During 2005, the Securities and Exchange Commission ("SEC" or the "Commission") filed 947 enforcement actions and obtained a record amount of more than $3 billion in penalties and disgorgement. As in any given year, the vast majority of these cases were not litigated but filed as settlements. In addition to money penalties and disgorgement, most SEC settlements levy "obey-the-law" injunctions--injunctions (or consent decrees) against future violations of securities laws in which a perpetrator agrees to "sin no more" or risk contempt of court--as a remedy. The injunction has been a "cornerstone" of the SEC's enforcement program since the Commission's founding in 1934.
On August 10, 2005, the Eleventh Circuit challenged the Commission's use of injunctions in SEC v. Smyth, declaring in footnote 14 of its opinion--dictum--that SEC obey-the-law injunctions are defective in some circumstances. This Article argues that the Eleventh Circuit's footnote should not be regarded as precedential or accorded substantial weight by the courts, the SEC, or other affected parties. Besides the fact that it was improper for the circuit court to rule on an issue that was not presented on appeal or briefed by the parties, SEC obey-the-law injunctions do not violate the law. Contrary to the Eleventh Circuit's arguments in footnote 14 of Smyth, obey-the-law injunctions and consent decrees are consistent with the Federal Rules of Civil Procedure, the Due Process Clause of the Fifth Amendment, and the right to a jury trial guaranteed by the Seventh Amendment. The Eleventh Circuit's dictum does, however, raise a number of interesting questions about SEC obey-the-law injunctions, suggesting that a reexamination of this important enforcement tool is appropriate. If, as some commentators have suggested, SEC injunctions were limited only to the prevention of substantially identical fraudulent schemes, the SEC's duty to protect financial markets against fraud would be unduly restrained. But the Commission should consider voluntarily tweaking its future approach by creating obey-the-law injunctions with specific and demanding compliance terms, for both corporations and individual defendants.
Part I of this Article will outline the background of SEC v. Smyth and the history of obey-the-law injunctions as civil penalties. Part II will discuss the Eleventh Circuit's three principal legal arguments in footnote 14 against SEC obey-the-law injunctions. Part III addresses the Commission's future use of obey-the-law injunctions, and concludes that the SEC should not significantly alter its approach to injunctions but should include more specific and demanding compliance provisions with these orders.
I. History of SEC Injunctions and Background of Smyth
Since the founding of the Commission more than seventy years ago, the injunction has served as the SEC's most reliable enforcement tool. Part I.A discusses the history and development of the obey-the-law injunction and why the SEC continues to rely on this remedy even though it now has a host of other enforcement tools at its disposal. Part I.B will discuss the background and procedural history of SEC v. Smyth, in which the defendant consented to an obey-the-law injunction typical of many Commission settlements. Parts II and III discuss whether the Eleventh Circuit was correct to attack the Smyth case injunction and whether the court's footnote 14 should influence the SEC's future approach.
a. History of SEC Obey-the-Law Injunctions
From its earliest days, the SEC has had the power to seek injunctions to prevent ongoing and future violations of securities laws. Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act") empowers the Commission to seek permanent or temporary injunctions in federal court "whenever it shall appear to the Commission that any person is engaged or about to be engaged in acts or practices constituting a violation of any provision" of the Exchange Act or the rules of one of the self-regulatory agencies. Section 20(b) of the Securities Act of 1933 ("Securities Act"), Section 42(d) of the Investment Company Act of 1940 ("Investment Company Act"), and Section 209(d) of the Investment Advisers Act of 1940 ("Investment Advisers Act") provide the Commission with similar authorization.
Historically, an injunction was not only the Commission's most important form of relief but often its only option for a remedy. From 1934, when the SEC was created, until 1984, when Congress passed the Insider Trading Sanctions Act ("ITSA"), the primary tool available to the SEC Enforcement Division was an injunction. Prior to ITSA, the SEC's civil penalty authority was found in one very narrow provision of the Exchange Act, which permitted it to assess a penalty of $100 per day for the failure to file certain statutorily required reports. The SEC had no other authority to seek, and the courts had no authority to impose, financial penalties in civil proceedings for violations of federal securities laws. Accordingly, the Commission's only legitimate power was to seek injunctions authorized by the Exchange Act, Securities Act, Investment Company Act, and the Investment Advisers Act, as well as judicially-compelled disgorgement of ill-gotten gains (or other forms of relief mandated by courts).
Following a series of insider trading scandals in the early 1980s, Congress passed ITSA and empowered the SEC with retrospective relief provisions--specifically, the ability to obtain significant monetary penalties. ITSA, the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, and the Sarbanes-Oxley Act of 2002  have given the SEC a broad range of remedies. With the authority of these statutes, today the SEC may seek civil monetary penalties or disgorgement, bar or suspend an individual from serving as a corporate officer or director, or require audits, accounting for frauds, or special supervisory arrangements. Nonetheless, the SEC continues to use the injunction as one of its principal enforcement tools against both perpetrators of securities fraud and those who aid and abet violators of securities fraud because injunctions allow the Commission to sanction repeat offenders with contempt of court. Defendants who disobey previous injunctions may be prosecuted for civil or criminal contempt, which can result in civil monetary damages or criminal sanctions (i.e., imprisonment). Prosecution for contempt is both easier for the Commission and potentially more troublesome for the violator because an individual has no constitutional right to an indictment prior to the trial of a criminal contempt charge, may not have a right to a jury trial, and, when a jury is empanelled, a contempt sanction can be more severe than a penalty imposed under the equivalent sections of the securities laws.
The entry of an injunction can also have substantial collateral consequences for a defendant. The Supreme Court originally observed in SEC v. Capital Gains Research Bureau that Commission injunctions were only a "mild prophylactic," but in a more recent opinion Chief Justice Burger commented that injunctions in the securities field are, in fact, "a drastic remedy, not a mild prophylactic." An SEC obey-the-law injunction is not just "a slap on the wrist" but can have far-reaching consequences. Besides related civil and criminal penalties, an injunction can result in the "the loss of one's business or livelihood, the loss of benefits that would otherwise be available under the securities laws, and . . . the loss of personal and professional reputation." An injunction, if material, must be disclosed in subsequent securities transactions, whether or not the disclosure is mandated by a specific statute or rule. Whether through the press, a credit reporting agency, or simply by word of mouth, an injunction can cause serious harm to an individual. In SEC v. Thermodynamics, for example, the Tenth Circuit pointed out several collateral consequences of an SEC injunction issued against a Securities Act violator:
The injunction appeared on his Dun and Bradstreet report, and he had to explain it to the people he did business with. There was evidence that the injunction may have hampered him in securing a line of credit from a local bank. It also prevented him from being considered for a place on a board of directors . . . . The appellant also testified that the presence of the injunction was a "mark" against him which he wanted to remove for family reasons. In one instance the injunction prevented him from making a Regulation A offering of stock in his corporation, and a waiver of the rule relating to injunctions against officers was sought but denied.
Obey-the-law injunctions may also affect individual or company proceedings before federal agencies such as the Federal Communications Commission and the Commodities Futures Trading Commission, before regulatory agencies such as the National Association of Securities Dealers and New York Stock Exchange, and under state securities proceedings as well.
In ruling on SEC injunctive relief requests, a court may consider the collateral consequences of an injunction before consenting to its order. Courts also take into account other factors including, but not limited to, the severity of the violation, the degree of scienter involved, the defendant's recognition of the wrongful nature of his conduct, and the defendant's sincerity in refraining from future violations. The Eleventh Circuit, for example, employs a multiprong test balancing "the egregiousness of the defendant's actions, the isolated or recurrent nature of the infraction, the degree of scienter involved, the sincerity of defendant's assurances against future violations, the defendant's recognition of the wrongful nature of his conduct, and the likelihood that the defendant's occupation will present opportunities for future violations."  Other circuit courts have articulated similar balancing tests. Regardless of the specific test imposed, the SEC cannot obtain injunctive relief on a bare showing that a violation has been committed. Injunctions are designed to be prophylactic, not punitive. The fundamental purpose of SEC injunctions is to protect investors or the financial markets from future harm.
The vast majority of SEC enforcement proceedings (over ninety percent), however, never make it to the courts. Most SEC enforcement proceedings are settled--not litigated on the merits. Reasons for this high rate of settlement vary. From the subject's perspective, litigation itself (even if ultimately successful) can be expensive and create unwanted publicity. A loss at trial may result not only in immediate sanctions but also in the defendant being collaterally estopped from relitigating related issues in subsequent private actions. From the Commission's perspective, its staff is too small to try more than a fraction of the cases being investigated. Settlements allow the SEC quick and easy victories without dedicating timely and expensive resources to investigation and litigation.
In the settlement context, the Commission has developed a practice of seeking broad injunctions which generally forbid future violations of the statutes or regulations at issue rather than narrow injunctions which only forbid more of the specific conduct in which the violator had engaged. The Commission designs the orders to be as "sweeping" and all-encompassing as possible so that recidivist offenders cannot evade the reach of obey-the-law injunctions through technical maneuvering. Broad obey-the-law injunctions have become the Commission's "non-negotiable" position, with the SEC insisting on these injunctions in virtually every settlement that includes an injunctive relief provision.
b. Background of SEC v. Smyth
SEC v. Smyth arose out of a "relatively ordinary" enforcement action in which defendants consented to the entry of an obey-the-law injunction by the SEC. In June 2001, the Commission filed a complaint in the Northern District of Georgia against three former officers and the outside auditor of Vista 2000, Inc., a consumer products company based in Roswell, Georgia. The Commission charged the defendants with violations of federal securities laws, including the antifraud, periodic reporting, recordkeeping, and internal accounting control provisions. The former outside auditor defaulted, and defendants entered into partial settlements with SEC in which they consented to disgorgement of ill-gotten gains, civil money penalties, and an Order of Permanent Injunction (i.e., an obey-the-law injunction) enjoining them from future violations of the securities laws cited in the SEC's complaint. They did, however, reserve the right to litigate the amount they would have to pay in disgorgement and monetary penalties. The injunction was nearly identical to other recent SEC injunctions--it simply tracked the general language of the statutes and rules alleged to have been violated, and ordered the defendants (along with others acting in concert with them or on their behalf) not to violate those statutes and rules again.
One of the defendants, Arnold E. Johns, Jr., appealed, challenging the district court's failure to convene an evidentiary hearing prior to determining the amount of disgorgement. On appeal, the Eleventh Circuit vacated the district court's order and remanded the case, holding that the court abused its discretion by entering judgment without holding an evidentiary hearing. Although the enforceability of the consent injunction was not before the Eleventh Circuit and the court acknowledged the appealing defendant's voluntary consent to the injunction imposed by the district court, and thus his waiver to challenge the injunction on appeal, the court noted it "would be remiss" if it did not inform the district court that the injunctions it had issued in the case were "unenforceable." In footnote 14 of the Smyth opinion, the court argued that these commonly-used injunctions violate Federal Rule of Civil Procedure Rule 65(d) because they are overbroad and nonspecific, that the orders violate a defendant's due process rights because they permit the SEC to bring a future case by filing a contempt proceeding in the district where the injunction was issued regardless of whether the defendant would otherwise be subject to personal jurisdiction in that district, and that a contempt proceeding resulting from an injunction denies the defendant the rights he or she would receive-- including the right to a jury trial guaranteed by the Seventh Amendment--if the SEC had to file a new case:
This Circuit has held repeatedly that "obey the law" injunctions are unenforceable . . . . The specificity requirement of Rule 65(d) is no mere technicality . . . . An injunction must be framed so that those enjoined know exactly what conduct the court has prohibited and what steps they must take to conform their conduct to the law . . . . By persuading the district court to sign the consent decree it presented pursuant to its stipulation with Johns, the SEC apparently is of the belief that the Due Process Clause would present no hurdle to the enforcement of the injunction it has obtained . . . . The SEC is also apparently of the belief that the Rules of Civil Procedure would have little application in a contempt proceeding . . . not to mention [the defendant's] Seventh Amendment right to a trial by jury. 
On September 22, 2005, the SEC petitioned the Eleventh Circuit to remove footnote 14 from its opinion because the remedy--obey-the-law injunctions--was never presented to the court or briefed by the parties. As the Commission argued, the issue should not have been summarily resolved without allowing the SEC an opportunity to present its position. Footnote 14 could have the effect of unfairly "casting a shadow" over all the general practice of SEC obey-the-law injunctions. Aside from this procedural consideration, the SEC attempted to refute the Eleventh Circuit's argument against the enforceability of obey-the-law injunctions by addressing the merits of the court's claim, arguing that the Smyth defendants consented to the injunction imposed and suggesting that the Commission had acted based on the public interest. Despite the Commission's concerns, the Eleventh Circuit denied the Commission's request to delete footnote 14.
II. Eleventh Circuit's Concerns Are Not Compelling
The Eleventh Circuit presented three main vulnerabilities in the SEC's practice of entering broad obey-the-law injunctions: (1) Obey-the-law injunctions violate the specificity requirement of Federal Rule of Civil Procedure Rule 65(d); (2) contempt proceedings resulting from obey-the-law injunctions violate a defendant's due process right to personal jurisdiction; and (3) contempt proceedings resulting from injunctions violate the right to trial by jury. This section argues that the court's concerns are not compelling. Part II.A outlines the Smyth court's arguments pertaining to Rule 65(d) and the counterarguments briefed to the court by the SEC. Part II.B will discuss the court's argument that SEC obey-the-law injunctions violate in personam jurisdiction, and Part II.C will address the contention that injunctions can violate the Seventh Amendment jury trial right.
a. Rule 65(d) Specificity Requirement
In the Smyth settlement, as in most SEC enforcement settlements, the Commission demanded, and the defendants consented to, an injunction with boilerplate language that reached almost any future securities law violations. The Eleventh Circuit argued such injunctions that "track the provisions of the statute or regulation the violation of which is enjoined" are too broad and thus violate the specificity requirement of Rule 65(d) of the Federal Rules of Civil Procedure. Under Rule 65(d), an injunctive order must be "specific in terms" and "describe in reasonable detail . . . the act or acts sought to be restrained . . . ." Civil injunctions must apprise a party enjoined of the conduct that will risk contempt so as to protect those who are enjoined by informing them of what they must do or refrain from doing in order to comply with the injunction. The specificity requirement also facilitates appellate review because an appellate court cannot assess the correctness of a district court's judgment without knowing its precise bounds. The Eleventh Circuit, citing Rule 65(d), noted, "[a]n injunction must be framed so that those enjoined know exactly what conduct the court has prohibited and what steps they must take to conform their conduct to the law." The court argued that it has "held repeatedly that 'obey-the-law' injunctions are unenforceable" when they do not conform to the specificity requirement. The specificity requirement is not a mere technicality--"the command of specificity is a reflection of the seriousness of the consequences which may flow from a violation of an injunctive order." The SEC's injunction in Smyth would deny the defendants the clarity that Rule 65(d) demands since the terms of the injunction "reach any violation of the securities laws and regulations . . . ."
In response to the Eleventh Circuit's Rule 65(d) contention in the Smyth footnote, the SEC argued that the defendants, represented by counsel, had expressly consented to the injunctive provision contained in the consent decree and thereby waived their rights under Rule 65(d). Paragraph 13 of the defendant's official consent decree contained the following unambiguous language: "Defendant . . . agrees that he will not oppose the enforcement of the Order of Permanent Injunction on the ground that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure, and hereby waves any objection based thereon." As the Commission noted, case law from the Supreme Court, the Eleventh Circuit, as well other circuit courts, supports the notion that "protections provided by Rule 65(d), like most rights and protections, are subject to waiver." For example, in Combs v. Ryan's Coal Co., in which appellants challenged a civil contempt judgment on the ground that it violated Rule 65(d), the Eleventh Circuit concluded that the specificity requirement was indeed waivable:
[A]t no time before the trial court did appellants ever complain about the adequacy of the consent decree which they themselves helped to craft. They made no attempt to request more specific language; they chose not to exercise their right to the usual remedy for inadequacies of this sort: a motion for clarification or modification of the consent decree. At this point any possible objection they might have to the decree is stale.
The Supreme Court has similarly found that the Rule 65(d) specificity requirement can be waived. As the Commission argued in its petition to the Eleventh Circuit, Rule 65(d) "is not jurisdictional, in the sense that an injunction that does not comply with its requirements is a nullity even where no party has objected to it." Rule 65(d) creates a right for a party to insist on specificity, but the defendant can give up that right by choice.
Second, the SEC argued in its petition that the Smyth footnote incorrectly suggested "injunctions that track the language of the relevant legal provision are per se invalid" because they are too vague and thus violate Rule 65(d). In fact, the Supreme Court, the Eleventh Circuit, and other circuit courts have held that there is no "absolute bar" against injunctions that track statutory language. In McComb v. Jacksonville Paper Co., for example, in considering a decree that tracked the language of the Fair Labor Standards Act and "enjoined any practices which were violations of those statutory provisions," the Supreme Court concluded that "[d]ecrees of that generality are often necessary to prevent further violations where a proclivity for unlawful conduct has been shown." Citing to a prior Eleventh Circuit decision, the SEC pointed to an opinion by Judge Gerald Tjoflat--the author of the Smyth opinion and its footnote--holding that injunctions "that order the defendant essentially to do nothing more than obey the securities laws" are indeed "permissible." Although an injunction's validity depends "at least in part on the breadth of the relevant statutory language," an injunction with boilerplate language can still fairly apprise a party enjoined of the precise conduct that will risk contempt, Judge Tjoflat wrote.
Finally, the Commission argued that injunctions tracking statutory language do not violate Rule 65(d)'s specificity requirement because the Commission, as a government agency charged with regulating the securities industry, is given special authority. That is, SEC injunctions are allowed to be broad and sweeping in scope because of the "public law nature" of SEC activities and thus should be given deferential treatment relative to Rule 65(d). The Fifth Circuit has acknowledged "broader authority accorded administrative agencies in their effort to enforce administrative schemes of regulation." Similarly, the Seventh Circuit held that "[t]he broad framework of the injunction in this case is particularly appropriate because of the public interest involved and the necessity of protecting the investing public from fraud and deceit."  Indeed, courts have long recognized that injunctions sought by government agencies are permitted to be of greater breadth than those sought by private litigants. SEC obey-the-law injunctions receive a degree of deference because, unlike private litigants, the Commission acts on the basis of public interest in furtherance of its statutory charge to regulate the securities industry.
In its petition to the Eleventh Circuit defending obey-the-law injunctions against the court's specificity argument, the SEC failed to acknowledge that other courts--including the Supreme Court--have shown signs of being less than completely comfortable with obey-the-law injunctions due to their lack of specificity. In the context of the National Labor Relations Act, the Supreme Court held that "the mere fact that a court has found that a defendant has committed an act in violation of a statute does not justify an injunction broadly to obey the statute and thus subject the defendant to contempt proceedings if he shall at any time in the future commit some new violation unlike and related to that with which he was originally charged." In other words, injunctive power extends only to activities that a court "can both anticipate and specifically describe." Boilerplate injunctions that track broad statutory provisions may not meet this requirement. Many precedents have upheld SEC obey-the-law injunctions framed in terms of statutory language, but other precedents strictly adhere to the specificity requirements of Rule 65(d). For example, in the D.C. Circuit's decision in SEC v. Savoy Industries, that court struck from an injunction at-issue language that tracked Section 17(a) of the Securities Act.
Although some courts have expressed concerns with the generality of obey-the-law injunctions, the practice under the authority of the SEC has received broad approval in many other jurisdictions. The Second Circuit concluded that there "can be no abuse of discretion in framing an injunction in terms of the specific statutory provision which the court concludes has been violated." That circuit court approved a district court decision to frame an injunction "in language virtually identical to that of Rule 10b-5." Similarly, the D.C. Circuit, in the context of a cease and desist order, ruled out "any requirement on the part of the Commission to tailor its order more narrowly to the specific types of violations of the provisions involved." The court reasoned that the SEC had broad authority "to curb a wider range of securities violations in an effort to combat recidivism," and limiting injunctive orders to "copy-cat violations" would undercut this purpose. The D.C. Circuit observed that quoted regulations in an injunction--however broad--provide sufficient guidance for a defendant, and that, if necessary, the defendant can always seek clarification from the SEC.
The Eleventh Circuit failed to balance the specificity requirements for injunctions with the right of a defendant to waive the specificity requirements of Rule 65(d). In Smyth, the defendant consented to entry of an injunction tracking language of the statute that he was alleged to have violated and expressly waived his rights under Rule 65(d). Such a waiver renders enforceable what may otherwise be an unenforceable order. Indeed, an injunction that does not comply with Rule 65(d) is not a nullity per se when no party objects to its lack of specificity. Courts have consistently upheld SEC injunctions framed in terms of statutory language, and SEC injunctions, particularly because the Commission has the special duty to regulate the securities industry on the public's behalf. There is a long history of case law to support the proposition that the Rule 65(d) specificity requirement is waivable, as the SEC's petition to the Eleventh Circuit made clear. The Eleventh Circuit's suggestion that SEC obey-the-law injunctions are a nonwaivable exception and should receive special treatment from courts is unpersuasive.
b. Due Process Right to Personal Jurisdiction
In addition to its Rule 65(d)-based specificity objection to obey-the-law injunctions, the Eleventh Circuit argued that these orders violate a defendant's due process right to personal jurisdiction. Injunctions issued by the Commission reach any future violation of securities laws, no matter where the violation has occurred. When an injunction is broad enough to cover later conduct unrelated to the conduct that sparked the injunction, a defendant can still be dragged into a contempt proceeding. The court that issued the original injunction simply has to issue a show-cause order on the SEC's contempt motion and convene a hearing to permit the defendant a chance to rebut its proof.  The SEC could thus hold an individual in contempt for a future violation in a federal district in which the due process clause would bar prosecution of an independent suit. Following the Eleventh Circuit's logic, in personam jurisdiction would be lacking as a defendant could be sanctioned for violating a crime in a district in which he/she has no presence. To hold a defendant in contempt for infractions related to obey-the-law injunctions when personal jurisdiction is lacking violates due process. The SEC does not have the unique ability to waive the Constitution's jurisdictional requirements. Indeed, the securities laws only "permit the exercise of personal jurisdiction to the limit of the Due Process Clause of the Fifth Amendment."
The Eleventh Circuit's jurisdictional concern with obey-the-law injunctions would be legitimate if these orders were only a license for the SEC to bring a separate case in a jurisdiction with no other connection to the subsequent violation. But the court failed to recognize that SEC injunctions and consent decrees preserve the connection between two infractions by demanding that the defendant consent to the continuing jurisdiction of the original trial court. SEC injunctions almost uniformly stipulate that a defendant waive the procedural due process right to personal jurisdiction for future securities law violations. The Eleventh Circuit failed to balance its concern for this procedural due process right with the fact that, if an individual voluntarily, knowingly, and expressly consents to the jurisdiction of a court over him, the right to in personam jurisdiction is waived.
Fundamentally, personal jurisdiction is a "waivable right." As the Supreme Court held in Burger King Corp. v. Rudzewicz, "there are a 'variety of legal arrangements' by which a litigant may give 'express or implied consent' to the personal jurisdiction of the court":
For example, particularly in the commercial context, parties frequently stipulate in advance to submit their controversies for resolution within a particular jurisdiction. Where such forum-selection provisions have been obtained through "freely negotiated" agreements and are not "unreasonable and unjust," their enforcement does not offend due process.
Federal Rule of Civil Procedure 65(d) also demands that a defendant have "actual notice" of a waiver of personal jurisdiction for the waiver to be binding. Although there is no clear test for determining what qualifies as "express or implied consent" under the Burger King standard or "actual notice" under Rule 65(d), there can be little doubt that express consent by a defendant to a consent degree that is "freely negotiated" with the SEC would satisfy both rules. In the Smyth case, for example, defendants consented to an Order of Permanent Injunction which enjoined them from disobeying any of the securities laws cited in the SEC complaint and specifically stipulated that they "admitted the in personam jurisdiction of" the Northern District of Georgia (the trial court) which "retain[ed] jurisdiction over this matter for all purposes . . . ." The jurisdictional waiver was clear and unequivocal. The Smyth defendants were represented by counsel and consented to an injunction that contained an obvious waiver of personal jurisdiction. Thus there can be little doubt that their waiver would satisfy the standard provided by Supreme Court and Rule 65(d).
Almost all SEC obey-the-law injunctions contain language similar to the order in the Smyth case requiring that defendants consent to the jurisdiction of the court over them. Assuming proper notice and consent, individuals burdened with obey-the-law injunctions agree to specific jurisdictional provisions, thereby waiving the right to personal jurisdiction that would exist in a separate suit.  Once this consent to continuing jurisdiction of the trial court is entered it applies to future securities law violations regardless of whether that jurisdiction would be appropriate under independent circumstances. Although the Eleventh Circuit correctly recognized that obey-the-law injunctions can create procedural due process concerns, the court's footnote 14 failed to recognize that the right to personal jurisdiction was waived in the Smyth case and that jurisdictional waivers are standard practice for SEC obey-the-law injunctions. Open, equitably negotiated settlements between the Commission, securities law violators, and their respective counsel satisfy the standard for waiver of personal jurisdiction.
c. Right to Jury Trial
The Smyth footnote suggested a third major problem with obey-the-law injunctions: Contempt proceedings resulting from an injunction may violate the Seventh Amendment right to trial by jury. As the Eleventh Circuit argued, "[t]he SEC is also apparently of the belief that the Rules of Civil Procedure would have little application in contempt proceeding . . . not to mention [defendant's] right to a trial by jury." The court hinted that it may be improper for a district court to hold a contempt hearing without affording a defendant "his rights under the Rules, including . . . a jury trial of the issues the SEC would ordinarily submit to a jury were the SEC to sue . . . in a separate action rather than seek enforcement of the injunction . . . ." If the SEC held a defendant in contempt for future violations of a securities law pursuant to an injunction, that individual could be deprived of his jury trial right--a right to which he would be entitled in an independent suit on the same matter--in the ensuing contempt proceeding.
The Eleventh Circuit's view that a jury trial is required for a contempt proceeding resulting from an SEC obey-the-law injunction is unconvincing because contempt sanctions are few in number compared to the total number of actions in which the Commission seeks injunctive relief. In 2004, for example, the SEC filed twenty-one contempt proceedings for violations of prior injunctions, representing only 3% of the Commission's 639 enforcement actions. SEC actions to enforce injunctions are increasingly rare as "the [C]ommission usually chooses to address new enforcement issues with a new enforcement action."
More importantly, although Federal Rule of Criminal Procedure 42(a) does provide for jury trials in certain criminal contempt proceedings, the right to jury trial in criminal contempt proceedings is not absolute. The Supreme Court has held that when a criminal offense is classified as "petty" (i.e., punishable by up to six months in prison), there is no constitutional right to jury trial, thus SEC contempt proceedings involving sentences of six months or less do not demand that a jury be convened. Some courts have held that SEC criminal contempt defendants cannot be sentenced to a period of confinement longer than six months without a jury trial, but a defendant guilty of violating an SEC injunction can be given a suspended sentence and placed on probation for three years without a jury trial. The contempt penalty imposed determines whether a defendant is entitled to a jury trial. Based on penalty criteria alone, in many cases an SEC obey-the-law injunction contemnor is not entitled to a jury trial.
The Eleventh Circuit also failed to recognize an important statutory exemption. 18 U.S.C. § 3691 mirrors Federal Rule of Criminal Procedure 42(b) by outlining the right to jury trial in contempt proceedings but it also provides for the following important exception: "This section shall not apply . . . to contempts committed in disobedience of any lawful writ, process, order, rule, decree, or command entered in any suit or action brought or prosecuted in the name of, or on behalf of, the United States." SEC injunctions qualify for this statutory exemption. An SEC criminal contempt proceeding can properly be brought "in the name of, or on behalf of, the United States" even if the related injunction was obtained by the Commission. Thus, even when the Commission seeks a contempt penalty for an offense that does not qualify as petty and necessitates incarceration of more than six months, the Commission is not required to conform to the requirements of the Seventh Amendment. The Eleventh Circuit incorrectly suggested that there is an absolute right to jury trial in criminal contempt proceedings resulting from SEC obey-the-law injunctions.
The claim that a jury trial is required for a civil contempt proceeding resulting from an SEC obey-the-law injunction is similarly unavailing because civil contempt penalties are remedial, not punitive. A civil contempt proceeding can result from SEC obey-the-law injunctions when, for example, an injunction is limited to "compliance with filing requirements or orders the production of records" without prohibiting the defendant from engaging in certain types of illegal conduct going forward. Because of the Commission's tendency to include prospective language in its injunctions that tracks the language of statutes or rules and prohibits future violations, civil contempt proceedings resulting from SEC obey-the-law injunctions are very rare. More importantly, because civil contempt sanctions are "considered to be coercive and avoidable through obedience, and thus may be imposed in ordinary civil proceeding upon notice and opportunity to be heard," jury trials are not required. Civil sanctions are designed only to enforce compliance with the order and are lifted as soon as there is compliance. In a case of criminal contempt a judge can assess a nonpetty penalty for failure to comply with an order, but in the civil arena the extent of the penalty completely depends on cooperation of the violator.
Thus, although the defendant in the Smyth case did not specifically waive his right to jury trial in a consent decree, and SEC obey-the-law injunctions normally do not demand this waiver, the Eleventh Circuit's footnote incorrectly suggested that Commission injunctions violate the right to jury trial. On the rare occasion that the SEC does pursue civil or criminal contempt resulting from violation of one of its orders, the right to jury trial does not apply.
III. The SEC Need Not Remake Its Injunctive Practice
The Eleventh Circuit's concerns about the enforceability of obey-the-law injunctions are unconvincing. The court's misguided footnote should not be allowed to restrain the Commission from preventing market fraud. Footnote 14 is not, however, irrelevant. As Part III will discuss, although the SEC is under no duty to follow the Eleventh Circuit's dictum, the Commission should voluntarily temper its approach to obey-the-law injunctions in some circumstances. The SEC should only alter its practice of issuing broad obey-the-law injunctions to the extent that it does not dilute the effectiveness of its enforcement practice, but it should consider incorporating more specific and demanding compliance provisions in these orders. Part III.A will briefly discuss why the Eleventh Circuit's dictum should not be regarded as precedential or accorded substantial weight by other courts, and Part III.B will consider possible revisions to SEC obey-the-law injunctions.
a. Eleventh Circuit's Footnote Does Not Bind the SEC
As discussed in Part II, the analysis presented by the Eleventh Circuit in Smyth footnote 14 is unpersuasive. SEC injunctions do not violate the Rule 65(d) specificity requirement, procedural due process rights, or the right to jury trial. The court failed to recognize that these rights can be, and in some cases are, explicitly waived in SEC injunctions and consent decrees, and that the waiver of these rights is both acceptable and proper. These arguments are particularly less-than-persuasive considering the context in which they were raised: The court placed them in the footnote of a decision on an unrelated securities law matter without giving the Commission a chance to brief or address the merits of the issues in any way.
Furthermore, the Eleventh Circuit's attack on obey-the-law injunctions is difficult to reconcile with an earlier decision by the same court reversing, as an abuse of discretion, a district court's denial of such an injunction. In SEC v. Ginsburg, the district court refused to permanently enjoin a corporate principal from future Exchange Act violations after a jury found him liable for communicating information about pending acquisitions by his company to family members, but the Eleventh Circuit reversed, holding that the SEC need only show a reasonable likelihood that the defendant would violate the securities laws in the future to be entitled to injunctive relief. Contrasting the Ginsburg and Smyth decisions leaves the Eleventh Circuit--which, along with the Second Circuit, hears more securities-related cases with the government as the plaintiff than any other circuit court--with confused precedent regarding the enforceability of the SEC's use of injunctions.
The Eleventh Circuit's dictum is nonbinding and should be ignored by other federal courts. Obey-the-law injunctions constitute an important and indispensable enforcement tool for the SEC which the court's footnote does not and should not destroy. Unlike disgorgement, penalties, suspensions, and other forms of ancillary relief, injunctions are prophylactic and prospective, and thus a key element in the Commission's enforcement arsenal. Potential criminal sanctions for future violations of obey-the-law injunctions, in particular, provide a powerful deterrent to violators of securities laws. The Eleventh Circuit's dictum should not be allowed to dilute the validity of this important sanction or retrospectively render unenforceable past SEC injunctions.
b. Future Commission Injunctions
Footnote 14 provides an opportunity for the Commission to reexamine its practice of issuing obey-the-law injunctions and consent decrees containing sweeping language. The Eleventh Circuit was off-base to suggest that obey-the-law injunctions violate the rights to personal jurisdiction and jury trial, and this criticism should largely be ignored. The court's point about the need for SEC injunctions to conform to the specificity requirement of Rule 65(d), however, although technically incorrect, is worthy of further examination. Commentators have suggested that injunctions more specific in scope may provide a more efficient enforcement tool for the SEC.  Indeed, the Commission should be aware that further challenges to obey-the-law injunctions citing similar problems lurk on the landscape and, as a result, may want to include more demanding compliance provisions (e.g., requiring outside monitors or consultants and internal governance reforms), for both corporations and individuals, in these orders. Demanding compliance terms coupled with injunctions broadly prohibiting future conduct would serve two main functions: (1) mitigating specificity concerns (i.e., concerns that broad injunctions do not sufficiently pinpoint what conduct is and is not prohibited in the future) by providing a blueprint for what exactly a defendant must do in order to remain in compliance with the injunction;  and (2) providing increased insurance against recidivism (i.e., solidifying the intended prophylactic effect of the injunction). Required outside monitors and consultants as well as internal governance reforms would serve as a check against future fraudulent conduct and as a roadmap for convicted offenders.
Critics have suggested that mechanical requests for obey-the-law injunctions with sweeping language by the SEC have become so routine that the Commission risks diluting the force of its statutory authority. The text of the Exchange Act specifically limits the circumstances in which the SEC may seek an injunction: "Whenever it shall appear to the Commission that any person is engaged or is about to engage" in a violation of federal securities law. A plain reading of the statute implies that injunctions should be allowed only when unlawful conduct is ongoing or imminent, but--particularly in settlements--the SEC frequently seeks and obtains injunctions after violations have ceased. The SEC's unselective approach to injunction issuance "arguably stretches the statute to the point of contradiction, doing no credit to either the Commission or the courts that have facilitated requests for injunctions in marginal cases." If the SEC continues to push the limits of its power to seek injunctions, the Commission not only opens itself up to attacks similar to the Smyth footnote but risks undermining the influence of obey-the-law injunctions in general.
In addition, critics have suggested that if the Commission molds its injunctions to the conduct at issue rather than mechanically copying and pasting broad language from the securities laws into these orders, the SEC's likelihood of achieving early settlements could improve. In settlement negotiations, defendants are often willing to accept ancillary relief in the form of penalties and disgorgement, but the collateral consequences of injunctions, which have the potential to destroy a professional's source of livelihood, can leave defendants no choice other than to litigate an SEC action which seeks to impose injunctive relief. Obey-the-law injunctions can indeed be "a drastic remedy, not a mild prophylactic." Unless cases involve ongoing misconduct and demonstrate a chance of recidivism, it may be more efficient for the SEC to either forgo injunctive relief or at least be flexible in negotiating the terms of its injunctions than to continue to insist on sweeping injunctive provisions. A flexible approach to injunctions, geared toward achieving a higher rate of settlement, could allow the Commission to more efficiently use its very limited staff and budgetary resources, thus enhancing its ability to fight securities law infractions.
Although broad injunctions with boilerplate language are imperfect, the alternative of limited, custom-tailored injunctions and consent decrees would dilute the effectiveness of the Commission's enforcement regime and hinder the SEC's ability to fight securities fraud. Injunctive relief may result in significant collateral damage to individuals, but injunctions are a crucial enforcement mechanism for the Commission. The breadth and generality of the SEC injunction is the foundation of its power. Such broad orders might be unjustified in circumstances when a defendant's actions are isolated or when there is less concern that the defendant will engage in ongoing violations, but in most situations the Commission should continue to insist on broad injunctions because a practice of specific injunctions and decrees would limit the SEC's ability to curtail recidivism and weaken its most powerful sanction--criminal contempt. Especially in the wake of the largest investment frauds in the history of the capital markets--Enron, WorldCom, Tyco, Adelphia, and HealthSouth to name just a few--"the need for a strong, direct response is evident, and the Commission's aggressive attitude toward the protection of the public is generally commendable." The SEC depends on obey-the-law injunctions to vigorously enforce the securities laws, and the Smyth footnote should not serve as a roadblock to its continued enforcement of these regulations.
The Commission should not, however, dismiss suggestions by the Eleventh Circuit and legal commentators that obey-the-law injunctions be curtailed. The SEC does need to be more agile and creative when implementing injunctions. It should not just blindly rubber stamp all settlements with broad obey-the-law injunctions as it does today. The SEC must be aware of the changing landscape in the obey-the-law injunction arena and should anticipate future opinions from other courts as well as challenges from practitioners similar to the Eleventh Circuit dictum.
The Commission should consider changing its approach to obey-the-law injunctions by issuing specific, demanding compliance provisions along with these orders. The broad language itself of obey-the-law injunctions is not a problem, but the fact that convicted defendants--whether individuals or corporations--don't know what future conduct obey-the-law injunctions prohibit is. If obey-the-law injunctions came with more demanding compliance provisions, concerns about specificity would be mitigated and the prophylactic goals of these injunctions would be cemented as well.
In a series of recent cases involving "market-timing" in the mutual fund industry, the Commission included more demanding compliance terms in its settlements. In a market-timing case involving Banc of America Capital Management, for example, the Commission required the defendant to hire an independent compliance consultant in order to ensure that the company would not continue to engage in market-timing. In a similar market-timing investigation involving Columbia Management Advisors, the SEC required that company not only to hire an independent compliance consultant but also to create an internal compliance and oversight infrastructure, including new ethics and controls committees. Although the Commission did not demand that defendants consent to obey-the-law injunctions in addition to these compliance provisions in the mutual fund market-timing cases, it could apply a similar model and demand compliance terms such as monitors, consultants, and governance reforms in cases when it seeks injunctive relief. This approach would not be limited to corporate defendants. An individual investor could be required to have oversight of his trading or the process by which his investments are made, for example, or a rogue broker could be required to put in place supervisory or compliance procedures at a future employer.
Although it seems unlikely that the SEC will significantly revamp its use of all-encompassing injunctions in view of its long-established reliance on this approach, in the wake of Smyth, the Commission should heed the advice of some critics and consider altering its approach to obey-the-law injunctions. The SEC should not overhaul its practice of issuing broad injunctions because a consistent tendency toward narrow injunctions would undermine the Commission's ability to provide a strong deterrent against egregious conduct, but injunctions combined with demanding compliance terms would provide a better tool for the Commission--one that would be better for defendants seeking increased guidance on their future conduct and would strengthen the SEC's power to prophylactically prevent further misconduct. Broad obey-the-law injunctions remain a crucial component of the Commission's enforcement program for fighting determined and committed fraudsters, but with demanding compliance terms included in the bargain both the efficiency and effectiveness of these injunctions would be improved, and the fraud prevention goals of the Enforcement Division would not suffer as a result.
The obey-the-law injunction is a "statutory mechanism that seeks to lock the barn door in good time." These injunctions provide the SEC with a form of relief that stops violators of securities laws "dead in their tracks." In Smyth, the Eleventh Circuit reasoned unpersuasively that the SEC's obey-the-law injunctions can be defective. Obey-the-law injunctions are consistent with the Federal Rules of Civil Procedure, the Due Process Clause of the Fifth Amendment, and the right to a jury trial guaranteed by the Seventh Amendment. The SEC has enhanced authority relating to its injunctive powers and related contempt proceedings. Congress explicitly authorized the Commission's enforcement of federal securities laws via injunction in the Exchange Act, and courts have recognized that injunctions sought by government agencies are permitted to be of greater breadth than those sought by private litigants in order to protect the public good. The SEC must be vigilant to ensure that it does not overstep its legitimate role and visit unwarranted or gratuitous sanctions on enforcement targets, but the Smyth footnote is nonbinding and should be ignored by other courts.
Although obey-the-law injunctions are a crucial, well-established enforcement tool for the SEC, the application of which should be continued, the Eleventh Circuit's dictum does serve as an opportunity for the Commission voluntarily to reassess its longstanding practice of commonly seeking obey-the-law injunctions. Legal pundits have argued that the practice of insisting on these injunctions as the Commission's "non-negotiable" position and tracking the language of the injunctions to broad statutory provisions may be "anachronistic," a remnant of a bygone era when the SEC did not have a broad repertoire of remedies at its disposal. If the SEC followed the advice of these critics and limited its injunctions to the prevention of substantially identical schemes, the agency's crucial job of protecting the financial markets against fraud would be restrained. Dedicated fraudsters could maneuver from one technical violation to another without risking contempt and resulting criminal sanctions. Indeed, narrowing injunctions to specific conduct undermines the prophylactic rationale for having obey-the-law injunctions in the first place. However, even though the legal arguments against injunctions are not compelling, the Smyth footnote serves as an opportunity for the Commission to add rigor and specificity to its injunctive practice. The SEC should consider accompanying obey-the-law injunctions for both corporate and individual defendants with demanding compliance terms. Such provisions would provide clarity and specificity to defendants and create greater assurance for the Commission that the terms of an injunction would be followed. The obey-the-law injunction should continue to be a cornerstone of the SEC Enforcement Division's practice in the future, but slight modifications would improve the injunction's efficiency and effectiveness.
* Columbia University Law School, Class of 2007. My thanks to Professor Harvey J. Goldschmid of Columbia for his advice on this Article, and to David B.H. Martin of Covington & Burling for providing me with the original idea. Thanks also to Jack M. Weiss of Gibson, Dunn & Crutcher and Joshua A. Naftalis of Wachtell, Lipton, Rosen & Katz.
 SEC Performance and Accountability Rep. 9 (2005), available at http://www.sec.gov/about/secpar/secpar2005.pdf. Disgorgement--repayment of ill-gotten gains--has been an element of the SEC's enforcement arsenal since 1971, when the Commission first persuaded a federal court to require that a defendant disgorge all proceeds of an improperly- closed public offering and any ill-gotten gains on the proceeds as a result of a violation of the anti-fraud provisions of the Exchange Act. See SEC v. Manor Nursing Ctrs., Inc., 458 F.2d 1082, 1104 (2d Cir. 1972).
 James D. Cox et al., Securities Regulation: Cases and Materials 773 (4th ed. 2004) ("Most SEC enforcement proceedings (over 90 percent) are settled, not litigated. Indeed, most staff enforcement recommendations to the Commission are accompanied by offers of settlement by one or more subjects."). See also SEC's Use of Broad Civil Injunctions Attacked in the Eleventh Circuit, Client Alert (Latham & Watkins), Sept. 29, 2005, at 1. ("The overwhelming majority of these cases were filed as settlements, where the defendant or respondent consented to the entry of relief imposed.").
 Russell Ryan, Rethinking SEC Injunctions After Appeals Court Reprimand, 37 Securities Regulation & Law Rep. 1488-91 (Sept. 5, 2005) (noting that injunctive remedy "has been the cornerstone of the SEC's enforcement program for more than 70 years").
 SEC v. Smyth, 420 F.3d 1225, 1233 n.14 (11th Cir. 2005) ("This Circuit has held repeatedly that "obey the law" injunctions are unenforceable . . . . The specificity requirement of Rule 65(d) is no mere technicality . . . . An injunction must be framed so that those enjoined know exactly what conduct the court has prohibited and what steps they must take to conform their conduct to the law . . . . By persuading the district court to sign the consent decree it presented pursuant to its stipulation with Johns, the SEC apparently is of the belief that the Due Process Clause would present no hurdle to the enforcement of the injunction it has obtained . . . . The SEC is also apparently of the belief that the Rules of Civil Procedure would have little application in a contempt proceeding . . . not to mention [the defendant's] Seventh Amendment right to a trial by jury.").
 15 U.S.C. §§ 78a-78mm (2004) ("Whenever it shall appear to the Commission that any person is engaged or is about to engage in acts or practices constituting a violation of any provision of this chapter, the rules or regulations thereunder, the rules of a national securities exchange or registered securities association of which such person is a member or a person associated with a member, the rules of a registered clearing agency in which such person is a participant, the rules of the Public Company Accounting Oversight Board, of which such person is a registered public accounting firm or a person associated with such a firm, or the rules of the Municipal Securities Rulemaking Board, it may in its discretion bring an action in the proper district court of the United States, the United States District Court for the District of Columbia, or the United States courts of any territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices, and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond.").
 15 U.S.C. §§ 77a-77aa (2004) ("Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this title, or of any rule or regulation prescribed under authority thereof, the Commission may, in its discretion, bring an action in any district court of the United States, or United States court of any Territory, to enjoin such acts or practices, and upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond.").
 15 U.S.C. §§ 80a-1 to 80a-64 (2004) ("Whenever it shall appear to the Commission that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of this title, or of any rule, regulation, or order hereunder, it may in its discretion bring an action in the proper district court of the United States, or the proper United States court of any Territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices and to enforce compliance with this title or any rule, regulation, or order hereunder. Upon a showing that such person has engaged or is about to engage in any such act or practice, a permanent or temporary injunction or decree or restraining order shall be granted without bond.").
 15 U.S.C. §§ 80b-1 to 80b-21 (2004) ("Whenever it shall appear to the Commission that any person has engaged, is engaged, or is about to engage in any act or practice constituting a violation of any provision of this title, or of any rule, regulation, or order hereunder, or that any person has aided, abetted, counseled, commanded, induced, or procured, is aiding, abetting, counseling, commanding, inducing, or procuring, or is about to aid, abet, counsel, command, induce, or procure such a violation, it may in its discretion bring an action in the proper district court of the United States, or the proper United States court of any Territory or other place subject to the jurisdiction of the United States, to enjoin such acts or practices and to enforce compliance with this title or any rule, regulation, or order hereunder. Upon a showing that such person has engaged, is engaged, or is about to engage in any such act or practice, or in aiding, abetting, counseling, commanding, inducing, or procuring any such act or practice, a permanent or temporary injunction or decree or restraining order shall be granted without bond.").
 See, e.g., Thomas J. Andre, Jr., Collateral Consequences of SEC Injunctive Relief: Mild Prophylactic or Perpetual Hazard, 1981 U. Ill. L. Rev. 625, 625 (1981) ("[T]he injunction is the Commission's most significant and frequently used enforcement weapon.").
 15 U.S.C. § 78ff(b) ("Any issuer which fails to file information, documents, or reports required to be filed under . . . this title or any rule or regulation thereunder shall forfeit to the United States the sum of $100 for each and every day such failure to file shall continue.").
 Stephen M. Cutler, Director, Div. of Enforcement, Speech at the 24th Annual Ray Garrett Jr. Corporate & Securities Law Institute (Apr. 29, 2004), available at http://www.sec.gov/news/speech/spch042904smc.htm.
 15 U.S.C. § 78a ("The amount of the penalty which may be imposed on the person who committed such violation shall be determined by the court in light of the facts and circumstances, but shall not exceed three times the profit gained or loss avoided as a result of such unlawful purchase, sale, or communication . . . . The amount of the penalty which may be imposed on any person who, at the time of the violation, directly or indirectly controlled the person who committed such violation, shall be determined by the court in light of the facts and circumstances, but shall not exceed the greater of $1,000,000, or three times the amount of the profit gained or loss avoided as a result of such controlled person's violation.").
 But cf. Ryan, supra note 3, at 1489 n. 4 ("[T]here is only one limited type of circumstance in which the SEC will occasionally file a complaint in federal court that does not demand an injunction as part of the final judgment. These are settlements in which the Commission agrees to charge its case in an administrative cease-and-desist order while insisting that the settling party pay a civil monetary penalty as part of the settlement. In such cases, the Commission gets the administrative equivalent to an injunction with its cease-and-desist order, but has to file a companion complaint in federal court to obtain the monetary penalty because the relevant statutes do not authorize the Commission to order the payment of civil penalties in cease-and-desist proceedings.").
 See Fed. R. Crim. P. 42(b) ("Notwithstanding any other provision of these rules, the court . . . may summarily punish a person who commits criminal contempt in its presence if the judge saw or heard the contemptuous conduct and so certifies.").
 Andre, supra note 10, at 628. Note that although both criminal and civil contempt sanctions are employed to enforce SEC obey-the-law injunctions, in most circumstances the Commission pursues criminal rather than civil contempt. Besides the fact that criminal sanctions are more punitive and burdensome, the SEC's preference for criminal sanctions is attributable to the fact that obey-the-law injunctions are usually crafted in negative form, prohibiting the defendant from engaging in specified kinds of conduct. When a defendant violates a decree, a civil contempt sanction is often inappropriate because the prohibited action has already been consummated, and neither a compensatory nor a coercive contempt order will provide a suitable remedy. Id.
 A criminal contempt sanction generally is characterized by the imposition of a fixed jail sentence or fixed fine, and is imposed to vindicate authority of the court issuing the injunction, while civil sanctions are more remedial, and are designed to compensate the party injured as a result of the injunction violation or to coerce compliance with the injunction's terms. See, e.g., Bradley v. American Household Inc., 378 F.3d 373, 377 (4th Cir. 2004) (civil contempt sanctions held to be criminal sanctions in cases when fines intended "to vindicate the authority of the court and punish the contemnor"). See also Buffington v. Baltimore County, 913 F.2d 113, 133 (4th Cir. 1990) (noting that criminal contempt sanctions are imposed to vindicate authority of court issuing injunction).
 Andre, supra note 10, at 630; See also Green v. United States, 356 U.S. 165, 187 (1958) ("By the same token it is clear that criminal contempts, although subject, as we have held, to sentences of imprisonment exceeding one year, need not be prosecuted by indictment under the Fifth Amendment.").
 Andre, supra note 10, at 631 n.37 ("The Supreme Court has held that where the criminal contempt is classified as a 'petty' offense, there is no constitutional right to jury trial."); Codispoti v. Pennsylvania, 418 U.S. 506, 512 (1974) ("Since that time, our decisions have established a fixed dividing line between petty and serious offenses: those crimes carrying a sentence of more than six months are serious crimes and those carrying a sentence of six months or less are petty crimes . . . . Under these cases, we plainly cannot accept petitioners' argument that a contemnor is entitled to a jury trial simply because a strong possibility exists that he will face a substantial term of imprisonment upon conviction, regardless of the punishment actually imposed."); Duncan v. Louisiana, 391 U.S. 145, 159 (1968) ("Crimes carrying possible penalties up to six months do not require a jury trial if they otherwise qualify as petty offenses.").
 See Andre, supra note 10, at 631 n.38 ("The Ninth Circuit has held that a fine imposed for criminal contempt may exceed the statutory fine that could have been imposed had the act been treated as an offense under the appropriate regulatory statute.").
 See id. at 640 ("In addition to these consequences flowing directly from mandated disclosure requirements, the general antifraud provisions may also require disclosure in appropriate circumstances even though there is no explicit disclosure duty imposed by the filing or reporting requirements. The Commission has taken the position that sections 17 and 10b are violated when an individual fails to disclose to investors that he previously has been enjoined from violating the registration provisions or the antifraud rules. Courts have adopted the same position in private litigation based on both section 10b and Rule 14a-9, and the same result should apply in appropriate situations under other provisions . . . .").
 See, e.g., In re Application of RKO Gen., Inc., 78 F.C.C.2d 1, 69-71 (1980) (practices detailed in SEC complaint resulting in consent decree, and confirmed by a special report of a committee board, given "substantial weight" in examination of licensee's qualifications).
 See 17 C.F.R. § 14.7(a)(1) (2002) (authorizing CFTC "to temporarily suspend from appearing or practicing before it any person" who has been "permanently enjoined by reason of his misconduct by any court of competent jurisdiction . . . after trial or upon summary judgment in any action brought by the U.S. Securities and Exchange Commission based upon any violation of the federal securities laws (15 U.S.C. 77a to 80b-20) or of rules and regulations adopted thereunder").
 See, e.g., In re Eugene T. Ichinose, Jr., Exchange Act Rel. No. 17,381, 21 S.E.C. Docket 970, 1980, WL 22146 (Dec. 16, 1980) ("We have repeatedly approved the NASD's uniform practice of treating violations of the securities acts as violations of the Association's ethical standards.").
 See, e.g., Uniform Securities Act § 212(a)(5) (1985) (providing that a securities license may be denied, suspended, or revoked if an individual "is permanently or temporarily enjoined by a court of competent jurisdiction from acting as an investment adviser, underwriter, broker-dealer, or as an affiliated person or employee of an investment company, depository institution, or insurance company, or from engaging in or continuing conduct or practice in connection with any of the foregoing activities, or in connection with the purchase or sale of a security").
 See SEC v. Bonastia, 614 F.2d 908, 913 (3d Cir. 1980) ("When examining the factors to be considered in reaching a determination under this standard, courts have looked to, among other things, the degree of scienter involved on the part of the defendant, the isolated or recurrent nature of the infraction, the defendant's recognition of the wrongful nature of his conduct, the sincerity of his assurances against future violations, and the likelihood, because of defendant's professional occupation, that future violations might occur."); SEC v. Youmans, 729 F.2d 413, 415 (6th Cir. 1984) ("The following factors are relevant in determining the likelihood of future violations: 1. the egregiousness of the violations, 2. the isolated or repeated nature of the violations, 3. the degree of scienter involved, 4. the sincerity of the defendant's assurances, if any, against future violations, 5. the defendant's recognition of the wrongful nature of his conduct, 6. the likelihood that the defendant's occupation will present opportunities (or lack thereof) for future violations, and 7. the defendant's age and health."); SEC v. Lorin, 76 F.3d 458, 461 (2d Cir. 1996) ("While a district court may properly consider the amount of time between the violations and the trial in deciding whether to issue an injunction, that interval is just one factor among several to be weighed.")
 See Aaron v. SEC, 446 U.S. 680, 701 (1980) (Burger, C.J., concurring) (holding that "the Commission must establish a sufficient evidentiary predicate to show that such future violation may occur . . . . Moreover, as the Commission recognizes, a district court may consider scienter or lack of it as one of the aggravating or mitigating factors to be taken into account in exercising its equitable discretion in deciding whether or not to grant injunctive relief.").
See Cox, supra note 2, at 793. ("In the abstract, an injunction is remedial and prophylactic in nature in that its overall purpose is to protect investors or the market's integrity against future harm; the action is not punitive in nature."). See also SEC v. Commonwealth Chemical Sec., Inc., 574 F.2d 90, 99-100 (2d Cir. 1978) ("It is fair to say that the current judicial attitude toward the issuance of injunctions on the basis of past violations at the SEC's request has become more circumspect than in earlier days. Experience has shown that an injunction, while not always a "drastic remedy" as appellants contend, often is much more than the "mild prophylactic" . . . . In some cases the collateral consequences of an injunction can be very grave . . . . The Securities Act and the Securities Exchange Act speak, after all, of enjoining "any person (who) is engaged or about to engage in any acts or practices" which constitute or will constitute a violation . . . . Except for the case where the SEC steps in to prevent an ongoing violation, this language seems to require a finding of "likelihood" or "propensity" to engage in future violations . . . . Our recent decisions have emphasized, perhaps more than older ones, the need for the SEC to go beyond the mere facts of past violations and demonstrate a realistic likelihood of recurrence.") (Citations omitted).
 Id. ("Unsuccessful defense, on the other hand, may result not only in the defendant being immediately sanctioned, but also in its being collaterally estopped from relitigating questions of violation in a subsequent private action, whereas settlement has no such collateral effect.").
 Joshua A. Naftalis, Note, "Wells Submissions" to the SEC as Offers of Settlement Under Federal Rule of Evidence 408 and Their Protection From Third-Party Discovery, 102 Colum. L. Rev. 1912, 1922 (2002) (noting importance of settlements to SEC).
 Order by Judge Clarence Cooper of Permanent Injunction and other Relief Against Arnold E. Johns 1-2, SEC v. Smyth, 1:01-CV-1344-CC (11th Cir. Oct. 30, 2002) [hereinafter Order of Permanent Injunction] ("It is hereby ordered, adjudged and decreed that defendant Johns and his agents, servants, employees and attorneys, and those persons in active concert or participation with him who receive actual notice of this Order of Permanent Injunction . . . be and hereby are permanently enjoined and restrained from violating, directly or indirectly, Section 17(a) of the Securities Act of 1933 by, through the use of any means or instruments of transportation or communication in interstate commerce or the use of the mails: 1. employing any device, scheme or artifice to defraud; 2. obtaining money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or 3. engaging in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser, in the offer or sale of any security."). The Order also contains similar language enjoining the defendants from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Section 13(a) of the Exchange Act and Rules 12b-20, 13a-11, 13a-13 thereunder, and Sections 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder. Id. at 2-7.
 See, e.g., Schmidt v. Lessard, 414 U.S. 473, 476 (1974) ("Since an injunctive order prohibits conduct under threat of judicial punishment, basic fairness requires that those enjoined receive explicit notice of precisely what conduct is outlawed.").
 Id. at 477. ("The requirement of specificity in injunction orders performs a second important function. Unless the trial court carefully frames its orders of injunctive relief, it is impossible for an appellate tribunal to know precisely what it is reviewing. We can hardly begin to assess the correctness of the judgment entered by the District Court here without knowing its precise bounds. In the absence of specific injunctive relief, informed and intelligent appellate review is greatly complicated, if not made impossible.").
 Id. See also Burton v. City of Belle Glade, 178 F.3d 1175, 1200 (11th Cir. 1999) (holding that injunction which prohibited municipality from discriminating on basis of race in its annexation decisions "would do no more than instruct the City to 'obey the law,'" and therefore was invalid); Payne v. Travenol Labs., Inc., 565 F.2d 895, 899 (5th Cir. 1978) (invalidating injunction that prohibited defendant from violating Title VII in its employment decisions).
 Stipulation & Consent to Entry of Permanent Injunction & Other Relief with Proposed Order by Defendant Arnold E. Johns Jr. 4, SEC v. Smyth, No. 1:01CV01344 (N.D. Ga. Oct. 25, 2002) [hereinafter Stipulation & Consent Order].
 785 F.2d 970, 979 (11th Cir. 1986). See also Williams v. City of Dothan, Ala., 818 F.2d 755, 760 (11th Cir. 1987); Wirtz v. Ocala Gas Co., 336 F.2d 236, 240--41 (5th Cir. 1964) ("If a defendant perceives that a proposed decree is too general, he should not consent to it, and if it is entered without his consent, he should appeal therefrom or petition the District Court for a modification."); Szabo v. U.S. Marine Corp., 819 F.2d 714, 718 (7th Cir. 1987) (finding objection under Rule 65(d) to injunction that wrote statutory prohibitions into decree was waived); Danny Kresky Enterprises Corp. v. Magid, 716 F.2d 206, 215 (3d Cir. 1983) (finding Rule 65(d) objections waived); United States v. Schafer, 600 F.2d 1251, 1253 (9th Cir. 1979) (finding Rule 65(d) objection waived where "the defendant negotiated for and consented to the entry of the decree and took no steps to modify it"); Brumby Metals, Inc. v. Bargen, 275 F.2d 46, 49 (7th Cir. 1960) (stating in direct appeal from injunctive order that Rule 65(d) is "controlling and mandatory . . . except by complete agreement of counsel").
 McComb v. Jacksonville Paper Co., 336 U.S. 187, 193 (1949) ("That result not only proclaims the necessity of decrees that are not so narrow as to invite easy evasion; it also emphasizes the danger in the attitude expressed by the courts below that the remedial benefits of a decree will be withheld where the precise arrangement worked out to discharge the duty to pay which both the statute and the decree imposed was not specifically enjoined.").
 The Smyth opinion was authored by Judge Gerald B. Tjoflat, a Republican appointed to the bench by President Ford in 1975. Chief Judge James L. Edmondson (also a Republican, appointed by Reagan in 1986) and Judge Phyllis A. Kravitch (a Democrat, appointed by President Carter in 1979) completed the panel that heard the case.
 Chandler v. James, 180 F.3d 1254, 1273 n.18 (11th Cir. 1999). See also United States v. Corn, 836 F.2d 889, 891-92 (5th Cir. 1988) ("That the court incorporated into the injunction language from the securities laws does not make the injunction vague so long as the borrowed language 'adequately describe[s] the impermissible conduct.'"); SEC v. Savoy Indus., 665 F.2d 1310, 1317-18 (D.C. Cir. 1981) ("We also uphold the District Court's use in the injunction of language similar to that of the statutes violated by [the defendant]."); United States v. Miller, 588 F.2d 1256, 1261 (9th Cir. 1978) ("But the mere fact that the injunction is framed in language almost identical to the statutory mandate [of the Interstate Commerce Act] does not make the language vague."); SEC v. Manor Nursing Ctrs., Inc., 458 F.2d 1082, 1103 (2d Cir. 1972) ("There can be no abuse of discretion in framing an injunction in terms of the specific statutory provision which the court concludes has been violated."); SEC v. Keller Corp., 323 F.2d 397, 402-03 (7th Cir. 1963) ("[T]he district court had the broad power and wide discretion to frame the scope of its preliminary injunction in terms of the statute and in doing so did not abuse its discretion.").
 See, e.g., Mulcahy v. Cheetah Learning LLC, 386 F.3d 849, 852 n.1 (8th Cir. 2004) (citing "principle that blanket injunctions to obey the law are disfavored"); S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 240 (2d Cir. 2001) ("Under Rule 65(d), an injunction must be more specific than a simple command that the defendant obey the law."); Glover Const. Co., Inc. v. Babbitt, No. 95-CV-467-B, 1999 WL 51784, at *2 (10th Cir. Feb. 5, 1999) (where "injunctive relief is nothing more than an artfully phrased prayer for the court to require [defendant] to obey the law in the future [s]uch injunctions are not appropriately issued"); Louis W. Epstein Family Partnership v. Kmart Corp., 13 F.3d 762, 771 (3d Cir. 1994) (language "that merely enjoins a party to obey the law . . . . does not give the restrained party fair notice of what conduct will risk contempt" and is therefore improper); United States v. Corn, 836 F.2d 889, 892 (5th Cir. 1988) ("Thus, an injunction ordering a party to 'obey the law' might well fail as overbroad."); EEOC v. Wooster Brush Co. Employees Relief Ass'n, 727 F.2d 566, 576 (6th Cir. 1984) ("Such 'obey the law' injunctions' cannot be sustained.").
 SEC v. Savoy Indus., 665 F.2d 1310, 1317-18, 1319 n.61 (D.C. Cir. 1981); see also United States v. Corn, 836 F.2d 889, 892 (5th Cir. 1988) ("[A]n injunction ordering a party to 'obey the law' might well fail as overbroad.").
 In Smyth, for example, the consent decree broadly enjoined defendants from violating section 10(b) of the Exchange Act and Rule 10b-5 thereunder. See Order of Permanent Injunction, supra note 54, at 2-3. If the defendants violated that statute and rule specified in any federal district, the district court that approved the original consent decree, the Northern District of Georgia, could make the defendants come to their jurisdiction to show cause and explain why they should not be sanctioned for the violation. Smyth, 420 F.3d at 1233 n.14.
 Fed. R. Civ. P. 65(d) provides that "[e]very order granting an injunction . . . is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise." (Emphasis added).
 See, e.g., Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982) ("A variety of legal arrangements have been taken to represent express or implied consent to the personal jurisdiction of the court."); Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (holding that forum-selection provisions which have been obtained through "freely negotiated" agreements and are not "unreasonable and unjust" do not offend due process): Nat'l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1964) (stating that parties to a contract may agree in advance to submit to jurisdiction of a given court); Petrowski v. Hawkeye-Security Co., 350 U.S. 495, 496 (1956) (upholding personal jurisdiction of a district court on basis of a stipulation entered into by defendant).
 See, e.g., SEC v. Diversified Growth Corp., 595 F.Supp. 1159, 1164 (D.C. Cir. 1984) (paragraph three of consent decree states that defendant "admits to the jurisdiction of this court over him and over the subject matter of this action.").
 SEC Performance and Accountability Rep. 17 (2004), available at http://www.sec.gov/about/secpar/secpar04.pdf. Contempt proceedings figures for 2005 are not available in the Commission's 2005 Performance and Accountability Report.
 The 2004 figure represented the lowest number of contempt proceedings sought by the Commission in five years. Id. (42 contempt proceedings filed in 2003); SEC Ann. Rep. 18 (2002), available at http://www.sec.gov/pdf/annrep02/ar02full.pdf (47 contempt proceedings in 2002, 31 in 2001, 36 in 2000, and 29 in 1999).
 See Daniel J. Morrissey, SEC Injunctions, 68 Tenn. L. Rev. 427, 448 (2001) ("Specifically, any future violation of the enjoined activity could become contempt, subjecting the defendant to criminal prosecution and conviction without the right to jury trial."). See generally 10 Louis Loss & Joel Seligman, Securities Regulations §§ 4750-51 & n.56 (3d ed. 2004).
 See Codispoti v. Pennsylvania, 418 U.S. 506, 513 (1974) ("Since that time, our decisions have established a fixed dividing line between petty and serious offenses: those crimes carrying a sentence of more than six months are serious crimes and those carrying a sentence of six months or less are petty crimes."); Baldwin v. New York, 399 U.S. 66, 73 (1970) ("Where the accused cannot possibly face more than six months' imprisonment, we have held that these disadvantages, onerous though they may be, may be outweighed by the benefits that result from speedy and inexpensive nonjury adjudications."); Frank v. United States, 395 U.S. 147, 148 (1969) ("The Sixth Amendment to the Constitution gives defendants a right to a trial by jury in 'all criminal prosecutions.' However, it has long been the rule that so-called 'petty' offenses may be tried without a jury."). See generally Wright, supra note 98, at § 712.
 United States ex rel. SEC v. Greenspan, SEC Litigation Rel. No. 9211 (S.D.N.Y., Oct. 20, 1980) (defendant sentenced to two-year prison term following jury trial pursuant to "his conviction for criminal contempt of three prior orders of permanent injunction issued against him by the federal court"); United States v. La Force, SEC Litigation Rel. No. 8607 (D. Vt., Nov. 27, 1978) (defendant sentenced to three years imprisonment following jury trial, pursuant to criminal contempt proceeding resulting from recurrent violations of Securities Act provisions).
 Frank, 395 U.S. 147 at 147 (held that where petitioner, charged with criminal contempt for violation of injunction restraining him from using interstate facilities in sale of certain oil interests without having filed a registration statement with Securities and Exchange Commission was convicted by court which suspended imposition of sentence and placed him on probation for three years, it was not error to deny him a jury trial).
 United States v. Duncan, 503 F.2d 1021, 1022 (10th Cir. 1974) ("Clearly, the injunction obtained by the Securities and Exchange Commission was entered in an action brought 'on behalf of' the United States . . . .").
 Morrissey, supra note 122, at 447 ("Even though the statute explicitly authorized actions only against a person 'engaged or about to engage' in violative conduct, a single past transgression of the securities laws, no matter how stale, now alone appeared to constitute the proper showing required for an injunction.").
 Regulators have made clear that the market-timing of which they disapproved encompassed a variety of investing techniques involving arbitrage of mutual fund share prices through the use of timed transactions. See Disclosure Regarding Market-timing and Selective Disclosure of Portfolio Holdings, Investment Company Act Rel. No. 26,418, 69 Fed. Reg. 22,300, 22,301-05 (Apr. 23, 2004). See also Press Release, Office of N.Y. State Att'y Gen. Eliot Spitzer, State Investigation Reveals Mutual Fund Fraud (Sept. 3, 2003), available at http://www.oag.state.ny.us/press/2003/sep/sep03a_03.html.
 In the mutual fund market-timing cases, in addition to specific, demanding compliance provisions, the SEC sought cease-and-desist orders, not obey-the-law injunctions. A cease-and-desist order empowers the Commission to order on its own initiative, without the approval of a federal court, an individual or entity to cease from the illegal action, make an accounting, and disgorge any unlawful profits. Morrissey, supra note 122, at 463-67. The Commission first gained the power to issue cease-and-desist orders in 1990, pursuant to the Securities Enforcement Remedies and Penny Stock Reform Act (the "Remedies Act"). Securities Enforcement Remedies and Penny Stock Reform Act of 1990, Pub. L. No. 101-429, 104 St. 931 (1990). In general, the Commission has used cease-and-desist orders as a response to less egregious activity than that which would require injunctive relief. Morrissey, supra note 122, at 468.
 Banc of America Capital Mgmt., L.L.C., Sec. Act Rel. No. 8538, Securities Exchange Act Rel. No. 51167, Investment Advisers Act Rel. No. 2355, Investment Company Act Rel. No. 26756 (Feb. 9, 2005).
 Columbia Mgmt. Advisors, Sec. Act Rel. No. 8534, Securities Exchange Act Rel. No. 51164, Investment Advisers Act Rel. No. 2351, Investment Company Act Rel. No. 26752 (Feb. 9, 2005). See also Alliance Capital Mgmt., L.P., Investment Advisers Act Rel. No. 2205A, Investment Company Act Rel. No. 26,312A (Jan. 15, 2004) (settlement requiring independent compliance officer and other internal compliance controls); Mass. Fin. Servs. Co., Investment Advisers Act Rel. No. 2213, Investment Company Act Rel. No. 26347 (Feb. 5, 2004) (settlement also requiring independent compliance officer as well as other internal compliance controls).