In a letter endorsement Monday, Judge Crotty refused a request to reconsider or certify for appeal a question that has resulted in divided views within the Southern District: whether the SEC must plead and prove that a defendant personally gained from an alleged fraud, for purposes of claims under Section 17(a)(2) of the Securities Act, which prohibits, in certain securities transactions, “obtain[ing] 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 light of the circumstances under which they were made, not misleading.” Last August, Judge Crotty, citing a a prior ruling from Judge Rakoff (the subject of this post), ruled that it would be sufficient to plead and prove that the defendant obtained money for his employer, while acting as the employer’s agent (see our prior blog post). In an opinion in March, Judge Sullivan expressly disagreed with Judges Rakoff and Crotty on the question, and dismissed Section 17(a)(2) claims arising from a stock offering from which the defendants did not themselves personally gain. The remaining claims survived, however (see our prior blog post). The legal issue is significant because the SEC does need not prove an intent to defraud for purposes of Section 17(a)(2) claims, unlike claims under other antifraud statutes or rules. Judge Crotty’s endorsement said that the ruling from Judge Sullivan “is not an intervening change in controlling law” and that interlocutory appeal would be inappropriate because the issue would not dispose of the entire case.