U.S. securities fraud case dismissed against Texas Attorney General

A federal judge on Friday dismissed a civil securities fraud case against Texas Attorney General Ken Paxton, court documents showed.

The ruling in the U.S. District Court for the Eastern District of Texas marks a major victory for the Tea Party Republican who has denied violating securities laws but still faces similar, though criminal, state-level charges.

In April, the U.S. Securities and Exchange Commission (SEC) charged Paxton over what the agency said was his role in a stock scam that defrauded investors in a Texas-based technology company called Servergy Inc.

The Commission accused Paxton of working to raise investor funds for the company without disclosing his commissions.

U.S. District Judge Amos Mazzant rejected this view, writing in a 29-page ruling that, “under the facts pleaded by the Commission, Paxton did not have a legal obligation to disclose his financial arrangement.”

Paxton, in a written statement, said: “I appreciate the judge’s thorough review, and I am gratified by his dismissal of the entire case.”

The judge also gave the SEC two weeks to amend its complaint with any additional facts that might revive their allegations.

The Securities and Exchange Commission did not immediately responded to a request for comment.

(Reporting by Eric M. Johnson in Seattle and Nate Raymond in New York; Editing by Sandra Maler)

comments powered by Disqus