2024-10-02 sec-litreleases judgment 191 KB 9,751 chars

SEC v. Jai Bhavnani, No. 2:24-cv-07967-PA, Central District of California (Oct. 2, 2024) — Judgment

raw: SEC v. RARI CAPITAL

SEC v. RARI CAPITAL, No. 2:24-cv-07967-PA (Oct. 2, 2024)

Caption
SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. RARI CAPITAL, INC., JAI BHAVNANI, JACK LIPSTONE, and DAVID LUCID, Defendants.
summary

Jai Bhavnani entered a final judgment with the SEC, agreeing to permanent injunctions and a five-year ban on crypto asset sales and officer roles to resolve securities fraud allegations.

paragraph

The SEC obtained a final judgment against Jai Bhavnani for violations of the Securities Act of 1933 and the Exchange Act of 1934. Bhavnani was ordered to pay a total of $63,567.51, which includes $7,18ng.51 in disgorgement, $1,378.00 in prejudgment interest, and a $55,000.00 civil penalty. The settlement imposes a five-year prohibition on participating in the issuance or sale of crypto assets offered as securities and bars him from serving as an officer or director of reporting issuers.

narrative

The Securities and Exchange Commission obtained a final judgment against Jai Bhavnani in the Central District of California to resolve allegations of securities fraud and unregistered broker-dealer activities. Bhavnani consented to the judgment without admitting or denying the allegations, which included making untrue statements and engaging in deceitful practices. As part of the resolution, he is permanently enjoined from violating the Securities Act and the Exchange Act. The court imposed a five-year ban on Bhavnani participating in the issuance, purchase, or sale of crypto assets offered as securities. Additionally, he is prohibited from serving as an officer or director of any reporting issuer for a period of five years. To settle the matter, Bhavnani must pay a total of $63,567.51, consisting of $7,189.51 in disgorgement, $1,378.00 in prejudgment interest, and a $55,000.00 civil penalty.

Enriched metadata

Scheme
broker-dealer-fraud (95%)
Court
Central District of California
Case No.
2:24-cv-07967-PA
Outcome
settled
Disgorgement
$7,190
Civil penalty
$55,000
Classified broker-dealer-fraud(confidence 95%). EDGAR detection: forms Form D· recall 29% / precision 9%. detection rule →
Statutes
15 U.S.C. § 78o(a)15 U.S.C. § 78o(b)15 U.S.C. § 77t(b)15 U.S.C. § 78u(d)15 U.S.C. § 78l15 U.S.C. § 78o(d)15 U.S.C. § 77t(d)28 U.S.C. § 300128 U.S.C. § 196111 U.S.C. § 52311 U.S.C. § 523(a)Sections 17(a)(2) and 17(a)(3) of the Securities ActSections 17(a)(2) and 17(a)(3) of the Securities ActSections 17(a)(2) and 17(a)(3) of the Securities ActSection 15(a) of the Securities Exchange ActSection 20(b) of the Securities ActSection 20(d) of the Securities Act
Parties
Securities and Exchange CommissionRari Capital, Inc.Jai BhavnaniJack LipstoneDavid Lucid
Keywords
ordered adjudgedadjudged decreedfurther orderedfinalsecuritiesexchangeorderedcommissionfurtherpagesecurities exchangepa-maa documentdocument pagepage pageentry final

Extracted insights

Dollar amounts 4
  • $64K $63,567 $10K–$100K
  • $55K $55,000 $10K–$100K
  • $7K $7,189 <$10K
  • $1K $1,378 <$10K
Entities 7
  • person final judgment
  • person general appearance
  • person Jai Bhavnani
  • agency Securities and Exchange Commission
  • organization Securities and Exchange Commission
  • court united states district court
  • organization United States District Court
Triples 9
  • Securities And Exchange Commission filed Complaint
  • Jai Bhavnani entered General Appearance
  • Jai Bhavnani consented Court's Jurisdiction
  • Securities And Exchange Commission ordered Final Judgment
  • Jai Bhavnani restrained Violating Sections 17(a)(2) And 17(a)(3)
  • Jai Bhavnani enjoined Violating Section 15(a) Of The Securities Exchange Act
  • Securities And Exchange Commission registered Broker Or Dealer
  • Jai Bhavnani waived Right To Appeal
  • United States District Court issued Final Judgment
Text layers
Extracted body text (9,751c)
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ERIN E. WILK (Cal. Bar No. 310214)
Email: [email protected]
MADIHA M. ZUBERI (Cal. Bar No. 326962)
Email: [email protected]
DAVID ZHOU (NY Bar No. 4926523)
Email: [email protected]
Attorneys for Plaintiff
Securities and Exchange Commission
Monique C. Winkler, Regional Director
Jason H. Lee, Associate Regional Director
44 Montgomery Street, Suite 700
San Francisco, CA 94104
(415) 705-2500 (Telephone)
(415)
705-2501 (Facsimile)
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
RARI CAPITAL, INC., JAI BHAVNANI,
JACK LIPSTONE, and DAVID LUCID,
Case No.2:24-cv-7967
FINAL JUDGMENT
AS TO DEFENDANT
JAI BHAVNANI
Defendants.
UNITED STATES DISTRICT COURT
CENTRAL DIST
RICT OF CALIFORNIA

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The Securities and Exchange Commission having filed a Complaint and
Defendant Jai Bhavnani (“Defendant”) having entered a general appearance;
consented to the Court’s jurisdiction over Defendant and the subject matter of this
action; consented to entry of this Final Judgment without admitting or denying the
allegations of the Complaint (except as to jurisdiction and except as otherwise
provided herein in paragraph VII); waived findings of fact and conclusions of law;
and waived any right to appeal from this Final Judgment:
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant
is permanently restrained and enjoined from violating Sections 17(a)(2) and 17(a)(3)
of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(2) and
77q(a)(3)] in the offer or sale of any security by the use of any means or instruments
of transportation or communication in interstate commerce or by use of the mails,
directly or indirectly:
(a) to obtain money or property by means of any untrue statement of a
material fact or any omission of a material fact necessary in order to
make the statements made, in light of the circumstances under which
they were made, not misleading; or
(b) to engage in any transaction, practice, or course of business which
operates or would operate as a fraud or deceit upon the purchaser.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also
binds the following who receive actual notice of this Final Judgment by personal
service or otherwise: (a) Defendant’s officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or participation with Defendant or
with anyone described in (a).

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II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED
that Defendant is permanently restrained and enjoined from violating Section 15(a)
of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78o(a)], by
making use of the mails or any means or instrumentality of interstate commerce to
effect any transactions in, or to induce or attempt to induce the purchase or sale of,
any security (other than an exempted security or commercial paper, bankers’
acceptances, or commercial bills) unless he is registered with the Commission as a
broker or dealer in accordance with Section 15(b) of the Exchange Act [15 U.S.C. §
78o(b)], or associated with a broker or dealer registered with the Commission in
accordance with Section 15(b) of the Exchange Act.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also
binds the following who receive actual notice of this Final Judgment by personal
service or otherwise: (a) Defendant’s officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or participation with Defendant or
with anyone described in (a).
III.
IT
 IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant
to Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Sections 21(d)(1) and
21(d)(5) of the Exchange Act [15 U.S.C. §§ 78u(d)(1), (d)(5)], Defendant is, for a
period of five years following the date of entry of this Final Judgment, restrained
and enjoined from directly or indirectly, including, but not limited to, through any
entity owned or controlled by Defendant, participating in the issuance, purchase,
offer, or sale of any crypto assets offered and sold as securities; provided, however,
that such injunction shall not prevent Defendant from purchasing or selling
securities for his own personal accounts.

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as
provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also
binds the following who receive actual notice of this Final Judgment by personal
service or otherwise: (a) Defendant’s officers, agents, servants, employees, and
attorneys; and (b) other persons in active concert or participation with Defendant or
with anyone described in (a).
IV.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant
to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)], Defendant is
prohibited, for a period of five years following the date of entry of this Final
Judgment, from acting as an officer or director of any issuer that has a class of
securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or
that is required to file reports pursuant to Section 15(d) of the Exchange Act [15
U.S.C. § 78o(d)].
V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendant is liable for disgorgement of $7,189.51, representing net profits gained as
a result of the conduct alleged in the Complaint, together with prejudgment interest
thereon in the amount of $1,378.00. The Court finds that sending the disgorged
funds to the United States Treasury, as ordered below, is consistent with equitable
principles. The Court further imposes a civil penalty in the amount of $55,000.00
pursuant to Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] and Section
20(d) of the Securities Act [15 U.S.C. § 77t(d)]. Defendant shall satisfy these
obligations by paying $63,567.51 to the Securities and Exchange Commission
within 30 days after entry of this Final Judgment.
Defendant may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request. Payment may
also be made directly from a bank account via Pay.gov through the SEC website at

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http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified
check, bank cashier’s check, or United States postal money order payable to the
Securities and Exchange Commission, which shall be delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number,
and name of this Court; Jai Bhavnani as a defendant in this action; and specifying
that payment is made pursuant to this Final Judgment.
Defendant shall simultaneously transmit photocopies of evidence of payment
and case identifying information to the Commission’s counsel in this action. By
making this payment, Defendant relinquishes all legal and equitable right, title, and
interest in such funds and no part of the funds shall be returned to Defendant. The
Commission shall send the funds paid pursuant to this Final Judgment to the United
States Treasury.
The Commission may enforce the Court’s judgment for disgorgement and
prejudgment interest by using all collection procedures authorized by law, including,
but not limited to, moving for civil contempt at any time after 30 days following
entry of this Final Judgment. The Commission may enforce the Court’s judgment
for penalties by the use of all collection procedures authorized by law, including the
Federal Debt Collection Procedures Act, 28 U.S.C. § 3001 et seq., and moving for
civil contempt for the violation of any Court orders issued in this action.
Defendant shall pay post judgment interest on any amounts due after 30 days
of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the
Consent of Defendant Jai Bhavnani is incorporated herein with the same force and

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effect as if fully set forth herein, and that Defendant shall comply with all of the
undertakings and agreements set forth therein.
VII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely
for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy
Code, 11 U.S.C. § 523, the allegations in the Complaint are true and admitted by
Defendant, and further, any debt for disgorgement, prejudgment interest, civil
penalty or other amounts due by Defendant under this Final Judgment or any other
judgment, order, consent order, decree or settlement agreement entered in
connection with this proceeding, is a debt for the violation by Defendant of the
federal securities laws or any regulation or order issued under such laws, as set forth
in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19).
VIII.
IT
 IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court
shall retain jurisdiction of this matter for the purposes of enforcing the terms of this
Final Judgment.
IX.
There being no just reason for delay, pursuant to Rule 54(b) of the Federal
Rules of Civil Procedure, the Clerk is ordered to enter this Final Judgment forthwith
and without further notice.
DATED:
Percy An
derson
UNITED STATES DISTRICT JUDGE

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ERIN E. WILK (Cal. Bar No. 310214) 
Email: [email protected] 
MADIHA M. ZUBERI (Cal. Bar No. 326962) 
Email: [email protected] 
DAVID ZHOU (NY Bar No. 4926523) 
Email: [email protected] 

Attorneys for Plaintiff 
Securities and Exchange Commission 
Monique C. Winkler, Regional Director 
Jason H. Lee, Associate Regional Director 
44 Montgomery Street, Suite 700 
San Francisco, CA 94104 
(415) 705-2500 (Telephone)
(415) 705-2501 (Facsimile)

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff,

v.

RARI CAPITAL, INC., JAI BHAVNANI, 
JACK LIPSTONE, and DAVID LUCID, 

Case No.2:24-cv-7967

FINAL JUDGMENT 
AS TO DEFENDANT 
JAI BHAVNANI 

Defendants.

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

Case 2:24-cv-07967-PA-MAA     Document 12     Filed 09/19/24     Page 1 of 6   Page ID
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The Securities and Exchange Commission having filed a Complaint and 

Defendant Jai Bhavnani (“Defendant”) having entered a general appearance; 

consented to the Court’s jurisdiction over Defendant and the subject matter of this 

action; consented to entry of this Final Judgment without admitting or denying the 

allegations of the Complaint (except as to jurisdiction and except as otherwise 

provided herein in paragraph VII); waived findings of fact and conclusions of law; 

and waived any right to appeal from this Final Judgment: 

I. 

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant 

is permanently restrained and enjoined from violating Sections 17(a)(2) and 17(a)(3) 

of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(2) and 

77q(a)(3)] in the offer or sale of any security by the use of any means or instruments 

of transportation or communication in interstate commerce or by use of the mails, 

directly or indirectly: 

(a) to obtain money or property by means of any untrue statement of a 

material fact or any omission of a material fact necessary in order to 

make the statements made, in light of the circumstances under which 

they were made, not misleading; or 

(b) to engage in any transaction, practice, or course of business which 

operates or would operate as a fraud or deceit upon the purchaser. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 

provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 

binds the following who receive actual notice of this Final Judgment by personal 

service or otherwise: (a) Defendant’s officers, agents, servants, employees, and 

attorneys; and (b) other persons in active concert or participation with Defendant or 

with anyone described in (a). 

Case 2:24-cv-07967-PA-MAA     Document 12     Filed 09/19/24     Page 2 of 6   Page ID
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II. 

IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED 

that Defendant is permanently restrained and enjoined from violating Section 15(a) 

of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78o(a)], by 

making use of the mails or any means or instrumentality of interstate commerce to 

effect any transactions in, or to induce or attempt to induce the purchase or sale of, 

any security (other than an exempted security or commercial paper, bankers’ 

acceptances, or commercial bills) unless he is registered with the Commission as a 

broker or dealer in accordance with Section 15(b) of the Exchange Act [15 U.S.C. § 

78o(b)], or associated with a broker or dealer registered with the Commission in 

accordance with Section 15(b) of the Exchange Act. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 

provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 

binds the following who receive actual notice of this Final Judgment by personal 

service or otherwise: (a) Defendant’s officers, agents, servants, employees, and 

attorneys; and (b) other persons in active concert or participation with Defendant or 

with anyone described in (a). 

III. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant 

to Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Sections 21(d)(1) and 

21(d)(5) of the Exchange Act [15 U.S.C. §§ 78u(d)(1), (d)(5)], Defendant is, for a 

period of five years following the date of entry of this Final Judgment, restrained 

and enjoined from directly or indirectly, including, but not limited to, through any 

entity owned or controlled by Defendant, participating in the issuance, purchase, 

offer, or sale of any crypto assets offered and sold as securities; provided, however, 

that such injunction shall not prevent Defendant from purchasing or selling 

securities for his own personal accounts. 

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as 

provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also 

binds the following who receive actual notice of this Final Judgment by personal 

service or otherwise: (a) Defendant’s officers, agents, servants, employees, and 

attorneys; and (b) other persons in active concert or participation with Defendant or 

with anyone described in (a). 

IV. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, pursuant 

to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)], Defendant is 

prohibited, for a period of five years following the date of entry of this Final 

Judgment, from acting as an officer or director of any issuer that has a class of 

securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or 

that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 

U.S.C. § 78o(d)]. 

V. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that 

Defendant is liable for disgorgement of $7,189.51, representing net profits gained as 

a result of the conduct alleged in the Complaint, together with prejudgment interest 

thereon in the amount of $1,378.00. The Court finds that sending the disgorged 

funds to the United States Treasury, as ordered below, is consistent with equitable 

principles. The Court further imposes a civil penalty in the amount of $55,000.00 

pursuant to Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] and Section 

20(d) of the Securities Act [15 U.S.C. § 77t(d)]. Defendant shall satisfy these 

obligations by paying $63,567.51 to the Securities and Exchange Commission 

within 30 days after entry of this Final Judgment. 

Defendant may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request. Payment may 

also be made directly from a bank account via Pay.gov through the SEC website at 

Case 2:24-cv-07967-PA-MAA     Document 12     Filed 09/19/24     Page 4 of 6   Page ID
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http://www.sec.gov/about/offices/ofm.htm. Defendant may also pay by certified 

check, bank cashier’s check, or United States postal money order payable to the 

Securities and Exchange Commission, which shall be delivered or mailed to 

Enterprise Services Center 
Accounts Receivable Branch 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 

and shall be accompanied by a letter identifying the case title, civil action number, 

and name of this Court; Jai Bhavnani as a defendant in this action; and specifying 

that payment is made pursuant to this Final Judgment. 

Defendant shall simultaneously transmit photocopies of evidence of payment 

and case identifying information to the Commission’s counsel in this action. By 

making this payment, Defendant relinquishes all legal and equitable right, title, and 

interest in such funds and no part of the funds shall be returned to Defendant. The 

Commission shall send the funds paid pursuant to this Final Judgment to the United 

States Treasury. 

The Commission may enforce the Court’s judgment for disgorgement and 

prejudgment interest by using all collection procedures authorized by law, including, 

but not limited to, moving for civil contempt at any time after 30 days following 

entry of this Final Judgment. The Commission may enforce the Court’s judgment 

for penalties by the use of all collection procedures authorized by law, including the 

Federal Debt Collection Procedures Act, 28 U.S.C. § 3001 et seq., and moving for 

civil contempt for the violation of any Court orders issued in this action. 

Defendant shall pay post judgment interest on any amounts due after 30 days 

of the entry of this Final Judgment pursuant to 28 U.S.C. § 1961. 

VI. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the 

Consent of Defendant Jai Bhavnani is incorporated herein with the same force and 

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effect as if fully set forth herein, and that Defendant shall comply with all of the 

undertakings and agreements set forth therein. 

VII. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, solely 

for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy 

Code, 11 U.S.C. § 523, the allegations in the Complaint are true and admitted by 

Defendant, and further, any debt for disgorgement, prejudgment interest, civil 

penalty or other amounts due by Defendant under this Final Judgment or any other 

judgment, order, consent order, decree or settlement agreement entered in 

connection with this proceeding, is a debt for the violation by Defendant of the 

federal securities laws or any regulation or order issued under such laws, as set forth 

in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). 

VIII. 

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court 

shall retain jurisdiction of this matter for the purposes of enforcing the terms of this 

Final Judgment. 

IX. 

There being no just reason for delay, pursuant to Rule 54(b) of the Federal 

Rules of Civil Procedure, the Clerk is ordered to enter this Final Judgment forthwith 

and without further notice. 

DATED: 
Percy Anderson

UNITED STATES DISTRICT JUDGE 

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PercyAnderson
Date

PercyAnderson
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