In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 14-2636 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff-Appellee, 

v.

SIMING YANG, 

Defendant-Appellant. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 12 C 2473 — Matthew F. Kennelly, Judge. 

____________________ 

ARGUED FEBRUARY 13, 2015 — DECIDED JULY 28, 2015 

____________________ 

Before WOOD, Chief Judge, and BAUER and RIPPLE, Circuit 

Judges. 

WOOD, Chief Judge. Just before investing in Zhongpin (a 

Chinese company) on behalf of Prestige Trade Investments, 

Siming Yang purchased both shares and option contracts for 

Zhongpin’s stock for his personal use. Taking the position 

that this was deceptive “front-running,” the U.S. Securities 

and Exchange Commission (SEC) instituted this civil suit 

against Yang. The jury found that Yang had violated the law 

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both by front-running and by filing a fraudulent disclosure 

form. As relief, the district court imposed a $150,000 civil 

penalty and issued a permanent injunction barring Yang 

from future violations of U.S. federal securities law. Yang 

appeals both the finding of violations and the propriety of 

the injunction. We affirm both aspects of the district court’s 

judgment. 

I 

Yang is a Chinese citizen who works in investment research. While employed at an investment advisory firm in 

the United States, he formed Prestige under the laws of the 

British Virgin Islands. Yang funded Prestige with capital 

from several Chinese investors, including himself. Yang was 

Prestige’s only officer and employee and acted as its sole investment manager. 

Yang’s dealings with the stock of Zhongpin, a Delaware 

corporation that processes pork products in China, form the 

basis of this lawsuit. During the relevant period, Zhongpin’s 

common stock was traded on the NASDAQ exchange, and 

options contracts for its stock were traded on the Chicago 

Board of Options Exchange (CBOE). The company was registered with the SEC pursuant to Section 12(b) of the Securities 

Exchange Act (Exchange Act). See 15 U.S.C. § 78l(b). 

Between March 15 and March 23, 2012, Prestige (at Yang’s 

instruction) purchased 3,194,893 shares of Zhongpin common stock. Before he did so, Yang purchased 2,878 Zhongpin 

call options and 50,000 shares of Zhongpin common stock on 

March 14 and 15, 2012, through a SogoTrade account that he 

had opened jointly with Chinese citizen Caiyan Fan. In the 

district court, Yang argued that he was not the person who 

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made these purchases; he has not pursued this contention on 

appeal, however, and so that defense is waived. Yang did not 

disclose these purchases to Prestige. 

After its purchases were completed, Prestige owned 

more than five percent of Zhongpin’s common stock; this 

triggered an obligation under federal securities law to file a 

Schedule 13D form disclosing its ownership. See Section 

13(d) of the Exchange Act, 15 U.S.C. § 78m(d). Yang and two 

other people associated with Prestige (all listed as “Reporting Persons” on the form) filed an original and amended 

Schedule 13D on behalf of the company. Both forms disclosed that Yang had shared voting and dispositive power 

over the Zhongpin shares that Prestige had recently purchased, but they failed to list the shares that Yang had purchased for his own benefit, as required by Section 13(d) and 

SEC Rule 13d-1, 17 C.F.R. § 240.13d-1. The original Schedule 

13D misleadingly stated that, except for the transactions 

listed on the form, “no transactions in the Common Stock 

were effected by any Reporting Person” in the 60 days prior 

to Prestige’s attainment of a five percent interest in Zhongpin. 

These events prompted the SEC to file suit against Yang 

and Prestige, alleging that both had engaged in insider trading in violation of Exchange Act Section 10(b), 15 U.S.C. 

§ 78j(b), and SEC Rule 10b-5, 17 CFR § 240.10b-5. The SEC 

also alleged that Yang had violated Section 10(b), Rule 10b-5, 

and Section 206 of the Investment Advisers Act (Advisers 

Act), 15 U.S.C. § 80b-6, by engaging in front-running, a practice that involves trading for one’s personal gain in advance 

of trades for one’s client. Finally, the SEC contended that 

Yang’s failure to include his personal purchases of Zhongpin 

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stock in the Schedule 13D that he filed on behalf of Prestige 

constituted a violation of the reporting requirements in Exchange Act Section 13(d) and SEC Rule 13d-1. Thus, the SEC 

asserted, Yang’s filing of the form was fraudulent or deceptive for purposes of Section 10(b) and Rule 10b-5(b). 

A jury found that Yang had violated the law by engaging 

in front-running and by failing to disclose his personal purchases on the Schedule 13D. It rejected the SEC’s claims that 

Yang and Prestige had failed to comply with the insidertrading rules. Yang then moved for judgment as a matter of 

law or a new trial, relying on the theory that the jury could 

not reasonably have concluded that Yang was the person 

who made the trades in the SogoTrade account. Finding that 

the evidence was sufficient to support the verdict, the court 

denied the motion. After considering Yang’s awareness of 

wrongdoing, the lack of harm resulting from his actions, and 

some of his recent trading activity, the court issued a permanent injunction prohibiting Yang from violating federal securities law. It also imposed a $150,000 civil penalty. 

Yang’s appeal challenges both the jury’s verdict and the 

permanent injunction. He raises four principal arguments: 1) 

the district court lacked jurisdiction because of the foreign 

nature of Yang’s activities; 2) front-running does not constitute a violation of federal securities law; 3) his failure to disclose his personal purchases of Zhongpin stock in Schedule 

13D was not a material omission; and 4) the district court 

abused its discretion in issuing a permanent injunction. 

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II 

A 

We first discuss Yang’s arguments about the authority of 

the court to act in this case, given his own nationality and 

that of his company. 

Yang casts this as an argument that the court lacked 

jurisdiction over him under the Exchange Act and the 

Advisers Act. He asserts that these statutes do not reach his 

actions, because he is a citizen of China, Prestige is 

organized under the laws of the British Virgin Islands, and 

its owners are all Chinese. There was some dispute at oral 

argument over the question whether this is a challenge to 

subject-matter jurisdiction or merely an argument that there 

was a lack of legislative authority to regulate Yang’s actions 

(and thus that the SEC had failed to state a claim). If it is the 

former, we would be able to reach the issue even if it had not 

been raised in the district court; if the latter, we could not 

address the argument on appeal unless it was properly 

preserved. See Arbaugh v. Y&H Corp., 546 U.S. 500, 513–15 

(2006). Because Yang did raise the issue in the district court, 

we do not need to resolve this point; we can address the 

argument whether the claim is truly jurisdictional or not. 

Section 206 of the Advisers Act provides that district 

courts have jurisdiction over actions brought by the SEC relating to “conduct within the United States that constitutes 

significant steps in furtherance of the violation, even if the 

violation is committed by a foreign adviser and involves only foreign investors.” 15 U.S.C. § 80b-14(b)(1). Yang purchased shares of common stock (and options contracts for 

that stock) of Zhongpin, which as we have noted is incorpoCase: 14-2636 Document: 00712635679 Filed: 10/27/2015 Pages: 13 Case: 14-2636 Document: 37 Filed: 07/28/2015 Pages: 13

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rated in Delaware and at the time was traded on NASDAQ 

and the CBOE. Trades involving stocks or option contracts 

for stock of U.S. companies made on U.S. exchanges easily 

qualify as “conduct within the United States,” regardless of 

the citizenship of the purchaser. This activity, moreover, was 

essential to the alleged violations: Yang could not have engaged in front-running without making these trades. 

Yang argues that the maintenance of this suit would violate the principles underlying Morrison v. Nat'l Australia Bank 

Ltd., 561 U.S. 247 (2010), where the Supreme Court limited 

the extraterritorial reach of Section 10(b) of the Exchange 

Act. See id. at 265. But even assuming that Morrison applies 

to the Advisers Act, its reasoning does not help Yang. The 

Morrison Court found that Section 10(b) extends to “the use 

of a manipulative or deceptive device or contrivance only in 

connection with the purchase or sale of a security listed on 

an American stock exchange, and the purchase or sale of any 

other security in the United States.” Id. at 273. Yang’s purchase of Zhongpin stock, “a security listed on an American 

stock exchange,” falls comfortably within that scope. Thus, 

Morrison actually supports the conclusion we now reach: 

both the Advisers Act and Section 10(b) of the Exchange Act 

can be applied to Yang’s purchases of Zhongpin securities. 

B 

Yang next argues that front-running is not a violation of 

either the Exchange Act or the Advisers Act. Unfortunately 

for him, this is an afterthought. Yang did not make this argument in the district court either at trial or in his motions 

under Federal Rule of Civil Procedure 50; he has therefore 

forfeited it on appeal. Cf. Unitherm Food Sys., Inc. v. SwiftEckrich, Inc., 546 U.S. 394, 404–05 (2006) (litigant forfeited 

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right to seek a new trial on appeal because it did not seek a 

new trial in the district court); Cone v. W. Va. Pulp & Paper 

Co., 330 U.S. 212, 215–17 (1947) (finding that “a party’s failure to make a motion in the District Court for judgment 

notwithstanding the verdict, as permitted in Rule 50(b), precludes an appellate court from directing entry of such a 

judgment”). As we have noted, Yang did file a Rule 50(b) 

motion in which he objected to the jury’s verdict on sufficiency-of-the-evidence grounds, but that objection was based 

on the contention that the jury did not have sufficient evidence from which to conclude that he, rather than another 

person (such as Caiyan Fan), made the trades in the 

SogoTrade account. That argument is plainly a different one 

from the contention Yang is now putting forward on appeal. 

In this court, he asserts that even if he did make the trades, 

his actions in doing so did not violate federal securities law 

as a matter of law. Cf. Libertyville Datsun Sales, Inc. v. Nissan 

Motor Corp. in U.S.A., 776 F.2d 735, 737 (7th Cir. 1985) (litigant must raise the particular argument in the district court 

in order to preserve it on appeal). 

While we may consider a new argument on appeal in 

criminal cases under plain error review, see FED. R. CRIM. P.

52(b), our ability to review for plain error in civil cases is severely constricted. See Russian Media Grp., LLC v. Cable Am., 

Inc., 598 F.3d 302, 308 (7th Cir. 2010) (“In civil litigation, issues not presented to the district court are normally forfeited 

on appeal.”); Deppe v. Tripp, 863 F.2d 1356, 1360–61 (7th Cir. 

1988). There is no Federal Rule of Civil Procedure explicitly 

authorizing plain error review in civil litigation. This silence 

flows from the fact that a civil litigant “should be bound by 

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tice if his counsel’s work is bad enough (an option that rings 

hollow for criminal defendants). See Deppe, 863 F.2d at 1360. 

We “may consider a forfeited argument if the interests of 

justice require it,” but such cases are rare. Russian Media 

Grp., LLC, 598 F.3d at 308 (citing Amcast Indus. Corp. v. Detrex 

Corp., 2 F.3d 746, 749–50 (7th Cir. 1993)) (singling out cases 

“in which failure to present a ground to the district court has 

caused no one—not the district judge, not us, not the appellee—any harm of which the law ought to take note”); see also Stern v. U.S. Gypsum, Inc., 547 F.2d 1329, 1333 (7th Cir. 

1977) (court may conduct plain error review if “justice demands more flexibility”). Yang has made no attempt to 

demonstrate why his case qualifies as one of these “rare civil 

case[s] where exceptional circumstances exist.” Jackson v. 

Parker, 627 F.3d 634, 640 (7th Cir. 2010). 

Yang’s complete failure to raise this issue below means 

that the record is undeveloped on this point. The SEC had no 

opportunity to respond to this facial attack on the frontrunning theory in the district court. Instead, it reasonably 

focused its efforts at trial on proving that it was Yang who 

made the trades in question. The district court also had no 

opportunity to address this theory. And it is far from clear 

that the elements of plain error review would be satisfied in 

any case; Yang has made no attempt to show why he deserves to be relieved of his forfeiture. See id. (pointing to the 

lack of a developed record, the inability of the opposing party to add to that record, and the appealing party’s failure to 

show the elements of plain error review as indicating that 

the court should not address the argument). As we have noted before, “to reverse the district court on grounds not presented to it would undermine the essential function of the 

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district court.” Domka v. Portage Cty., Wis., 523 F.3d 776, 784 

(7th Cir. 2008) (quoting Economy Folding Box Corp. v. Anchor 

Frozen Foods Corp., 515 F.3d 718, 720 (7th Cir. 2008)) (alteration omitted). On the record before us, we see no exceptional 

circumstance that should cause us to depart from this prudential rule. We thus decline to reach Yang’s argument that 

“’front-running’ should never be considered fraudulent conduct within the meaning of ... Section 10(b) and Rule 10b-5.” 

III 

Yang next contends that his failure to disclose his personal purchases of Zhongpin stock on Schedule 13D was so trivial that it cannot be a material omission. This is essentially an 

argument that the SEC presented insufficient evidence from 

which the jury could reasonably have concluded that the 

omission of his purchases on that form was material. Yang 

stresses that his personal purchase of 50,000 shares of stock 

on March 14, 2012, was a tiny fraction of Zhongpin’s market 

volume for that day’s trading, and that disclosing those 

50,000 shares would have changed the amount of shares disclosed on the Schedule 13D by only a miniscule percentage. 

Once again, however, Yang failed to raise this argument 

at any point during the proceedings in the district court. He 

never mentioned materiality in any of his trial motions, including his motion for judgment as a matter of law. Guided 

by the same principles we just reviewed, we conclude that 

Yang has failed to present a compelling reason for us to take 

this matter up on appeal. Normally we do not review a sufficiency-of-the-evidence claim “unless the party seeking review has made a timely motion for a directed verdict in the 

trial court.” Hudak v. Jepsen of Ill., 982 F.2d 249, 250 (7th Cir. 

1992) (quoting Rogers v. ACF Indus., Inc., 774 F.2d 814, 818 

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(7th Cir. 1985)); see also Van Bumble v. Wal-Mart Stores, Inc., 

407 F.3d 823, 827 (7th Cir. 2005) (refusing to review sufficiency-of-the-evidence claim because litigant “failed to move for 

judgment as a matter of law pursuant to Fed. R. Civ. P. 50(a) 

or make any other motions challenging the sufficiency of the 

evidence”). 

At times we have implied that there is an exception to 

this rule of forbearance when the failure to review a sufficiency-of-the-evidence argument would result in “manifest 

injustice.” Hudak, 982 F.2d at 250–51. Even when that exception applies, however, the review is limited to determining 

“whether there was any evidence to support the jury’s verdict, irrespective of its sufficiency, or whether plain error was 

committed which, if not noticed, would result in a manifest 

miscarriage of justice.” Id. (quoting Thronson v. Meisels, 800 

F.2d 136, 140 (7th Cir. 1986)). Here, there is no manifest injustice in failing to address Yang’s newly minted argument. If 

Yang had made it clear that he was contesting the materiality 

of his omission, the SEC could have responded with additional evidence; for all we know, it might have reconsidered 

its litigation strategy. Yang points to nothing that convinces 

us that adherence here to the normal rules requiring initial 

presentation of arguments to the district court would result 

in manifest injustice. In any case, we are satisfied that there 

is at least some evidence in the record supporting the materiality of Yang’s omission. The form requires disclosure and 

Yang certified that it was complete, but it was not. Even 

though the percentage of shares was small, the absolute 

number was not negligible. We must leave for another day 

the question whether that number can fall so low that an 

SEC action for noncompliance with the Schedule 13D reporting requirement must fail for lack of materiality. 

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IV 

Yang’s final argument relates to the district court’s injunction. We will set aside an injunction only if the district court 

abused its discretion in imposing it. See SEC v. Cherif, 933 

F.2d 403, 408 (7th Cir. 1991). Yang contends that the district 

court impermissibly relied on facts not before the jury and 

unrelated to the violations alleged by the SEC at trial. He objects to the fact that the court looked to his undisclosed trading while the litigation was pending. In one instance he 

traded in a separate Fidelity account, and in another he engaged in a transaction with Prestige that “ran afoul of the 

stipulated asset freeze order that the Court had entered.” 

Yang’s premise about the universe of information the district court was entitled to consult before making its decision 

to impose an injunction is incorrect. The Exchange Act allows federal courts to grant “any equitable relief that may be 

appropriate or necessary for the benefit of investors” in an 

action brought by the SEC. See 15 U.S.C. § 78u(d)(5); see also 

id. § 78u(e) (granting district courts jurisdiction to issue injunctions requiring persons to comply with federal securities 

law); id. § 78u(d)(1) (authorizing the SEC to bring suit in federal district court to enjoin a person from engaging in violations of federal securities law). The Advisers Act provides a 

similar grant of authority. See 15 U.S.C. § 80b-9(d). 

Once the SEC has demonstrated a past violation, it “need 

only show that there is a reasonable likelihood of future violations in order to obtain [injunctive] relief.” SEC v. Holschuh, 

694 F.2d 130, 144 (7th Cir. 1982). To predict such a likelihood, 

the court “must assess the totality of the circumstances surrounding the defendant and his violation.” Id. This assessment includes consideration of “the gravity of harm caused 

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by the offense; the extent of the defendant’s participation 

and his degree of scienter; the isolated or recurrent nature of 

the infraction and the likelihood that the defendant’s customary business activities might again involve him in such 

transactions; the defendant’s recognition of his own culpability; and the sincerity of his assurances against future violations.” Id. 

This district judge was thus authorized to consider Yang’s 

continued trading; both the Fidelity trade and the Prestige 

transaction confirmed the likelihood that Yang would violate 

federal securities laws again. The undisclosed Fidelity trading was similar to Yang’s earlier purchases of Zhongpin 

stock (i.e., a large purchase of a company’s stock just before 

the company announced it was going private). The new 

transaction with Prestige undermined the earnestness of 

Yang’s assurances that he would cease all trading on U.S. 

markets and would not violate U.S. securities laws in the future. Finally, both actions implied that Yang’s “customary 

business activities” might involve transactions similar to 

those that the jury had found to violate the law. 

Yang also argues that the injunction was too harsh, particularly because of its potential impact on his ability to 

trade in U.S. securities in the future and the risk that the SEC 

might impose a life-time trading ban on him. The judge’s 

concession that Yang’s violations caused “no significant 

harm to investors” indicates, Yang says, that his penalty is 

disproportionately severe and may become worse. But the 

judge undertook a thorough analysis, weighing the slight 

injury against the other relevant factors, including the extent 

of Yang’s participation and knowledge of the violations 

(which the judge found was extensive) and the potential that 

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Yang would be involved in similar transactions in the future. 

The judge did not abuse his discretion in determining that 

these factors demonstrated a reasonable likelihood that Yang 

would commit future violations. He was not required to 

consider future actions that the SEC might take against Yang 

in coming to this conclusion. 

V 

Both the Exchange Act and the Advisers Act reach the activities of which Yang was accused in this case. The district 

court had jurisdiction over this matter, which dealt with activities on U.S. markets. Yang has forfeited his arguments 

regarding the illegality of front-running and the materiality 

of his Schedule 13D disclosure. Finally, the district court did 

not abuse its discretion when it permanently enjoined Yang 

from committing future violations of the U.S. federal securities laws. We thus AFFIRM the judgment of the district court. 

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