Securities and Exchange Commission v DeYoung (Seiler Intervenor; First Utah Bank Interested Party; and Thompson, Receiver)

Seiler and two other intervenors appealed the denial of their objection to the claim bar in a settlement agreement between bank and Thompson. The panel affirmed. It first held that the anti-injunction act did not apply as Seiler did not have a state lawsuit pending when the claim bar was approved. It held Thompson had standing to negotiate the agreement including the claim bar because Thompson stands in the shoes of the entity which accepted retirement funds form Seiler and others which were deposited in Bank and stolen by DeYoung; the entity was harmed by Bank’s failure to discover the theft in that it became insolvent, the insolvency was traceable to the failure to detect the thefts and the harm can be redressed by an order for Bank to reimburse the entity. It affirmed approval of the settlement including the claim bar because the district court had broad equitable powers to resolve the receivership case and the factors relied upon by the district court, Bank would only settle with a claim bar, the fact that Bank could be unable to satisfy a judgment if protracted litigation took place, the fact that Bank will not admit fault, the fact that the insurance policy here would be consumed in litigation expenses reducing the amount of the settlement, the fact that 99.98% of claimants approved the settlement  and the problems with obtaining victory at trial including an indemnity agreement between Bank and the claimant entity, support the agreement including the bar. It finally held the district court did not commit clear error in accepting Thompson’s analysis of Bank’s financial condition, concluding that the amount offered in settlement was the most that could be offered without violating federally mandated increases in capital reserves, the policy involved would have been consumed in litigation expenses and Bank lacked enough capital to satisfy multiple judgments against it and there was no abuse of discretion in rejecting Seiler’s expert’s declaration that Bank could kick in more money.