• Section 523(a)(19) Conflicts with Two Circuit Interpretations
  • August 3, 2017 | Authors: Kathryn H. (Katie) Hester; Jeffrey R. Barber
  • Law Firm: Jones Walker LLP - Jackson Office
  • On Feb. 15, 2017, the U.S. Court of Appeals for the Eleventh Circuit held that a debtor does not need to have committed a securities violation to have his/her debt excepted from discharge under 11 U.S.C. § 523(a)(19) as long as the judgment is for a securities violation. If the debtor is a party to the judgment and the judgment is for a securities violation, whether the debtor is the one who violated a securities law is irrelevant.<sup>1</sup> The Eleventh Circuit’s decision conflicts with decisions from both the Ninth and Tenth Circuit Courts of Appeals, though the Tenth Circuit might as well agree with the Eleventh Circuit’s holding on the same set of facts. Section 523(a)(19)<sup>2</sup>makes non dischargeable a debt that “(1) is for violation of securities laws (§ 523 (a) (19) (A)); and (2) results from a judgment, order, consent order, decree or settlement agreement (§ 523 (a) (19) (B)).”<sup>3</sup>