Opinion ID: 609176
Heading Depth: 2
Heading Rank: 2

Heading: SEC Disgorgement Fund

Text: 8 On April 24, 1990 Milken plead guilty, as noted, to the six-count information and was sentenced to a ten-year prison term. At the same time he settled a civil action brought against him by the SEC. Under the terms of his plea and settlement, he agreed, as earlier stated, to pay a $200 million criminal fine and to establish a $400 million civil claim fund that was called the SEC Disgorgement Fund. 9 This Disgorgement Fund was set up to compensate private parties with claims against Milken arising out of his illicit activities at Drexel. The assets of the fund, minus certain administrative expenses, are to be distributed pursuant to a plan or plans proposed by the SEC and approved by the district court, or to parties making valid claims against Milken. Milken may make application to the court for payment of such valid claims, which are defined in the judgment establishing the Disgorgement Fund as claims arising out of a) bona fide final judgments against Milken; b) bona fide court approved settlements with Milken; and c) agreements reached in good faith to settle any bona fide claim for compensatory damages ... arising out of Drexel-related Activities. Milken retains the right to pay out these valid claims in connection with a joint settlement with Drexel. 10 The establishment of the SEC Disgorgement Fund was not intended to limit Milken's liability to injured persons, and distributions from the fund are not conditioned on the claimants' release of Milken from liability. To this end, the final judgment of the district court approving the fund states: Except as explicitly provided in this FINAL JUDGMENT and the CONSENT, nothing herein is intended to or shall be construed to have created, compromised, settled, or adjudicated any claims ... or rights ... other than as between the [SEC] and MICHAEL MILKEN and his immediate family.