Dennis Shepard (defendant) learned that Mark IV Industries, Inc. had issued a tender offer to acquire Purolator Products (Purolator), a publicly held company. The tender offer was not public information and Shepard agreed to keep it confidential. Instead, Shepard informed his friend Michael Sargent (defendant) of the tender offer. Shepard was the president of a webcasting company and did not have a high net worth. Sargent, who was a dentist and had a relatively high net worth, purchased 20,400 shares of Purolator after his conversation with Shepard. He then sold the shares after the public announcement of the tender offer, making a profit of $141,768. The Securities and Exchange Commission (SEC) (plaintiff) brought a civil enforcement action against Shepard and Sargent. The SEC sought disgorgement of the profits Sargent had obtained, an injunction preventing future violations of securities law, prejudgment interest on the disgorgement amount, and civil penalties. The district court found Shepard and Sargent jointly and severally liable for disgorgement of Sargent’s profits but denied injunctive relief and civil penalties. The SEC appealed.