bonus based on “the
performance of the Oak Funds.” Id. at SPA-120 n.24. So Ahmed’s
forfeited “carried interest” is not an ill-gotten gain from his fraud but
rather was his expectancy to a portion of Oak’s profits conferred by the
General Partnership Agreement. But disgorgement does not protect
the wrongdoer’s expectancy interests; it attempts to “restor[e] the
status quo” by “tak[ing] money out of the wrongdoer’s hands.” Liu,
140 S. Ct. at 1943 (cleaned up). Equity does not require an offset for
the carried interest, which was contingent on Ahmed’s relationship
with Oak and was not derived directly from his fraud.
Ahmed’s argument to the contrary is unpersuasive. He
contends that the Court should follow the approach of SEC v. Penn, in
which a district court ordered an evidentiary hearing to determine
“the value of [the defendant’s] forfeited interest in the fund” of his
former employer to offset his disgorgement obligation. No. 14-cv-
581, 2017 WL 5515855, at *3-4 (S.D.N.Y. Aug. 22, 2017). But in that
case, the “SEC d[id] not dispute that Penn’s carried interest in the
Fund . . . could offset his disgorgement obligation,” in accordance
with the terms of Penn’s plea agreement. Id. at *4. Penn did not
conclude that forfeited carried interest generally should offset a
disgorgement obligation.8
8 Ahmed also requests that the district court on remand offset his
disgorgement obligation by the amount of civil judgments obtained against

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We thus affirm the district court’s calculation of Ahmed’s
disgorgement obligation and decline to revisit its calculation of civil
penalties.
4. Application of the NDAA
The district court did not err by applying the NDAA’s
expanded statute of limitations to Ahmed’s disgorgement obligation.
Ahmed argues that the district court’s application of the NDAA was
incorrect for four reasons: (1) the SEC failed to cross-appeal; (2) the
district court reopened a final judgment; (3) the NDAA does not apply
retroactively; and (4) application of the NDAA violates the Ex Post
Facto Clause. Although the SEC argues that Ahmed’s first three
arguments are barred by the law-of-the-case doctrine, we do not
decide whether that doctrine applies because all four of Ahmed’s
arguments are without merit.
a. Cross-Appeal Rule
The SEC’s failure to cross-appeal did not prevent the district
court from recalculating disgorgement under the NDAA. Under the
cross-appeal rule, “an appellate court may not alter a judgment to
benefit a nonappealing party.” Greenlaw v. United States, 554 U.S.
237, 244 (2008). Ahmed argues that the cross-appeal rule is
jurisdictional, so the SEC’s failure to cross-appeal from the amended
final judgment deprived the district court of jurisdiction to enlarge
disgorgement under the NDAA. This argument fails.
him by his victims. This could be appropriate if Ahmed were to prove that
he paid restitution. See, e.g., SEC v. Palmisano, 135 F.3d 860, 863-64 (2d Cir.
1998).

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First, the cross-appeal rule did not deprive the district court of
jurisdiction to recalculate disgorgement. It is well-settled that “the
requirement of a cross-appeal is a rule of practice which is not
jurisdictional and in appropriate circumstances may be disregarded.”
Finkielstain v. Seidel, 857 F.2d 893, 895 (2d Cir. 1988); accord Texport Oil
Co. v. M/V Amolyntos, 11 F.3d 361, 366 (2d Cir. 1993) (explaining that
“there has been some conflict in our Court as to whether the late filing
of a notice of cross-appeal is a matter of practice or is a jurisdictional
bar” and “adher[ing]” to Finkielstain); see also Carlson v. Principal Fin.
Grp., 320 F.3d 301, 309 (2d Cir. 2003) (relying on Finkielstain and
Texport and treating the cross-appeal rule as non-jurisdictional);
Clubside, Inc. v. Valentin, 468 F.3d 144, 162 (2d Cir. 2006) (same).9
Second, the cross-appeal rule is inapplicable to Ahmed’s case
because the SEC did not seek to “enlarge its rights under the
judgment by enlarging the . . . scope of equitable relief,” Int’l Ore &
Fertilizer Corp. v. SGS Control Servs., Inc., 38 F.3d 1279, 1286 (2d Cir.
1994)—i.e., the outcome that the cross-appeal rule forbids—but rather
sought to remand the case to present its NDAA arguments to the
district court in the first instance. Critically, the SEC could not have
presented these arguments in a timely cross-appeal because the
NDAA was enacted after the deadline to file a cross-appeal had
passed. It would make little sense if the cross-appeal rule prevented
nonappealing parties from receiving the benefit of intervening
retroactive statutes. As this Court explained in Litton Systems, Inc. v.
9 Swatch Group Management Services Ltd. v. Bloomberg L.P., 756 F.3d
73 (2d Cir. 2014), is not to the contrary. There, we characterized as
“jurisdictional” only Federal Rule of Appellate Procedure 3(c)(1)(B)’s
requirement that a notice of cross-appeal identify the challenged district-
court order. Id. at 93.

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American Telephone & Telegraph Co., 746 F.2d 168 (2d Cir. 1984), albeit
under somewhat different circumstances,
No party to an appeal should be held to a standard that
permits consideration of an intervening statute only
when issues affected by the statute are already pending
on appeal. Such a standard would require either
anticipation of statutes not yet enacted or the assertion of
frivolous grounds in appeals and cross-appeals in the
hope that a new statute might affect their resolution
favorably.
Id. at 171. We decline to apply the cross-appeal rule in Ahmed’s case
because it would frustrate congressional intent and judicial economy.
b. Reopening a Final Judgment
Nor would application of the NDAA reopen a final judgment.
“When a new law makes clear that it is retroactive, an appellate court
must apply that law in reviewing judgments still on appeal that were
rendered before the law was enacted, and must alter the outcome
accordingly.” Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 226 (1995).
The Supreme Court has taken care to distinguish “judgments from
which all appeals have been forgone or completed” and “judgments
that remain on appeal.” Id. at 227.
Here, the district court’s grant of summary judgment is not
“final” within the meaning of Plaut because appeals are ongoing. See
Miller v. French, 530 U.S. 327, 347 (2000) (“[W]hen Congress changes
the law underlying a judgment awarding . . . relief, that relief is no
longer enforceable to the extent it is inconsistent with the new law.
Although the remedial injunction . . . is a final judgment for purposes

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of appeal, it is not the last word of the judicial department . . . [because
it] is subject to the continuing supervisory jurisdiction of the court,
and therefore may be altered according to subsequent changes in the
law.” (emphasis added) (cleaned up)). Application of the NDAA
thus does not reopen a final judgment.
c. Retroactivity of the NDAA
The district court also did not err by giving retroactive effect to
the NDAA’s disgorgement amendments. In Landgraf v. USI Film
Products, 511 U.S. 244 (1994), the Supreme Court explained that
“[s]ince the early days of this Court, we have declined to give
retroactive effect to statutes burdening private rights unless Congress
had made clear its intent.” Id. at 270. To overcome this
presumption against retroactivity, a “court must ask whether the new
provision attaches new legal consequences to events completed
before its enactment,” thereby suggesting “clear congressional intent
authorizing retroactivity.” Id. at 269-70, 272.
The NDAA’s disgorgement amendments explicitly apply to
cases pending at the time of enactment. Section 6501(b) provides
that the NDAA’s disgorgement amendments “shall apply with
respect to any action or proceeding that is pending on, or commenced
on or after, the date of enactment of this Act.” Pub. L. No. 116-283,
§ 6501(b), 134 Stat. 3388, 4626 (2021). The Supreme Court has, in
dicta, interpreted nearly identical language as a retroactivity
command. See, e.g., Landgraf, 511 U.S. at 255 & n.8, 256 (construing
the phrase “shall apply to all proceedings pending on or commenced
after the date of enactment of this Act” as an “explicit retroactivity
command”); Martin v. Hadix, 527 U.S. 343, 354-55 (1999) (same). If
Congress enacts a provision containing a phrase to which the

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Supreme Court has previously ascribed a particular meaning, we will
presumptively confer that meaning to the provision. See generally
Siebert v. Conservative Party of N.Y. State, 724 F.2d 334, 337 (2d Cir.
1983) (recounting the “canon of statutory construction that Congress
is presumed to be aware of the judicial background against which it
legislates”). We thus conclude that the NDAA’s disgorgement
amendments apply retroactively to Ahmed’s case.
We are not persuaded by Ahmed’s contrary arguments. First,
we reject Ahmed’s argument that the SEC may not receive the benefit
of the ten-year statute of limitations because the SEC initially brought
this enforcement action under 15 U.S.C. § 78u(d)(5), not § 78u(d)(7).
Section 78u(d)(7) did not exist at the time the SEC filed suit, so it
would have been impossible to invoke that provision. In any event,
the SEC brought the action “pursuant to the authority conferred upon
it by . . . 15 U.S.C. § 78u(d)” generally, Second Am. Compl. at 4, SEC
v. Ahmed, No. 15-cv-675 (D. Conn. Apr. 1, 2016), ECF 208, and, as the
district court explained, it “relied on the common law injunctive,” i.e.,
equitable, “power of the district court[],” Special App’x at SPA-245.
Similarly, the district court itself “did not rely solely on [15 U.S.C.
§ 78u(d)(5)] to authorize disgorgement in its initial ruling” and
instead exercised its inherent equitable power to do so. Id.
Second, Ahmed’s argument that the NDAA eviscerated his
“vested and adjudicated limitation defense” is meritless. Appellant’s
Br. at 33 (emphasis in original). The Supreme Court imposed a five-
year statute of limitations on disgorgement in Kokesh, 137 S. Ct. 1635,
which was decided over two years after the SEC brought this action.
So Ahmed could not have had a reliance interest in Kokesh’s statute of
limitations before the SEC brought this action. We thus interpret the

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NDAA to contain an effective retroactivity command applicable to
Ahmed’s case.
d. Ex Post Facto Clause
Finally, the district court’s application of the NDAA to
Ahmed’s disgorgement award did not violate the Ex Post Facto
Clause. Ahmed argues that disgorgement under the NDAA is
punitive, so retroactive application to his case would run afoul of the
Ex Post Facto Clause’s guarantee. We are not persuaded.
The Constitution provides, “No . . . ex post facto Law shall be
passed.” U.S. Const. art. I, § 9, cl. 3. “To violate the Ex Post Facto
Clause . . . a law must be retrospective—that is, it must apply to
events occurring before its enactment—and it must disadvantage the
offender affected by it, by altering the definition of criminal conduct
or increasing the punishment for the crime.” Abed v. Armstrong, 209
F.3d 63, 66 (2d Cir. 2000) (cleaned up). A two-step framework
governs Ex Post Facto Clause challenges. At step one, “[w]e must
ascertain whether the legislature meant the statute to establish ‘civil’
proceedings.” Smith v. Doe, 538 U.S. 84, 92 (2003) (cleaned up). If
Congress’s intention “was to impose punishment, that ends the
inquiry.” Id. “If, however, the intention was to enact a regulatory
scheme that is civil and nonpunitive,” we must proceed to step two
and “further examine whether the statutory scheme is ‘so punitive
either in purpose or effect as to negate . . . [that] intention’ to deem it
civil.” Id. (quoting Kansas v. Hendricks, 521 U.S. 346, 361 (1997)).
But we typically “defer to the legislature’s stated intent,” and “only
the clearest proof will suffice to override legislative intent and
transform what has been denominated a civil remedy into a criminal
penalty.” Id. (cleaned up). That is not this case.

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First, in enacting 15 U.S.C. § 78u(d)(7), Congress clearly
intended to provide a civil remedy. To determine whether a
statutory scheme is civil or criminal, we “ask whether the legislature,
in establishing the penalizing mechanism, indicated either expressly
or impliedly a preference for one label or the other.” Hudson v.
United States, 522 U.S. 93, 99 (1997) (cleaned up). Disgorgement
under § 78u(d) is designated as providing “[c]ivil money penalties,”
and we have previously characterized “disgorgement” as a civil
remedy. 15 U.S.C. § 78u(d)(3); see Contorinis, 743 F.3d at 306
(“Disgorgement . . . is a civil remedy . . . preventing unjust
enrichment.”).
Second, Ahmed does not provide “the clearest proof” that
disgorgement under § 78u(d)(7) is “so punitive either in purpose or
effect” as to “transform what has been denominated a civil remedy
into a criminal penalty.” Smith, 538 U.S. at 92 (cleaned up). Ahmed
argues that disgorgement is in practice a criminal penalty because its
“‘primary purpose . . . is to deter violations of the securities laws,’
which is ‘inherently punitive’” according to Kokesh. Appellant’s Br.
at 36 (quoting Kokesh, 137 S. Ct. at 1643). Ahmed also contends the
NDAA is punitive because it has a longer limitations period for
violations committed with scienter than for those without.
But Ahmed misreads Kokesh. In Liu, the Supreme Court
recognized that Kokesh “expressly declined to pass on the question”
of whether “disgorgement is necessarily a penalty, and thus not the
kind of relief available at equity.” Liu, 140 S. Ct. at 1946 (emphasis
added). The disgorgement award in Kokesh was deemed a “penalty”
because it “exceed[ed] the bounds of traditional equitable principles”
in awarding disgorgement “as a consequence of violating public

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laws” and to deter the wrongdoer, not to compensate victims. Id. at
1941, 1946. But Kokesh “ha[d] no bearing on the SEC’s ability to
conform future requests for a defendant’s profits to the limits outlined
in common-law cases awarding a wrongdoer’s net gains.” Id. at
1946. In other words, Liu approved disgorgement as long as the
award conforms to traditional equitable limitations—i.e., “restoring
the status quo and ordering the return of that which rightfully
belongs to the purchaser or tenant.” Tull v. United States, 481 U.S.
412, 424 (1987) (quoting Porter v. Warner Holding Co., 328 U.S. 395, 402
(1946)).
Moreover, the longer limitations period for violations
committed with scienter does not render disgorgement punitive.
The more plausible inference is a nonpunitive one—i.e., scienter is an
element of fraud, which may be harder to detect and investigate
because fraud is usually committed with deception. Cf. Merck & Co.,
Inc. v. Reynolds, 559 U.S. 633, 644 (2010) (“[I]n the case of fraud, . . . a
defendant’s deceptive conduct may prevent a plaintiff from even
knowing that he or she has been defrauded.”). We thus hold that the
district court’s application of the NDAA did not violate the Ex Post
Facto Clause.10
* * *
In sum, we find no abuse of discretion in the district court’s
calculation of disgorgement or error in its application of the NDAA.
10 Our decision to vacate and remand the actual-gains award, see
infra Section II.C, does not bear on our Ex Post Facto Clause analysis. The
district court did not increase the actual-gains award following the NDAA
nor do Defendants raise a related Ex Post Facto Clause challenge.

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C. Calculation of Interest and Actual Gains
We affirm the district court’s award of prejudgment interest but
vacate and remand the award of “actual gains” because it is broader
than equity permits.11
1. Legal Standard
The district court’s prejudgment-interest and actual-gains
awards were incident to disgorgement, so we consider whether they
“fall[] into those categories of relief that were typically available in
equity.” Liu, 140 S. Ct. at 1942 (cleaned up). One such category of
relief is “supplemental enrichment,” which encompasses the
opportunity cost or time value of money lost by victims, including
“interest, rent, and other measures of use value, proceeds, and
consequential gains” on ill-gotten assets. 2 Restatement (Third) of
Restitution and Unjust Enrichment (“Restatement”) § 53(1) & cmt. a
(Am. L. Inst. 2011); see 1 Dan B. Dobbs, Law of Remedies: Damages–
Equity–Restitution § 3.6(2), at 342-43 (2d ed. 1993) (“When the
defendant is under a duty to pay the plaintiff as damages or
otherwise, and during the period of nonpayment the defendant has a
legally recognized benefit from use of the money retained, he is under
an obligation to make restitution of that benefit to the plaintiff,
whether the benefit is measured in profits or interest or some other
form of use value.”). Supplemental enrichment may thus reflect
11 The parties disagree about the calculation of post-judgment
interest. In a December 2, 2022 order, the district court took a different
approach from what either party argues here. Ahmed appealed from this
order, and the appeal was consolidated with other appeals from
liquidation, all of which were held in abeyance pending this appeal. As
explained infra, those appeals are dismissed as moot.

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passive gains on ill-gotten funds, without the direct manipulation of
a fraudster. We review a district court’s “choice of remedies” for
abuse of discretion. SEC v. Frohling, 851 F.3d 132, 139 (2d Cir. 2016).
2. Prejudgment Interest
The district court did not abuse its discretion by awarding
prejudgment interest at the IRS underpayment rate for the period
before the asset freeze. The Relief Defendants argue that
prejudgment interest was inappropriate because they did not act
wrongfully or know of Ahmed’s wrongful actions and, even if
appropriate, the IRS underpayment rate was punitive and thus
contrary to traditional equitable principles. The SEC counters that
the Relief Defendants’ alleged good faith is irrelevant to prejudgment
interest on Ahmed’s disgorgement obligation. Moreover, the Relief
Defendants present no evidence that the IRS underpayment rate
would overcompensate Ahmed’s victims and thus be punitive. We
agree with the SEC.
“The decision whether to grant prejudgment interest and the
rate used if such interest is granted are matters confided to the district
court’s broad discretion, and will not be overturned on appeal absent
an abuse of that discretion.” Endico Potatoes, Inc. v. CIT
Grp./Factoring, Inc., 67 F.3d 1063, 1071-72 (2d Cir. 1995) (cleaned up).
In assessing prejudgment-interest awards, a court should consider
“(i) the need to fully compensate the wronged party for actual
damages suffered, (ii) considerations of fairness and the relative
equities of the award, (iii) the remedial purpose of the statute
involved, and/or (iv) such other general principles as are deemed
relevant by the court.” Wickham Contracting Co. v. Loc. Union No. 3,
Int’l Bhd. of Elec. Workers, AFL-CIO, 955 F.2d 831, 834 (2d Cir. 1992).

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The district court did not abuse its discretion by awarding
prejudgment interest at the IRS underpayment rate. First, the good
faith of the Relief Defendants is immaterial because a prejudgment
award concerns the amount that Ahmed, the primary defendant,
must disgorge. Cf. Morales v. Freund, 163 F.3d 763, 767 (2d Cir. 1999)
(upholding the decision not to award prejudgment interest when the
“district court suggested that the defendants, though liable, might
well have acted in good faith”). See generally CFTC v. Walsh, 618 F.3d
218, 225 (2d Cir. 2010) (“A relief defendant is a person who holds the
subject matter of the litigation in a subordinate or possessory
capacity . . . [and] may be joined in a securities enforcement action to
aid the recovery of relief.” (cleaned up)). The district court found
that Ahmed committed securities fraud, so there is no question that
he lacked good faith. Even though, as explained infra, relief-
defendant liability may be inappropriate as against a particular asset,
that does not bear on the propriety or size of prejudgment interest
against the primary defendant. See SEC v. Miller, 808 F.3d 623, 635
(2d Cir. 2015) (“Equitable relief against a third-party non-wrongdoer
may be entered where such an individual (1) has received ill-gotten
funds; and (2) does not have a legitimate claim to those funds.”
(cleaned up)).
Second, the district court did not abuse its discretion by
awarding prejudgment interest at the IRS underpayment rate. That
rate “reflects what it would have cost to borrow the money from the
government and therefore reasonably approximates one of the
benefits the defendant derived from its fraud.” SEC v. First Jersey
Sec., Inc., 101 F.3d 1450, 1476 (2d Cir. 1996) (affirming use of the IRS
underpayment rate). This rate thus reflects “use value,” or
unearned interest that the rightful owner of the funds could have

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received but for the fraud. In First Jersey, we squarely rejected the
argument that the district court should have applied the one-year
treasury-bill rate—i.e., “the rate at which one lends money to the
government rather than borrows money from it”—because
“defendants have had the use of the money.” Id. at 1476-77. Here,
Ahmed held the ill-gotten gains before the asset freeze, so the IRS
underpayment rate was appropriate.12 We thus affirm the district
court’s award of prejudgment interest.
3. Actual Gains
We vacate and remand the district court’s award of actual gains
because it failed to account for traditional equitable limitations. The
parties dispute the proper equity analog for actual gains. On one
hand, the Relief Defendants argue that we should look to constructive
trust, which requires that gains come from assets traceable to the
fraud. On the other hand, the SEC argues that the proper equity
analog is “accounting” or “accounting for profits,” forms of
restitution by money judgment.
Both constructive trust and accounting may be appropriate
analogs for a primary disgorgement award, but neither is helpful
here. Our review is limited to the scope of actual gains on disgorged
assets—i.e., “supplemental or collateral benefits derived by the
recipient from an initial transaction with the claimant.” 2
12 The Relief Defendants have not put forth any evidence that the
investment return from the Oak funds was less than the IRS underpayment
rate. Their concerns about overcompensation are thus unfounded or, at
the very least, premature before distribution. See 2 Restatement § 53(1)
(“[Supplemental] [e]nrichment . . . may be presumed in the case of a
recipient who is enriched by misconduct.”).

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35
Restatement § 53 cmt. a; see 1 Dobbs, Law of Remedies, supra at 31,
§ 4.5(3), at 637 (“[I]f a consequential benefit measure is justified, it
need not be pursued under either a trust or an accounting theory.”).
The most appropriate equity analog for the actual-gains award
here appears to be “consequential gains.” Consequential gains
“result from a profitable investment, use, or other disposition of the
[plaintiff’s] property, distinct from the transaction by which the
defendant was originally enriched.” 2 Restatement § 53 cmt. d; see
also 1 Dobbs, Law of Remedies, supra at 31, § 4.5(3), at 637 (“In the case
of restitution, courts can take the measure of consequential benefits, not
the value of the thing itself but the value it produces in the hands of
defendant.” (emphasis in original)).
One equitable limitation on consequential gains is that a
“conscious wrongdoer” is liable for “consequential gains that are not
unduly remote.” 2 Restatement § 53(3). As the Restatement
commentary suggests, “[t]he object of the disgorgement remedy—to
eliminate the possibility of profit from conscious wrongdoing”—is
measured by the “net increase in the assets of the wrongdoer, to the
extent that this increase is attributable to the underlying wrong.” Id.
§ 51 cmt. e (emphasis added). And treatises confirm:
Even the willful wrongdoer should not be made to give
up that which is his own; the principle is disgorgement,
not plunder. . . . [S]ome apportionment must be made
between those profits attributable to the plaintiff’s
property and those earned by the defendant’s efforts and
investment, limiting the plaintiff to the profits fairly
attributable to his share.

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36
1 Dobbs, Law of Remedies, supra at 31, § 4.5(3), at 642 (emphasis
added). So consequential gains on assets subject to disgorgement
must not be unduly remote from the fraud.13
Here, the district court did not consider whether consequential
gains on frozen assets were unduly remote from Ahmed’s fraud. Its
September 6, 2018 ruling simply awarded “actual returns on the
frozen assets” without elaboration or limitation based on Ahmed’s
profitable uses of the frozen assets. Special App’x at SPA-106. 14
And its December 14, 2018 ruling, which sought to clarify the
13 The Restatement provides “scant guidance on how to determine
wealth legally attributable to a wrong for purposes of disgorgement” and
remoteness. Mark P. Gergen, Causation in Disgorgement, 92 B.U. L. Rev.
827, 827 (2012); see also George E. Palmer, Law of Restitution § 2.13 (3d ed.
2023) (noting a “recurring problem[] in the law of restitution” is calculating
“the defendant’s gain [that] is the product not solely of the plaintiff’s
interest but also of contributions made by the defendant”). But several
factors may guide courts awarding consequential gains, including “general
considerations of fairness, . . . the nature of the defendant’s wrong, the
relative extent of his contribution, and the feasibility of separating [gains]
from the contribution traceable to the plaintiff’s interest.” Palmer, Law of
Restitution, supra, § 2.13; see 1 Dobbs, Law of Remedies, supra at 31, § 4.5(3),
at 646 (providing factors governing “[r]ecovery of the defendant’s
consequential gains”).
14 District courts have discretion in awarding supplemental
enrichment, which could include “actual returns on the frozen assets.”
Special App’x at SPA-106. We have previously limited the availability of
prejudgment interest during the period of an asset freeze when the
defendant has “been denied the use of those assets.” SEC v. Razmilovic,
738 F.3d 14, 36 (2d Cir. 2013). But it may be appropriate for a district court
to award an alternative measure of supplemental enrichment, such as a
fixed interest rate that approximates “fair compensation to the person
wronged” within the equitable limits set forth in Liu. 140 S. Ct. at 1943.

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37
previous ruling, again imposed no limitation on actual gains and
instead ordered disgorgement of “any actual interest accrued or gains
earned on the frozen assets used to satisfy that disgorgement
amount.” Id. at SPA-151. Indeed, at oral argument, the SEC
conceded that these 2018 orders failed to address any equitable
limitation on actual gains. Moreover, the district court’s September
4, 2019 ruling on Ahmed’s motion to alter the judgment merely
clarified that (1) “interest or gains are owed only on the frozen assets
used to satisfy the disgorgement amount”; and (2) “interest or gains
should be calculated by determining the actual interest accrued or
gains earned and not by using the checking account interest rate.”
Id. at SPA-207 (cleaned up). After this Court remanded for the
district court to recalculate Ahmed’s disgorgement obligation under
the NDAA, the district court stated it would award “any interest or
gains accrued on disgorged frozen assets from the date of the [district
court’s] freeze order,” again without restriction. Id. at SPA-251.
The district court should have ensured that consequential gains on
frozen assets were not unduly remote from Ahmed’s wrongdoing or,
in other words, were attributable to the fraud.
We disagree with the SEC’s argument that the district court’s
award of actual gains is authorized by SEC v. Razmilovic, 738 F.3d 14
(2d Cir. 2013). In Razmilovic, we held that prejudgment interest was
inappropriate during the period of an asset freeze because “the
defendant has already, for that period, been denied the use of those
assets.” Id. at 36. In passing, we also noted, “[i]n such a case, after
a final order of disgorgement, the funds previously frozen would
presumably be turned over to the government in complete or partial
satisfaction of the disgorgement order, along with any interest that
has accrued on them during the freeze period.” Id. We do not read

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Razmilovic to give the district court blanket permission to award
actual gains without limitations. Rather, under Liu, any such award
must be consistent with equity, and the use of the word “presumably”
in Razmilovic suggests that its discussion of supplemental enrichment
(i.e., “interest that has accrued”) was dicta. Id.
The Relief Defendants argue that our decision in SEC v. Manor
Nursing Centers, Inc., 458 F.2d 1082 (2d Cir. 1972), bars the award of
actual gains. This, too, is inapposite. The district court in Manor
Nursing ordered disgorgement of “proceeds received in connection”
with the defendants’ fraud and “profits and income earned on such
proceeds.” Id. at 1104 (emphasis omitted). We affirmed
disgorgement of “proceeds” as “a proper exercise of the district
court’s equity powers” but vacated the district court’s award “of
profits and income earned on the proceeds” as “a penalty
assessment.” Id. We reasoned that an award of “profits” would
“arbitrarily requir[e] those [defendants] who invested wisely to
refund substantially more than other [defendants].” Id. at 1104-05.
The “only plausible justification” for disgorgement of “profits and
income” was “the deterrent force,” but we found the district court’s
orders of injunctive relief and disgorgement of “proceeds” were
“sufficient deterrence to further violations” of the federal securities
laws. Id. at 1104. Instead of “profits and income,” we ordered
“interest [on the proceeds] at the New York legal rate from the date
[defendants] received the proceeds.” Id. at 1105.
But any suggestion in Manor Nursing that consequential gains
are generally impermissible is in tension with Liu. Under Liu, if
supplemental enrichment is consistent with traditional principles of
equity, it is not a “penalty.” Supplemental enrichment is governed

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39
by restitutionary principles—i.e., “restor[ing] the status quo,” Liu, 140
S. Ct. at 1943 (internal quotation marks omitted)—not deterrence of
“further violations” of the securities laws, Manor Nursing, 458 F.2d at
1104. Moreover, district courts retain broad discretion as to the
appropriate measure of supplemental enrichment, whether it is a
form of profits or interest. See, e.g., 1 Dobbs, Law of Remedies, supra
at 31, § 3.6(2), at 343 (“The profits of the fiduciary in this
[disgorgement] example represent one measure of use value of the
money. It is capable of earning interest and it is capable of earning
profits. In this kind of case the plaintiff is entitled to the profits
measure if he prefers.”).
We thus remand for the district court to reassess actual gains in
light of Liu. On remand, the district court retains discretion over the
appropriate measure of supplemental enrichment. Liu offers
general guideposts for equitable relief: namely, wrongdoers should
(1) be deprived of their net profits from unlawful activity; and (2) “not
be punished by paying more than a fair compensation to the person
wronged.” 140 S. Ct. at 1942-43 (cleaned up). If the district court
reimposes an actual-gains award on disgorged assets, it should
ensure that consequential gains on the frozen assets are not “unduly
remote.” See supra note 13. The district court may also elect a
different measure of supplemental enrichment consistent with “fair
compensation,” such as a fixed-interest rate for the period of the asset
freeze.15
15 The parties dispute the district court’s method of calculating
actual gains, but we decline to reach this issue given our vacatur of the
actual-gains award.

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40
D. Nominee Doctrine
Finally, the district court’s analysis in support of its conclusion
that the Relief Defendants are merely nominal owners of all the frozen
assets held in their names was inadequate. The Relief Defendants
argue that the district court should have applied an asset-by-asset
approach to the nominee theory and the SEC failed to satisfy its
burden of proving that the Relief Defendants were mere nominees of
Ahmed as to each asset when they held legal title to, controlled, and
received benefits from those assets. The SEC argues that the district
court correctly characterized the “nominee” doctrine, did not shift the
burden of persuasion to the Relief Defendants, and could not have
applied an asset-by-asset approach because the Relief Defendants
failed to meet their burden to produce evidence of their legitimate
ownership of each of the disputed assets. Furthermore, if the Court
remands, the SEC seeks permission to pursue alternative theories of
recovery, including under Cavanagh I, 155 F.3d 129.
1. Legal Standard
Equitable limits on disgorgement differ between assets held by
the primary wrongdoer (i.e., Ahmed) and those held by third-party
non-wrongdoers (i.e., Relief Defendants). See Miller, 808 F.3d at 635.
As to primary defendants, “[t]he amount of disgorgement ordered
need only be a reasonable approximation of profits causally
connected to the violation.” Razmilovic, 738 F.3d at 31 (cleaned up).
District courts need not “apply equitable tracing rules to identify
specific funds in the defendant’s possession that are subject to
return.” FTC v. Bronson Partners, LLC, 654 F.3d 359, 373 (2d Cir.
2011); see, e.g., Contorinis, 743 F.3d at 303 (explaining, in the context of
an insider-trading violation, “the insider would unquestionably be

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41
liable to disgorge the profit . . . whether the insider trader has put his
profits into a bank account, dissipated them on transient pleasures, or
given them away to others”). So the district court is not required to
“trace” ill-gotten gains to specific assets in Ahmed’s possession—any
of his own assets may be liquidated to satisfy his disgorgement
obligation.16
For relief defendants, however, equity imposes different rules.
“A court of equity will wrest property fraudulently acquired, not only
from the perpetrator of the fraud, but . . . from his children and his
children’s children, or, as elsewhere said, from any persons amongst
whom he may have parceled out the fruits of his fraud.” 3 John
Norton Pomeroy, Equity Jurisprudence § 918, at 601 (5th ed. 1994)
(cleaned up). But third parties, like the Relief Defendants, have a
bona fide purchase defense according to which “[a] purchaser for
value and without notice acquires the legal interest that the grantor
holds and purports to convey, free of equitable interests that a
restitution claimant might have asserted against the property in the
hands of the grantor.” 2 Restatement § 66; see also id. § 58(2) (“A
claimant entitled to restitution from property or its traceable product
may assert the same rights against any subsequent transferee who is
not a bona fide purchaser . . . or bona fide payee.”). A bona fide
purchase defense is inherently asset specific, requiring a court to
determine whether a third party (1) gave value in exchange for an
asset in particular and (2) lacked notice as to that asset’s true
provenance.
16 Since Liu, this Court has affirmed the lack of a tracing requirement
as to primary-defendant disgorgement. See, e.g., SEC v. de Maison, No. 18-
2564, 2021 WL 5936385, at *2 (2d Cir. Dec. 16, 2021).

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42
In Cavanagh I, we recognized third-party liability in a securities-
enforcement action when a relief defendant “(1) has received ill-
gotten funds; and (2) does not have a legitimate claim to those funds.”
155 F.3d at 136. Although Cavanagh I was decided in the asset-freeze
context, it is based on the same background principles of equity,
including the bona fide purchase rule. See Palmer, Law of
Restitution, supra at 36 n.13, § 19.7 (“Courts are generally agreed that
an innocent person who obtains a benefit through the wrongful act of
a third person will be required to make restitution to the one at whose
expense the benefit was obtained, unless, in addition to his innocence,
the recipient is protected because he gave value.”). So relief-
defendant liability under Cavanagh I applies to disgorgement.17
But equity also recognizes a third way: the so-called
“nominee” theory. A “nominee” holds bare legal title to an asset but
is not its true equitable owner. Such an asset may be disgorged to
satisfy a judgment against a third party deemed to be the asset’s true
equitable owner.18 This doctrine reflects the principle that “equity
looks to the intent, rather than to the form,” and is thus “able to treat
that as done which in good conscience ought to be done.” 2
Pomeroy, Equity Jurisprudence, supra at 41, §§ 363, 378, at 8, 41
17 Several sister circuits also have continued to recognize relief-
defendant liability after Liu. See, e.g., SEC v. Berkeley Healthcare Dynamics,
LLC, No. 20-16754, 2022 WL 42807, at *2 (9th Cir. Jan. 5, 2022); SEC v.
Camarco, No. 19-1486, 2021 WL 5985058, at *13-17 (10th Cir. Dec. 16, 2021).
18 Relief Defendants argue that state law governs the “nominee”
doctrine. We disagree. Federal courts are courts of law and equity, see
U.S. Const. art. III, § 2, cl. 1, and to deduce equitable limits, we may look to
the practices of the state and federal courts and “the ordinary principles and
practice of courts of chancery.” Liu, 140 S. Ct. at 1950 (cleaned up).

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(emphasis omitted). “Equity’s advantage in fashioning
restitutionary remedies was . . . sidestepping title problems . . . . to act
against the person rather than against the property.” 1 Dobbs, Law
of Remedies, supra at 31, § 4.3(1), at 587. The principle undergirding
the nominee theory has been widely applied. See, e.g., Nat’l Bank v.
Case, 99 U.S. 628, 632 (1878) (“A transfer for the mere purpose of
avoiding his liability to the company or its creditors is fraudulent and
void, and he remains still liable. . . . [I]f, in fact, the transferee is a mere
tool or nominee of the transferrer, so that, as between themselves,
there has been no real transfer, . . . the transfer will be held for
nought.” (cleaned up)); Higgins v. Smith, 308 U.S. 473, 475 (1940)
(“[T]he jury was instructed to find whether these sales by the
taxpayer . . . were actual transfers of property . . . or whether they
were to be regarded as simply ‘a transfer by Mr. Smith’s left hand,
being his individual hand, into his right hand, being his corporate
hand, so that in truth and fact there was no transfer at all.’”). We
thus agree with the district court that the nominee theory, as a
reflection of background equitable principles, may be used to
determine the owner of an asset for disgorgement purposes. If a
relief defendant is deemed a mere nominal owner of an asset that is
equitably owned by the primary defendant, the equitable rules
governing primary-defendant disgorgement apply. Like the bona
fide purchase defense, the nominee doctrine is necessarily an asset-
specific inquiry. The inquiry turns on a third party’s behavior
toward a particular asset, such as whether the third party controlled,
benefitted from, and/or transferred a particular asset held in a
nominee’s name. We review a district court’s exercise of equitable

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power to fashion a disgorgement remedy for abuse of discretion.
Frohling, 851 F.3d at 139.
2. Application
The district court’s application of the nominee doctrine was
inadequate as to most of the assets in question because it failed to
determine whether the SEC proved that these particular assets (or
groups of similar assets) were held by the Relief Defendants as mere
nominees of Ahmed. The district court invoked a six-factor nominee
test but did not apply it on an asset-by-asset basis. Instead, it
deemed the Relief Defendants nominal owners of a large swathe of
assets without finding that Ahmed is in fact the equitable owner.
This erroneously shifted the burden to the Relief Defendants to show
that Ahmed is not the equitable owner of assets to which the Relief
Defendants hold legal title.19 See Dan B. Dobbs & Caprice L. Roberts,
Law of Remedies: Damages–Equity–Restitution § 4.4(3), at 446 (3d ed.
2018) (“The law of unjust enrichment places the burden of production
on the party seeking disgorgement.”).
Specifically, the district court’s analysis regarding the Iftikar A.
Ahmed Family Trust, MetLife Policy (which was owned by the Iftikar
A. Ahmed Family Trust), and Fidelity x7540 account was sufficient
because the district court weighed the SEC’s evidence and considered
the Relief Defendants’ counter-evidence as to each asset and made
19 We note, however, that relief defendants carry the burden of proof
with respect to affirmative defenses such as bona fide purchase. See CFTC
v. Kimberlynn Creek Ranch, Inc., 276 F.3d 187, 192 n.5 (4th Cir. 2002). We
also note that courts in civil cases can draw adverse inferences against relief
defendants should they invoke their Fifth Amendment privilege not to
testify. See SEC v. Colello, 139 F.3d 674, 677-78 (9th Cir. 1998).

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findings on the record. But as to other assets, the district court’s
analysis was insufficient. For many of the disputed assets, the
district court simply rejected the Relief Defendants’ request for an
asset-by-asset approach by noting that the Relief Defendants “made
this same argument before the Second Circuit and it was soundly
rejected.” Special App’x at SPA-110 (citing I-Cubed, 664 F. App’x at
56-57). But I-Cubed concerned the asset freeze, which required “a
lesser showing than is necessary for other forms of equitable relief,”
like disgorgement. I-Cubed, 664 F. App’x at 55. Moreover, for
certain assets, such as the contents of the safety deposit box and the
Ahmeds’ two Park Avenue apartments, the district court made
findings only at the preliminary-injunction stage. And the district
court was silent as to other assets, such as Shalini Ahmed’s earrings
and designer handbags, but it nevertheless authorized disgorgement
of those assets.
As a result, the district court erroneously shifted the burden to
the Relief Defendants to present evidence that they were the true
owners of these assets. But the burden remained with the SEC to
prove that Ahmed was the true owner of each asset (or group of
similar assets), and the district court should have made specific
findings accordingly. Furthermore, the district court discussed
Ahmed’s invocation of his Fifth Amendment right against self-
incrimination and Shalini Ahmed’s invocation of her marital privilege
but failed to discuss what, if any, adverse inference should be drawn.
So, with the exception of the district court’s findings that
Ahmed is the equitable owner of the Iftikar A. Ahmed Family Trust,
MetLife Policy, and Fidelity x7540 account, we vacate and remand the
district court’s disgorgement order as to the Relief Defendants’ assets.

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On remand, the SEC, as the party seeking disgorgement, must prove
that the Relief Defendants are nominees for each asset or class of
assets.20 If the district court finds that an asset is nominally owned
by one of the Relief Defendants (and actually owned by Ahmed), it
may be disgorged. If the district court finds that an asset is not
nominally owned by one of the Relief Defendants, then the district
court may consider whether an alternative theory of relief-defendant
liability permits disgorgement of the asset. For example, the district
court may apply Cavanagh I liability or a joint-ownership theory.21
Moreover, consistent with the burden of proof, the district court
should state on the record what, if any, adverse inferences it draws
from the Relief Defendants’ failure to testify if the SEC offers that
evidence.
III. CONCLUSION
We conclude that the district court (1) reasonably excluded
Ahmed from parts of discovery and denied him access to frozen
funds to hire counsel; (2) accurately calculated disgorgement by
approximating the “net profits” of Ahmed’s fraud; and (3) properly
gave retroactive effect to the NDAA’s disgorgement amendments.
But applying traditional principles of equity under Liu, we also
conclude that (4) the district court’s award of actual gains exceeded
equitable limitations by failing to ensure that no unduly remote
20 We agree with the Relief Defendants’ suggestion at argument that
“in some cases assets can be grouped if the same analysis applies to
multiple assets” or “[c]lasses of assets.” Oral Arg. Tr. at 12-13.
21 The parties dispute whether the district court’s joint-ownership
analysis was dicta or an alternative holding. The record is unclear, and the
district court is best positioned to clarify on remand.

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consequential gains are awarded; and (5) the “nominee” doctrine—
though well-established in equity and applicable to disgorgement—
must be applied on an asset-by-asset basis. For the foregoing
reasons, we affirm in part and vacate and remand in part the district
court’s judgment.
Our vacatur of the actual-gains award and application of the
nominee doctrine affects the scope of the district court’s liquidation
orders. In a separate order, we thus sua sponte dismiss as moot
Defendants’ appeals from those orders, 22-135, 22-184, 22-3077, 22-
3148. We also deny as moot Relief Defendants’ motions for a stay of
liquidation, and all stays are vacated.

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