Family Law: In Case Involving Criminal and SEC Insider Trading Proceedings, Appellate Court Determines That Ex-Husband’s Criminal Fees Constituted A Separate Debt But That Ex-Wife Was Liable For, As A Community Obligation, Some Of The SEC Insider Tradi

Ex-Wife Had To Bear $931,000 In Fees, Much Lower Than Multi-Millions In Fees Incurred By Husband.

            In re Marriage of Whitman, Case No. A157055 (1^st Dist., Div. 2 Dec. 29, 2023) (partially published) involved ex-husband, a hedge fund founder, who incurred multi-millions in fees defending himself in a criminal insider trading case and a parallel SEC civil proceeding.  The appellate court then considered the lower court’s allocations of fees between ex-husband and wife.   It finally determined things this way in a lengthy decision:   (1) wife was not liable for any criminal defense fees, because this was a separate debt of ex-husband under Family Code section 2623 [neither tort nor contract claims, but criminal fees incurred after their separation]; (2) wife was liable for $290,000 in fees (an allocated amount, much smaller than the lion share of the $9.4 million in fees apportioned to husband) for the SEC civil proceeding because the community obtained some benefit (Family Code, § 2625); and (3) wife was liable for about $641,000 in fees incurred by the hedge fund in intervening in the civil case because she tried to wind it down, although it was producing income at the time.