In 1986, Marc Belzberg, a vice-president for First City Financial Corp., Ltd. (defendant), executed a purchase of stock for Ashland Oil Company, to be conducted through Bear Stearns. The transaction in question was the first in which Bear Stearns and First City conducted business together. Bear Stearns purchased the shares, subsequently transferring them to First City at a price lower than that which Bear Stearns paid for the shares. The Securities and Exchange Commission (plaintiff) brought suit against First City as a result of the transaction, alleging that it failed to file a registration under Section 13(d) of the Securities Exchange Act of 1934, requiring registration for entities holding five percent or more of the shares of a corporation. First City alleged that the shares were intended to be purchased by Belzberg personally, not First City. The district court ruled in favor of the SEC, and ordered First City to disgorge any profits gained from the Ashland transaction. First City then appealed to the District of Columbia Circuit Court of Appeals.