                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

SECURITIES AND EXCHANGE                
COMMISSION,
                 Plaintiff-Appellee,
                v.                           No. 05-55269
ALAN V. PHAN,
              Defendant-Appellant,            D.C. No.
                                           CV-03-03698-LGB
               and                            OPINION
THE HARTCOURT COMPANIES INC.;
YONGZHI YANG,
                       Defendants.
                                       
        Appeal from the United States District Court
           for the Central District of California
        Lourdes G. Baird, District Judge, Presiding

                   Argued and Submitted
          February 14, 2007—Pasadena, California

                   Filed August 29, 2007

     Before: Harry Pregerson, William A. Fletcher, and
             Marsha S. Berzon, Circuit Judges.

                 Opinion by Judge Berzon




                            10775
                         SEC v. PHAN                     10779


                         COUNSEL

John A. Furutani and Mark C. Peters, Furutani & Peters, LLP,
Pasadena, California, for the defendant-appellant.

Jeffrey T. Tao, Senior Counsel, Securities and Exchange
Commission, Washington, D.C., for the plaintiff-appellee.


                         OPINION

BERZON, Circuit Judge:

   The SEC alleged that Alan Phan used stock registered only
for employee compensation purposes to raise capital from the
public for the cash-strapped publicly traded company he led
in 1999, thereby violating federal securities law. The district
court granted summary judgment in favor of the SEC, holding
that Phan both engaged in an unregistered securities sale and
committed securities fraud. In this appeal, Phan contends that
the admissible evidence, viewed in the light most favorable to
him, supports his position rather than the SEC’s.

   We affirm the district court’s summary judgment rulings
concerning the registration issue. Whether or not the stock
was initially issued to compensate bona fide consulting ser-
vices, Phan was involved in its subsequent resale to raise cap-
ital for the company and thereby violated the registration
provision of federal securities law. We agree with Phan, how-
ever, that the summary judgment record does not demonstrate
that he made misstatements material as a matter of law. We
therefore reverse the grant of summary judgment in favor of
the SEC with respect to the antifraud claims and vacate much
of the relief the district court awarded against Phan.
10780                   SEC v. PHAN
                              I.

   During the relevant time period, Phan was chairman, CEO,
and president of the Hartcourt Companies Inc. (“Hartcourt”),
a publicly traded business development and investment hold-
ing company based in Long Beach, California. Believing, as
did many others during the heady dot-com bubble of the late
1990s, that fortunes could be made by investing in the tech-
nology sector, Hartcourt decided to enter the Chinese technol-
ogy market. To this end, Hartcourt entered into a pair of
investment agreements with companies based in China and
Hong Kong that obligated Hartcourt to pay those companies
several million dollars in cash during the later half of 1999.
As was true of many other companies venturing into the tech-
nology sector in the late 1990s, Hartcourt’s ambition out-
stripped its financial resources, and the company found itself
in the fall of 1999 having difficulty making the promised pay-
ments to its investment partners.

   To help it find business opportunities in China, Hartcourt
sought the assistance of Yongzhi Yang, a math professor in
Alabama who worked part-time as a consultant to American
companies seeking to invest in Chinese technology firms.
According to Yang, he and his wife, Yan Wu, ran the consult-
ing business as a joint enterprise; Yang preferred to use only
Wu’s name on public documents to hide from his university
the fact that he moonlighted.

   Hartcourt entered into a written Fee and Option Agreement
(the “Fee Agreement”) with Wu on August 23, 1999. The Fee
Agreement specified that Wu “will use [her] best efforts to
search for, identify and make known to [Hartcourt], Internet-
related businesses and Assets (“Opportunities”) which qualify
as potential acquisitions by [Hartcourt].” The Fee Agreement
explained that Wu’s “talents and services are of a special,
unique, unusual and extraordinary character and are of partic-
ular and peculiar benefit and importance to [Hartcourt].”
                              SEC v. PHAN                            10781
   The Fee Agreement stated that Hartcourt would provide
Wu with an option to purchase one million Hartcourt shares
at a price of $1.25 per share, approximately Hartcourt’s then-
current share price. The Fee Agreement represented that this
payment was “to satisfy [Wu’s] time and expense incurred, up
to and including the first acquisition by [Hartcourt] of an
Opportunity introduced or arranged by [Wu],” and that Wu
“has not been engaged to perform, nor will [she] agree to per-
form any services in connection with capital raising transac-
tions.”1 The Fee Agreement specified that Wu would serve as
a consultant through December 30, 1999, but that either party
could terminate her service on thirty-days notice. The Fee
Agreement contained no provision requiring Wu to forfeit the
option if the Fee Agreement was terminated early, although
it did state that Hartcourt “shall only be liable for payment of
fees earned by [Wu] as a result of work prior to the effective
date of the termination.”

   Under the terms of a separate Option Agreement (the “Op-
tion Agreement”), also signed on August 23, 1999, Hartcourt
granted Wu an option to purchase one million shares to fulfill
the promise made in the Fee Agreement. Wu had until
December 1, 2001 to exercise the option and was required to
pay the $1.25 per share at the time of exercise to receive the
stock (the “prepayment” requirement). In other words, Wu
immediately became the owner of the options, but would not
receive the one million shares of Hartcourt until she paid
$1.25 million.

  Both agreements were filed with the SEC on September 7,
1999, as attachments to a Form S-8, which registered the issu-
ance of those one million shares.2 This form and its attach-
   1
     The agreement further specified that “[i]t is mutually understood and
agreed that any fees for services provided by [Wu] on behalf of or which
results in some benefit for [Hartcourt] in connection with a capital raising
transaction shall be negotiated separately from this Agreement and paid by
[Hartcourt] in cash.”
   2
     The relevant Form S-8 also registered the issuance of stock to compen-
sate several other individuals. The SEC does not dispute the legitimacy of
those transactions.
10782                        SEC v. PHAN
ments were publicly available upon filing. The Securities Act
of 1933 (“the 1933 Act”), 15 U.S.C. §§ 77a-77aa, requires
publicly traded companies to register all new issuances of
stock. A Form S-8 provides a streamlined method of register-
ing stock issued to compensate employees and consultants, as
opposed to the more detailed and prolonged process required
to register shares used to raise capital. Registration of Securi-
ties on Form S-8, 64 Fed. Reg. 11,103, 11,103 (Mar. 8, 1999)
(“S-8 Release”) (codified at 17 C.F.R. § 239.16(b)). By sign-
ing the S-8 registration, Hartcourt explicitly agreed to amend
the form “during any period in which offers or sales are being
made” to “reflect . . . any facts or events arising after the
effective date of the registration statement . . . which, individ-
ually or in the aggregate, represents a fundamental change in
the information set forth in the registration statement” and to
“include any material information with respect to the plan of
distribution not previously disclosed in the registration state-
ment or any material change to such information in the regis-
tration statement.” 17 C.F.R. § 229.512(a)(1).

   Right after it filed the S-8 form, Hartcourt issued one mil-
lion shares of common stock to Wu. Contrary to the Option
Agreement, however, Wu (and Yang) paid nothing to Hart-
court at that time. In a declaration submitted in the district
court Yang explained that he pressed for the elimination of
the prepayment requirement because “I wanted some guaran-
tee that my wife and I would receive our option shares, since
we did not have the money to pay the option price, and it
made no sense for us to bring companies to Hartcourt if there
was no guarantee that we would receive the shares.”

   Phan stated in his declaration that to satisfy Yang’s request
he orally modified the agreement on behalf of the company,
by waiving the prepayment requirement and instead allowing
Wu to receive the shares in exchange for a promissory note
to pay Hartcourt $1.25 million.3 Hartcourt did not note this
  3
   Phan’s explanation of this modification has some holes, both logical
and factual. It requires Wu, who apparently did not have the liquid assets
                              SEC v. PHAN                            10783
modification in its S-8 form, so the supposedly superseded
terms were the only publicly disclosed information about the
arrangement between Hartcourt and Wu.

   Within months, Wu resold most of the one million shares.
The bulk of the shares were sold to Rubin Investment Group
(“Rubin”) in a November 1, 1999 transaction involving
500,000 shares and a November 4, 1999 transaction involving
300,000 shares. The sales were at prices well below the $1.25
per share that Wu supposedly was obligated to repay Hart-
court. Phan stated in his declaration that he suggested Yang
contact Rubin and that he directed Hartcourt’s lawyer to draft
a contract for one of these stock sales. Phan also acknowl-
edged that Hartcourt’s demand in October 1999 that Wu
repay the $1.25 million promissory note generated Wu’s deci-
sion to sell the shares.4 Yang likewise stated in his declaration
that he informed Phan that Wu would be forced to sell the
shares if Hartcourt demanded repayment of the loan, and
“Phan insisted that if that was the only way we could pay
Hartcourt, then we should sell the shares and get Hartcourt
paid.”

   At Phan’s direction, Wu wired the approximately $680,000
in proceeds of these two sales to Hartcourt’s investment part-

to pay for the shares, to have taken on the risk that she would be unable
to resell the shares for at least $1.25 million. Under the original Option
Agreement, in contrast, she could have waited until the shares were worth
more than $1.25 million, bought them then, and then sold $1.25 million
worth, assuring against any risk. Moreover, Phan never produced a copy
of the purported promissory note, there was apparently no payment sched-
ule agreed upon, and Hartcourt never required Wu to pay the full $1.25
million. Nevertheless, Phan’s declarations maintained that at the time
Hartcourt eliminated the prepayment requirement, it “fully expected” to
receive $1.25 million from Wu.
   4
     In a SEC investigatory hearing, Yang testified that Phan “started to
take shares away for Rubin” in order to cover the company’s outstanding
debts. In his later declaration, Yang framed the sale as a response to Hart-
court’s demand to repay the promissory note.
10784                          SEC v. PHAN
ners in China and Hong Kong, to pay Hartcourt’s outstanding
debts. On December 8, 1999, she also wired one of these part-
ners more than $81,000, from money she received upon sell-
ing Hartcourt shares. Phan characterized these transactions as
an arrangement “to avoid delay” by “eliminat[ing] the middle-
man,” because Hartcourt would have immediately wired Wu’s
payments to its creditors. Wu also transferred 36,400 shares
on November 4, 1999 directly to Perfect Data Corporation,
another creditor of Hartcourt.

   Yang made a number of smaller purchases and sales of
Hartcourt’s stock during the fall of 1999, primarily for his
own benefit. During the same period, Hartcourt promised
Yang that he would receive 100,000 shares in exchange for
helping Hartcourt enter into a joint venture with Chinese tech-
nology company Innostar. The defendants explain that this
promise caused Hartcourt to forgive Wu’s debt for the pur-
chase price of 100,000 of the original one million shares in
lieu of issuing additional shares.

   After conducting an investigation, the SEC filed a civil
complaint against Phan, Yang, and Hartcourt, exercising its
power to seek injunctions and fines against those who violate
the 1933 Act and the Securities Exchange Act of 1934 (“the
1934 Act”). See 15 U.S.C. §§ 77t, 78u. The SEC alleged that
the defendants violated Section 5 of the 1933 Act, 15 U.S.C.
§ 77e, which forbids the unregistered sale of securities. The
SEC also alleged violations of the antifraud provisions of Sec-
tion 17(a) of the 1933 Act, 15 U.S.C. § 77q(a), Section 10(b)
of the 1934 Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17
C.F.R. § 240.10b-5, based on materially untrue statements
made in Hartcourt’s S-8 filing.5

   After both parties moved for summary judgment, the dis-
  5
    The SEC’s complaint also alleged that the defendants committed secur-
ities fraud by including untrue statements in a series of press releases. That
theory of liability was subsequently abandoned.
                                 SEC v. PHAN                              10785
trict court granted the SEC’s motion and denied the defen-
dants’ motion. The district court permanently enjoined the
defendants from violating securities laws, fined the defen-
dants — imposing a $55,000 fine against Phan, a $20,000 fine
against Yang, and a $275,000 fine against Hartcourt —
ordered Hartcourt and Yang to disgorge ill-gotten gains —
$819,363 and $186,604, respectively — and barred Phan from
serving as an officer or director of a publicly traded company.
Phan appealed the judgment; Yang and Hartcourt did not.

   We review de novo the district court’s decisions on the
summary judgment motions. SEC v. First Pac. Bancorp, 142
F.3d 1186, 1190 (9th Cir. 1998). In our review, we must “de-
termine, viewing the evidence in the light most favorable to
the nonmoving party, whether there are any genuine issues of
material fact and whether the district court correctly applied
the relevant substantive law.” Johnson v. Columbia Props.
Anchorage, LP, 437 F.3d 894, 898 (9th Cir. 2006).

                                       II.

   It is unlawful to participate in an interstate or mail sale of
unregistered securities. See 1933 Act § 5(a), (c), 15 U.S.C.
§ 77e(a), (c);6 see also Berckeley Inv. Group, Ltd. v. Colkitt,
  6
   Section 5 provides:
      (a)   Sale or delivery after sale of unregistered securities
      Unless a registration statement is in effect as to a security, it shall
      be unlawful for any person, directly or indirectly—
      (1) to make use of any means or instruments of transportation
      or communication in interstate commerce or of the mails to sell
      such security through the use or medium of any prospectus or
      otherwise; or
      (2) to carry or cause to be carried through the mails or in inter-
      state commerce, by any means or instruments of transportation,
      any such security for the purpose of sale or for delivery after sale.
      ...
10786                         SEC v. PHAN
455 F.3d 195, 212 (3d Cir. 2006) (“In order to establish a Sec-
tion 5 violation, [plaintiff] must point to evidence that: (1) no
registration statement was in effect as to the securities; (2)
[defendant] sold or offered to sell the securities; and (3) the
sale or offer was made through interstate commerce.”). By its
terms, Section 5 of the 1933 Act creates liability for any
securities sale for which “a registration statement is [not] in
effect;” it does not limit liability to initial distribution. 15
U.S.C. § 77e(a); see also SEC v. Cavanagh, 155 F.3d 129,
133 (2d Cir. 1998) (“Each sale of a security . . . must either
be made pursuant to a registration statement or fall under a
registration exception.” (quoting Eddy J. Rogers, Jr. & Jason
Weeden, Resales of Securities Under the Securities Act, 1012
PLI/Corp. 285, 287 (Sept. 1997)));7 Allison v. Ticor Title Ins.
Co., 907 F.2d 645, 648 (7th Cir. 1990) (“Section 5 . . . applies
to transactions; each sale must be registered or exempt.”);
Shaw v. United States, 131 F.2d 476, 479 (9th Cir. 1942) (not-
ing that the registration requirement could apply to a compa-
ny’s resale of a batch of shares initially distributed using a
statutory exemption from registration); 1 LOUIS LOSS ET AL.,
SECURITIES REGULATION 591 (4th ed. 2006) (“On its face, § 5
is all embracing.”). Section 4(1) of the 1933 Act, however,
shields any “transactions by any person other than an issuer,
underwriter, or dealer,” thus exempting from Section 5 ordi-

    (c)   Necessity of filing registration statement
    It shall be unlawful for any person, directly or indirectly, to make
    use of any means or instruments of transportation or communica-
    tion in interstate commerce or of the mails to offer to sell or offer
    to buy through the use or medium of any prospectus or otherwise
    any security, unless a registration statement has been filed as to
    such security . . . .
15 U.S.C. § 77e.
   7
     In Cavanagh, the Second Circuit faced circumstances quite similar to
those here and held that the defendant violated Section 5 through a resale
of shares even if the initial distribution of those shares was validly regis-
tered using an S-8 form. See 155 F.3d at 133-34.
                              SEC v. PHAN                            10787
nary resales of stock between independent parties. 15 U.S.C.
§ 77d(1); see also SEC v. Murphy, 626 F.2d 633, 648 (9th Cir.
1980) (“Section 4(1) was designed to exempt routine trading
transactions with respect to securities already issued . . . .”);
Loss, supra, at 591 (explaining that § 4(1) exempts an unreg-
istered resale of blue-chip stock between friends from violat-
ing § 5).

   [1] The district court held that Phan violated Section 5
because a large portion of the stock was resold by Wu to raise
capital for Hartcourt without filing an additional registration
statement.8 The registration dispute in this case thus centers
on whether, at the time of Wu’s resales of Hartcourt’s stock,
the September 7, 1999 S-8 “registration statement [was] in
effect as to [the] security.” 15 U.S.C. § 77e(a).9

  [2] SEC regulations provide that an S-8 registration form
can be used by a company only to issue stock as a means of
compensating consultants for bona fide services not con-
nected with raising capital. First, 17 C.F.R. § 239.16b(a)(1)
  8
     Given the focus of Section 5 on whether the “the registration statement
is in effect” or “has been filed,” 15 U.S.C. § 77e(a), (c) (emphases added),
and the defendants’ summary judgment evidence that the stock was issued
originally with a bona fide compensatory purpose as required by the S-8
form, on this summary judgment record there is a material dispute of fact
concerning whether Hartcourt’s initial distribution of the stock to Wu vio-
lated the statute because the transaction from the outset was for purposes
not authorized by an S-8 registration. The summary judgment for the SEC
therefore cannot be sustained on the ground that an S-8 registration was
improper with regard to the initial transaction.
   9
     The district court found two additional reasons why Phan violated Sec-
tion 5: (1) The initial distribution of the one million shares to Wu was not
covered by the September 7, 1999 statement because the form did not
reflect the “fundamental[ ] change[ ]” caused by removing the prepayment
requirement; and (2) Yang received 100,000 free shares in connection
with the Innostar deal, and those shares were not registered. Because we
hold that Wu’s capital-raising resale of the stock sufficiently supports the
holding that Phan violated Section 5, we do not address the two other
rationales offered by the district court.
10788                         SEC v. PHAN
provides that an S-8 form may be used to register securities
“to be offered to its employees[10] . . . under any employee
benefit plan.” In turn, 17 C.F.R. § 230.405 provides that con-
sultants may participate in an “employee benefit plan,” but
“only if . . . [t]hey provide bona fide services to the registrant;
and . . . [t]he services are not in connection with the offer or
sale of securities in a capital-raising transaction, and do not
directly or indirectly promote or maintain a market for the
registrant’s securities.” (Emphasis added).

   [3] The SEC interprets these regulations flatly to prohibit
the use of an S-8 form to register shares that are sold to the
public to raise capital. As the SEC’s published explanation of
amendments to the regulations promulgated in 1999 specifies:

       [S]ome issuers and promoters have misused Form S-
       8 as a means to distribute securities to the public
       without the protections of registration under Section
       5 of the Securities Act. For example, the issuer regis-
       ters on Form S-8 securities nominally offered and
       sold to employees or, more commonly, to so-called
       “consultants.” These persons then resell the securi-
       ties in the public markets, at the direction of the
       issuer or a promoter. In some cases, the consultants
       or employees perform limited or no additional ser-
       vices for the issuer. The consultants or employees
       then either remit to the issuer the proceeds from
       these resales, or apply those proceeds to pay
       expenses of the issuer that are not related to any ser-
       vice provided by the consultants or employees.

         Registration of the shares on Form S-8 does not
  10
     Paragraph 1.(a) of General Instruction A to the S-8 form, which was
published in the Federal Register upon promulgation but not codified in
the Code of Federal Regulations, provides that for the purposes of S-8 reg-
istration, the term employee includes consultants. S-8 Release, 64 Fed.
Reg. at 11,117.
                         SEC v. PHAN                      10789
    accomplish Section 5 registration of these public
    sales. The transaction that takes place (a capital-
    raising transaction with the public) is a different
    transaction from the transaction registered on Form
    S-8 (a compensatory transaction with employees,
    including consultants). Although the issuer purports
    to sell securities to employees, the securities instead
    are sold to the public. The “employees” act as con-
    duits by selling the securities to the public and dis-
    tributing the proceeds (or their economic benefit) to
    the issuer. This public sale of securities by the issuer
    has not been registered, although the Securities Act
    requires registration. The failure to register this sale
    of securities deprives public investors of the protec-
    tions afforded by the Securities Act.

S-8 Release, 64 Fed. Reg. at 11,103-04 (emphasis added)
(footnote omitted).

   At the same time, the SEC explained the circumstances in
which it would view a transaction as seeking to raise capital
from the public:

    Form S-8 is not available to register offers and sales
    of securities to . . . consultants and advisors where:

    • By prearrangement or otherwise, the issuer or a
    promoter controls or directs the resale of the securi-
    ties in the public market; or

    • The issuer or its affiliates directly or indirectly
    receive a percentage of the proceeds from such
    resales.

Id. at 11,106 (footnote omitted). The SEC has also explained
that the “controls or directs” test is intended to “focus[ ] on
the issuer’s power to make a resale happen, or to make it hap-
pen at a particular time.” Id. at 11,106 n.30. And the “directly
10790                     SEC v. PHAN
or indirectly receive” test “will be satisfied where the issuer
or its affiliates receive an economic benefit from the resale
proceeds, such as when the proceeds are used to pay the issu-
er’s operating expenses or are paid to the issuer’s control per-
sons.” Id. at 11,106 n.31.

   [4] We owe substantial deference to an agency’s published
interpretation of its own regulations and will treat it as con-
trolling if it is not “plainly erroneous or inconsistent with the
regulation.” Auer v. Robbins, 519 U.S. 452, 461 (1997) (inter-
nal quotation marks omitted); see also Epstein v. MCA, Inc.,
50 F.3d 644, 654 n.17 (9th Cir. 1995) (applying such substan-
tial deference to an interpretation published in a SEC
Release), rev’d on other grounds sub. nom Matsushita Elec.
Indus. Co. v. Epstein, 516 U.S. 367 (1996). Such deference is
particularly sensible here in light of the SEC’s broad statutory
authority to design the schema for registering securities. See
15 U.S.C. § 77s. Because the SEC’s interpretation is not
“plainly erroneous or inconsistent” with regulations that
already draw a distinction between bona fide consulting and
services that aid a capital-raising transaction, we hold that an
S-8 form cannot be used to register a securities transaction in
which the issuer or promoter controls or directs a resale or
directly or indirectly receives a percentage of the proceeds.

  [5] Applying this holding, we conclude that Wu’s resale of
Hartcourt’s publicly traded stock could not be covered by an
S-8 registration. That resale had the effect of supplying the
company with capital from the public at the company’s
behest.

   The summary judgment record, viewed in the light most
favorable to Phan, establishes both that Wu transferred to
Hartcourt’s creditors the proceeds of the stock sales she made
through Rubin and her brokerage account to satisfy the com-
pany’s outstanding debts and that Hartcourt was the impetus
behind these resales. Phan’s declaration states:
                         SEC v. PHAN                     10791
       Hartcourt made demand [sic] for payment from
    Yang and Yan Wu in October 1999. Yang agreed to
    sell the Hartcourt shares which he and his wife
    received from Hartcourt. He asked me if I knew any-
    one who could sell shares in large lots, and I directed
    him to call Rubin Investments, whose business card
    was on my desk at the time and whom had recently
    made a presentation to Hartcourt where they had
    described themselves as institutional investors which
    had an interest in investing in Hartcourt. In an effort
    to assist Yang and Yan Wu, I later asked my attor-
    ney to prepare a simple share purchase agreement
    which Yan Wu could use in selling the shares, since
    Yang told me that he and his wife were unfamiliar
    with the process. . . .

      ...

       From the payments which Hartcourt demanded
    that Yang and Yan Wu make pursuant to their exer-
    cise of the option shares, I instructed Yang to send
    those sums to third parties designated by Hartcourt
    instead of sending the money directly to Hartcourt.

Likewise, a declaration submitted by Yang stated:

    I advised Alan Phan that [Wu and I] did not have the
    money to pay off what was owed, and that the only
    way we could come up with a major portion of what
    was owed would be to sell the shares we received.
    Phan insisted that if that was the only way we could
    pay Hartcourt, then we should sell the shares and get
    Hartcourt paid.

   [6] This undisputed evidence demonstrates that it was the
company’s directives to Wu that resulted in the sale of the
stock and therefore in raising capital for the company. Given
these circumstances, the resale of Wu’s stock could not val-
10792                        SEC v. PHAN
idly be registered on Form S-8. Hartcourt — the issuer of
publicly traded stock — “control[led] or direct[ed] [Yang’s]
resale of the securities in the public market” through its
demand for repayment of the loans, because the demand
“ma[d]e a resale happen.” See S-8 Release, 64 Fed. Reg. at
11,106 & n.30. Further, Hartcourt “indirectly receive[d] a per-
centage of the proceeds from such resale” when the proceeds
of the resale were paid to its creditors. Id. at 11,106 & n.31.

   Phan asserts that the foregoing analysis is not here perti-
nent, as long as the defendants intended at an earlier time —
when Hartcourt initially granted Wu the one million shares —
to provide compensation for bona fide consulting. But, as we
have noted above, liability need not turn on whether Hart-
court’s initial grant of the shares to Wu was properly regis-
tered. Even if the S-8 form was effective as of the date of the
initial grant because Hartcourt intended to compensate Wu for
bona fide consulting services — as we must accept, constru-
ing the summary judgment record in the light most favorable
to the defendants — the S-8 registration ceased to be effective
once Hartcourt sought to use the shares for a capital-raising
purpose. See 1 THOMAS LEE HAZEN, TREATISE ON THE LAW OF
SECURITIES REGULATION § 3.4[4][E], at 252 (5th ed. 2005)
(“Unlike most other registered offerings, securities offered in
a Form S-8 registration may be subject to resale restric-
tions.”).

   At the point at which a company seeks to redistribute into
the public market the securities it issued to consultants, then,
“Form S-8 is not available to register offers and sales of
securities to . . . consultants.” S-8 Release, 64 Fed. Reg. at
11,106; see also 15 U.S.C. § 77f(a) (“A registration statement
shall be deemed effective only as to the securities specified
therein as proposed to be offered.” (emphasis added)).11 As
  11
     When securities registered using an S-8 form are used for capital-
raising purposes, the SEC apparently views the registration as becoming
a legal nullity from the moment it was filed. S-8 Release, 64 Fed. Reg. at
                               SEC v. PHAN                            10793
the previous analysis demonstrates, the circumstances sur-
rounding Wu’s resale of the stock clearly fall within the
SEC’s criteria for a capital-raising transaction. Consequently,
no “registration statement [was] in effect” as to Wu’s stock at
the time of resale, in violation of Section 5. 15 U.S.C.
§ 77e(a); see SEC v. DCI Telecoms., Inc., 122 F. Supp. 2d
495, 501 (S.D.N.Y. 2000) (“A violation of the registration
provisions exists where the issuing company raises capital via
its employees’ sale of stock, regardless of the existence a [sic]
preconceived plan. . . . Regardless of intent, a public company
and its officers violate the registration provisions by using
employees as conduits for the sale of S-8 stock to the public
because the true transaction — the distribution of securities to
the pubic — is not registered.”); Sky Scientific, Inc., Initial
Decision Release No. 137, 69 SEC Docket 763, 1999 WL
114405, at *30-32 (Mar. 5, 1999) (similar holding by an
administrative law judge in a SEC proceeding); see also SEC
v. Calvo, 378 F.3d 1211, 1219 (11th Cir. 2004) (applying the
principle that the 1933 Act creates strict civil liability to a
Section 5 claim). The (assumed for purposes of summary
judgment) initial legitimacy of Hartcourt’s S-8 registration
form is thus irrelevant to Phan’s liability under Section 5, as
Wu ultimately resold her shares to raise capital for Hartcourt
at the company’s behest.12

11,106 (specifying that when stock is resold for capital-raising purposes,
“Form S-8 is not available to register offers and sales of securities to . . .
consultants,” whether the resale comes about “[b]y prearrangement or oth-
erwise” (emphases added)). We do not understand this interpretation as
deeming the consultant’s initial receipt of shares violative of Section 5 if
the invalidating event happened only later. See supra note 8. At any rate,
we need not address whether that is so, as we uphold summary judgment
as to Phan’s Section 5 liability on the basis of the resale alone.
   12
      Phan does not challenge the district court’s holding that the defendants
failed to prove a Section 4(1) defense with regard to Wu’s resales because
they “were directed by Phan, and were expressly made to benefit Hart-
court.” We therefore do not examine this question.
10794                           SEC v. PHAN
   Phan also argues, in a cursory fashion without citing any
authority, that “[h]e did not participate in any sale of S-8
shares . . . nor did he benefit from any such sales.” Although
we have “recognize[d] that [a defendant’s] role in the transac-
tion must be a significant one before [Section 5] liability will
attach,” we have defined a “significant” role to include one
who is both a “necessary participant” and “substantial factor”
in the sales transaction. Murphy, 626 F.2d at 648, 652.13

   [7] Applying this standard, Phan’s role in assisting Wu’s
resale satisfied the “sold or offered to sell” element of Section
5. As detailed in the defendants’ own declarations, quoted
  13
     Prior to Pinter v. Dahl, 486 U.S. 622 (1988), we had held that an indi-
vidual was liable under Section 12 of the 1933 Act — the provision that
creates a private cause of action for Section 5 violations — when he was
a “necessary participant” and “substantial factor” in the sale or offer of an
unregistered security. Anderson v. Aurotek, 774 F.2d 927, 930 (9th Cir.
1985) (per curiam). Pinter rejected that standard as too lax to create Sec-
tion 12 liability. 486 U.S. at 648-50 & n.25. Section 12 specifies that
“[a]ny person who — (1) offers or sells a security in violation of [Section
5] . . . shall be liable . . . to the person purchasing such security from him.”
15 U.S.C. § 77l(a) (emphasis added). The Supreme Court keyed in on the
“from him” language of Section 12 in rejecting our “necessary
participant”/“substantial factor” test: “Those courts that have adopted the
approach have not attempted to ground their analysis in statutory lan-
guage. . . . The ‘purchase from’ requirement of § 12 focuses on the defen-
dant’s relationship with the plaintiff-purchaser. The substantial-factor test,
on the other hand, focuses on the defendant’s degree of involvement in the
securities transaction and its surrounding circumstances.” Pinter, 486 U.S.
at 651.
   Section 5 contains no language similar to the “from him” language of
Section 12. So Pinter did not overturn our holding in Murphy, that the
SEC establishes an actionable violation of Section 5 when it shows a
defendant is both a “necessary participant” and “substantial factor” in the
sales transaction. Cf. Calvo, 378 F.3d at 1215 (observing, in a 2004 deci-
sion, that “the SEC must prove that the defendant was a ‘necessary partici-
pant’ or ‘substantial factor’ in the illicit sale” to establish Section 5
liability and citing Murphy); Geiger v. SEC, 363 F.3d 481, 488 (D.C. Cir.
2004) (observing in a challenge to a SEC enforcement action that “[w]e
do not believe Pinter is on point” as to the scope of Section 5 liability).
                              SEC v. PHAN                            10795
above, Phan chose the date to call in Wu’s $1.25 million obli-
gation to Hartcourt, directed Wu to sell the shares in order to
repay her obligation, provided Yang with a buyer, directed
Hartcourt’s lawyer to draft a stock sale contract, and
instructed Wu where to send the proceeds. Phan therefore was
both a “necessary participant” and a “substantial factor in”
Wu’s resale. See id. at 652; see also Geiger, 363 F.3d at 487-
88 (“[S]omeone who played a role as crucial as [the defen-
dant’s] — finding the buyer, negotiating the terms, facilitating
the resale — cannot escape liability [under Section 5] by
avoiding direct involvement in the final [sales] act.”)

  [8] In sum, the district court properly granted summary
judgment in favor of the SEC on the Section 5 cause of action.14

                                    III.

   The district court also granted summary judgment in favor
of the SEC on its claim that Phan committed securities fraud
through his involvement in filing Hartcourt’s S-8 registration
form. The fraud claim is certainly supported by some of the
evidence, indeed much of it. But viewing all of the evidence
in the light most favorable to Phan, as we must on summary
judgment, we conclude that there are disputes of material fact
that preclude summary judgment. We therefore reverse the
district court’s grant of summary judgment in favor of the
  14
     We find no merit in Phan’s argument, which does not refer to any
legal authority, that summary judgment should have been granted in his
favor because “the district court improperly went beyond plaintiff’s theory
of the case” as contained in the SEC’s response to the defendants’ inter-
rogatories. Although the interrogatory answer cited by Phan intertwines
allegations about the lack of legitimate consulting and the issuance of false
press releases, it clearly states the SEC’s contention that “[t]he profits
from sales of the S-8 Shares were used to provide capital for Hartcourt’s
investments and acquisitions.” Phan cannot claim harm — let alone harm
that dictates summary judgment in his favor — from the SEC’s ultimate
reliance on a less sweeping theory. See Scott & Fetzer Co. v. Dile, 643
F.2d 670, 673-74 (9th Cir. 1981) (noting discovery provisions are intended
to prevent parties from facing unexpected surprises later in the litigation).
10796                            SEC v. PHAN
SEC but affirm the denial of Phan’s motion for summary
judgment.

  Section 17(a) of the 1933 Act,15 Section 10(b) of the 1934
Act,16 and Rule 10b-517 “forbid making [1] a material mis-
  15
    Section 17(a) provides:
       It shall be unlawful for any person in the offer or sale of any
       securities . . . by the use of any means or instruments of transpor-
       tation or communication in interstate commerce or by use of the
       mails, directly or indirectly
       (1) to employ any device, scheme, or artifice to defraud, or
       (2) to obtain money or property by means of any untrue statement
       of a material fact or any omission to state a material fact neces-
       sary in order to make the statements made, in light of the circum-
       stances under which they were made, not misleading; or
       (3) to engage in any transaction, practice, or course of business
       which operates or would operate as a fraud or deceit upon the
       purchaser.
15 U.S.C. § 77q.
  16
     Section 10(b) provides:
       It shall be unlawful for any person, directly or indirectly, by the
       use of any means or instrumentality of interstate commerce or of
       the mails, or of any facility of any national securities exchange
       —
       ...
       (b) To use or employ, in connection with the purchase or sale of
       any security registered on a national securities exchange or any
       security not so registered . . . any manipulative or deceptive
       device or contrivance in contravention of such rules and regula-
       tions as the Commission may prescribe as necessary or appropri-
       ate in the public interest or for the protection of investors.
15 U.S.C. § 78j.
  17
     Rule 10b-5 provides:
       It shall be unlawful for any person, directly or indirectly, by the
       use of any means or instrumentality of interstate commerce, or of
       the mails or of any facility of any national securities exchange,
                              SEC v. PHAN                           10797
statement or omission [2] in connection with the offer or sale
of a security [3] by means of interstate commerce. . . . Viola-
tions of Section 17(a)(1), Section 10(b) and Rule 10b-5
require scienter. . . . Violations of Sections 17(a)(2) and (3)
require a showing of negligence.” SEC v. Dain Rauscher,
Inc., 254 F.3d 852, 856 (9th Cir. 2001). Even though the
transaction registered by the S-8 form did not involve distri-
bution of shares to the public market, the SEC can prove fraud
by showing that an average investor would find any misstate-
ments that the form contained to be material because the form
was publicly disseminated. See SEC v. Rana Research, Inc.,
8 F.3d 1358, 1362 (9th Cir. 1993).

   Phan primarily challenges the district court’s holding that
the evidence viewed in the light most favorable to him dem-
onstrated the materiality of his misstatements.18 The antifraud
provisions’ materiality element is satisfied only if there is “a
substantial likelihood that the disclosure of the omitted fact
would have been viewed by the reasonable investor as having
significantly altered the ‘total mix’ of information made avail-
able.” Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988)
(quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438,
449 (1976)) (internal quotation mark omitted) (applying test

    (a) To employ any device, scheme, or artifice to defraud,
    (b) To make any untrue statement of a material fact or to omit 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 (c) To engage in any act, practice, or
    course of business which operates or would operate as a fraud or
    deceit upon any person, in connection with the purchase or sale
    of any security.
17 C.F.R. § 240.10b-5.
   18
      Phan also challenges the district court’s holding that the record
undisputably demonstrated his scienter. We resolve this appeal on the
basis of the materiality requirement and so do not reach the scienter ques-
tion.
10798                         SEC v. PHAN
to claims under Section 10(b) and Rule 10b-5); see also SEC
v. Rogers, 790 F.2d 1450, 1458 (9th Cir. 1986) (applying a
“reasonable investor” test to Section 17), overruled on other
grounds by Pinter v. Dahl, 486 U.S. 622 (1988).

   [9] Determining materiality in securities fraud cases
“should ordinarily be left to the trier of fact.” In re Apple
Computer Secs. Litig., 886 F.2d 1109, 1113 (9th Cir. 1989).
Materiality typically cannot be determined as a matter of sum-
mary judgment because it depends on determining a hypothet-
ical investor’s reaction to the alleged misstatement. As the
Supreme Court has explained:

       The determination [of materiality] requires delicate
       assessments of the inferences a “reasonable share-
       holder” would draw from a given set of facts and the
       significance of those inferences to him, and these
       assessments are peculiarly ones for the trier of fact.
       Only if the established omissions are “so obviously
       important to an investor, that reasonable minds can-
       not differ on the question of materiality” is the ulti-
       mate issue of materiality appropriately resolved “as
       a matter of law” by summary judgment.”

TSC Indus., 426 U.S. at 450 (quoting Johns Hopkins Univ. v.
Hutton, 422 F.2d 1124, 1129 (4th Cir. 1970)) (footnote omit-
ted);19 see also 10A CHARLES ALAN WRIGHT ET AL., FEDERAL
PRACTICE AND PROCEDURE: CIVIL § 2729, at 556 (3d ed. 1998)
(“[E]ven when there is no dispute as to the facts, it usually is
for the jury to decide whether the conduct in question meets
the reasonable-person standard.” (emphasis added)), cited in
  19
     More recently, the Supreme Court — in holding that the question of
materiality must be submitted to the jury in criminal perjury prosecutions
— has cited the materiality element of securities fraud as an “application-
of-legal-standard-to-fact sort of question . . . , commonly called a ‘mixed
question of law and fact,’ [that] has typically been resolved by juries.”
United States v. Gaudin, 515 U.S. 506, 512 (1995) (citing TSC Indus., 426
U.S. at 450).
                         SEC v. PHAN                      10799
TSC Indus., 426 U.S. at 450 n.12. Thus, for example, the
Supreme Court has refused to hold as a matter of law that a
difference between payment in warrants worth $5.25 each and
warrants worth $3.50 each would be material to an investor,
holding instead that, even if the company’s statements could
have misled investors to believe that the higher value was cor-
rect, the significance of the difference in value to an investor
was a question of fact for the jury. Id. at 459-60.

   [10] Applying this strict standard and evaluating the securi-
ties fraud claim in light of the record viewed most favorably
to Phan, we cannot find that the misstatements made in Hart-
court’s S-8 registration form rise to the level of obviousness
necessary to award summary judgment.

                              A.

   The SEC argues that the many misrepresentations and
omissions in the S-8 form as of the moment it was filed on
September 7, 1999 made materiality so obvious so as to war-
rant summary judgment. The evidence in the record is in con-
flict, however, as to many important facts that could support
this conclusion. For example: whether Wu had a bona fide
obligation fully to repay Hartcourt for the stock after the
transaction was restructured; whether Hartcourt did initially
intend the shares to compensate Yang and Wu for consulting
work; and whether Hartcourt issued the shares to Wu expect-
ing that they would be resold to raise capital from the public
to satisfy the company’s pressing debts. The S-8 registration
would certainly have contained material misstatements if
those disputed facts were resolved in the SEC’s favor. Obvi-
ously, an average Hartcourt investor would want to know if
the company was giving away a million shares of stock for
free or needed to sell stock quickly in order to stave off a
liquidity crisis. But we cannot uphold summary judgment in
favor of the SEC on that basis, as the underlying facts have
not been conclusively established.
10800                         SEC v. PHAN
   The district court determined otherwise after it refused to
credit critical statements in Phan’s and Yang’s declarations.
Those statements attested to a restructuring of the transaction
that created a bona fide obligation for Wu fully to repay Hart-
court for the stock.20 The district court viewed the declarations
as “uncorroborated and self-serving” and as contradicted by
earlier testimony in the record, and so disregarded the state-
ments regarding restructuring. The district court’s character-
izations of the statements cannot justify disregarding them.

   As we have previously noted, declarations oftentimes will
be “self-serving” — “[a]nd properly so, because otherwise
there would be no point in [a party] submitting [them].”
United States v. Shumway, 199 F.3d 1093, 1104 (9th Cir.
1999). In most cases, consequently, “[t]hat an affidavit is self-
serving bears on its credibility, not on its cognizability for
purposes of establishing a genuine issue of material fact.” Id.
Only in certain instances — such as when a declaration
“state[s] only conclusions, and not ‘such facts as would be
admissible in evidence,’ ” — can a court disregard a self-
serving declaration for purposes of summary judgment. Id.
(quoting FED. R. CIV. P. 56(e)).

   Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054 (9th Cir.
2002), relied upon by the district court as supporting the dis-
regard of “uncorroborated and self-serving” declarations,
involved just such a situation: The declaration in question
included facts beyond the declarant’s personal knowledge and
“provide[d] no indication how she knows [these facts] to be
true.” Id. at 1059 & n.5, 1061. Phan’s and Yang’s declarations
  20
    The district court did not, however, exclude any of this evidence from
the summary judgment record. Therefore, our review is de novo; the abuse
of discretion standard, applicable to review of evidentiary rulings made in
the course of deciding a summary judgment motion, Orr v. Bank of Am.,
285 F.3d 764, 773 (9th Cir. 2002), does not apply. See Leslie v. Grupo
ICA, 198 F.3d 1152, 1156-59 (9th Cir. 1999) (reviewing de novo a district
court’s decision to disregard the plaintiff’s declaration as unbelievable and
therefore to award summary judgment to the defendant).
                         SEC v. PHAN                      10801
do not have a similar defect, as they involve the declarant’s
own actions. The personal actions of Phan and Yang are cen-
tral to Wu’s obligation to repay Hartcourt for the stock, espe-
cially as the record shows that Wu was basically a figurehead
rather than an independent actor.

   [11] Moreover, it is unremarkable that the defendants could
not otherwise corroborate their personal conversations. That
is likely to be the case regarding most conversations between
two people, and does not disqualify either participant from
testifying about the interchange — subject, of course, to a
credibility determination by the finder of fact. The district
court was thus wrong to disregard the declarations as “uncor-
roborated and self-serving.”

   Nor was it proper to disregard Phan’s and Yang’s declara-
tions based on our case law that treats declarations “flatly
contradict[ed]” by the declarant’s prior testimony as “sham-
[s].” Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 267 (9th
Cir. 1991). Phan’s deposition testimony that he directed his
staff to send Wu a promissory note with a six-month term
does not “flatly contradict” the declaration’s assertion that
Hartcourt could demand repayment in October 1999. The
deposition provided only cursory testimony about the terms,
and Phan stated in his deposition that he was unsure whether
such a promissary note was even actually sent. Moreover,
Yang’s testimony during the SEC’s investigative proceedings
— that Phan “sa[id] do this deal, sell that many shares and
whatever money you get send to [Hartcourt’s creditor]” — is
entirely consistent with the statements in Yang’s later declara-
tion that Phan demanded repayment with the understanding
that Wu would have to sell the stock.

   [12] The upshot is that for present purposes, we must take
the description of the option transaction contained in Yang’s
and Phan’s declarations as true. In other words, we must
accept that Phan modified the Option Agreement at Wu’s
request to replace the prepayment requirement with a $1.25
10802                         SEC v. PHAN
million loan obligation and that Wu initially received the
stock for compensatory purposes, and cannot in evaluating the
grant of summary judgment on the fraud issue rely on any
misstatement concerning those representations.

   [13] At the same time, it is quite clear that, by the time the
form was filed, Yang and Wu, by their own account, had
arranged to obtain the shares without paying up front, yet the
form stated otherwise. That means that in evaluating the
SEC’s summary judgment motion, we can rely on the one
undisputed misstatement in the S-8 registration form: the
assertion that Wu would be required to pay $1.25 million in
cash upon exercising her option to receive the one million
Hartcourt shares.

                                    B.

   [14] Given that understanding of the underlying facts, we
cannot conclude on the present summary judgment record
that, by failing to disclose the payment term change, the S-8
registration form contained a misstatement “obviously impor-
tant to an investor.” See TSC Indus., 426 U.S. at 450. The
SEC, which both bears the burden of proof and is the party
moving for summary judgment, submitted no evidence to the
district court demonstrating the materiality of the misstate-
ment about the payment terms.21 In light of that vacuum, we
cannot conclude that an average investor would have viewed
the difference between Hartcourt potentially selling shares for
a definite payment of $1.25 million in cash rather than defi-
nitely selling the shares in exchange for a promissory note of
$1.25 million as pertinent in evaluating the company. We
would have to engage in rank speculation to determine the
  21
    The SEC submitted a declaration from a financial professional about
the effect of a series of allegedly fraudulent press releases on Hartcourt’s
stock price in order to prove the materiality of those misstatements. As
noted, the SEC no longer argues Phan committed fraud by issuing those
press releases.
                          SEC v. PHAN                      10803
inference that investors would have drawn from knowing that
the transaction changed from a potential occurrence to a defi-
nite reality. But as the Supreme Court has observed, “[t]he
determination [of materiality] requires delicate assessments of
the inferences a ‘reasonable shareholder’ would draw from a
given set of facts.” Id.

   We do agree with the SEC’s observation in its brief that
“[a]ny reasonable investor would consider it important that
the company was giving away one million shares and getting
. . . nothing close to full payment for the shares,” (emphasis
added); see also Murphy, 626 F.2d at 653 (“Surely the materi-
ality of information relating to financial condition . . . is not
subject to serious challenge.”). But we must accept for present
purposes that Hartcourt received a $1.25 million promissory
note in exchange for the shares. Although financial logic dic-
tates that a $1.25 million promissory note is less valuable than
$1.25 million in cash, given the risks inherent in a loan and
the time value of money, the record contains no evidence
about the value of this $1.25 million note at the time the trans-
action was restructured. Therefore, we have no way to know
if Hartcourt’s decision to accept a loan as payment was the
equivalent of agreeing to get “nothing close to full payment
for the shares,” or represented only a minor decrease in pay-
ment that might well be an inconsequential change in the risk
that investors already realized they faced by investing in the
unproven company. Accordingly, we cannot say as a matter
of law, unaided by any evidence in the record, that an investor
would view the “total mix” of information about Hartcourt as
“significantly altered” by this misstatement, standing alone.
See Basic, 485 U.S. at 231-32; United States v. Bingham, 992
F.2d 975, 976 (9th Cir. 1993) (per curiam) (reversing a crimi-
nal conviction for violating Rule 10b-5 when the govern-
ment’s expert testimony about materiality was “far too
abstract to satisfy the materiality requirement in a particular
case,” because “[m]ateriality must be judged in the context of
the ‘total mix’ of information available to investors”).
10804                     SEC v. PHAN
   Indeed, the case for materiality is, if anything, weaker here
than it was in TSC Indus. In TSC Indus., the Supreme Court
refused to hold as a matter of law that the difference in value
of a payment in warrants worth $3.50 and warrants worth
$5.25 was material. Here, we do not even know the value of
the promissory note. Given that gap in the record — which
would turn on Wu’s financial circumstances, her credit
record, and the likely repayment schedule, among other things
— we cannot gauge the extent of the misrepresentation and so
cannot determine whether the difference in value between the
promissory note and $1.25 million in cash was greater, abso-
lutely or as a percentage of the represented value, than the dif-
ference in value in TSC Indus., the significance of which was
held to be a question for the trier of fact.

   The SEC, indeed, does not really argue that the materiality
of the one misstatement about payment terms — the only mis-
statement supported by the record when construed in the light
most favorable to Phan — was by itself sufficiently obvious
to warrant summary judgment. Instead, the SEC’s brief argues
only that importance of the “numerous misrepresentations and
omissions is ‘so obvious that reasonable minds could not dif-
fer,’ ” not that the single misstatement regarding the form of
the transaction meets that standard. (Emphasis added). Like-
wise, the single judicial opinion that the SEC cites to support
granting summary judgment on materiality, SEC v. Softpoint,
Inc., 958 F. Supp. 846 (S.D.N.Y. 1997), aff’d, 159 F.3d 1348
(2d Cir. 1998) (unpublished table decision), concerns no mis-
statement similar to the sole misstatement we may consider at
this juncture. True, in that case, the defendant’s “Form S-8
registrations misrepresented the stock issued . . . as a consul-
tant’s fee, when, in actuality, proceeds from the shares were
funnelled back to [the company].” Id. at 863. But, as we have
stressed, the record here, construed in the light most favorable
to the defendants, demonstrates that the stock was initially
issued to Wu as a consultant’s fee. No case, including Soft-
                               SEC v. PHAN                            10805
point, supports the conclusion that a single misstatement on
a somewhat peripheral aspect of a transaction is material.22

   In sum, whether Phan made a material misstatement of fact
in the original filing is a question for resolution at trial.
Although it may well be that, in fact, the transaction was a
capital-raising conduit from the outset and the contrary repre-
sentations on the S-8 form were material misstatements, or
that the admitted misstatements regarding the form of the
original transaction was indeed material, neither matter can
appropriately be decided on the present summary judgment
record.

                                    IV.

   Up to this point our analysis has assumed that we can con-
sider all the evidence the district court used in ruling on the
summary judgment motions. Phan also appeals, however, the
district court’s rejection of several evidentiary objections.

  In asking us to reverse the district court’s evidentiary rul-
ings Phan faces a heavy burden. A district court’s refusal to
exclude evidence in its consideration of summary judgment is
  22
    Aside from alleging that the S-8 form contained material misstate-
ments at the time it was filed, the SEC also makes a cursory argument that
Phan violated “general antifraud principles” (but no regulatory require-
ment) by failing to update the form to disclose the later capital-raising
resales. On this theory, Phan would be liable for securities fraud based on
the resale of Wu’s stock, notwithstanding the disputed record concerning
whether Phan intended her to be a capital-raising conduit when the S-8
form was filed.
   This argument, however, cannot be reconciled with our holding in the
opinion’s previous section that Phan violated Section 5 of the 1933 Act by
failing to file a new registration form at the time of Wu’s resales, because
the S-8 form was no longer effective. We do not understand how the
securities laws could simultaneously deem the S-8 form ineffective and
require Phan to update the form, and we have found no case law applying
a duty to update to a stock registration form when the registrant is not still
issuing stock pursuant to that form.
10806                       SEC v. PHAN
reviewed for an abuse of discretion and warrants reversal only
when the “evidentiary ruling was manifestly erroneous and
prejudicial.” Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir.
2002). Phan falls far short of meeting such a burden. His
arguments are meritless, and some border on frivolous.

   Phan’s broadest challenge concerns a declaration submitted
by SEC lawyer Nicholas Chung, which incorporated dozens
of interview transcripts, depositions, and documentary exhib-
its. Phan argues the declaration and its attachments must be
excluded because Chung neither had personal knowledge of
the attachments’ creation nor served as a record custodian at
the SEC. Excluding this declaration would leave no evidence
in the record supporting the SEC’s claims.

   Phan correctly notes that Rule 56(e) of the Federal Rules of
Civil Procedure requires that declarations used to support or
oppose summary judgment motions “shall set forth such facts
as would be admissible in evidence, and shall show affirma-
tively that the [declarant] is competent to testify to the matters
stated therein.” FED. R. CIV. P. 56(e). For summary judgment
declarations, however, “a proper foundation need not be
established through personal knowledge but can rest on any
manner permitted by Federal Rule of Evidence 901(b) or
902.” Orr, 285 F.3d at 774. With the exception of one tran-
script, discussed below, Phan presents no argument on appeal
that the documents attached to Chung’s declaration failed to
comply with Rules 901 and 902.23

   Phan does argue that the SEC failed to establish a sufficient
foundation for the transcript of Yang’s August 2001 inter-
view, conducted as part of a SEC investigation into a prior
case. That transcript lacked a court reporter’s certification
when originally submitted to the district court, but the SEC
  23
    Moreover, the district court thoroughly reviewed each attachment for
compliance with Rules 901 and 902 and excluded several it found to lack
the proper foundation.
                              SEC v. PHAN                            10807
later provided the certification by filing a declaration from the
court reporter. The later declaration was adequate. See FED. R.
CIV. P. 56(e) (“The court may permit affidavits to be supple-
mented . . . by . . . further affidavits.”).24

   Phan also objects to the admission of the transcript of
Yang’s 2001 interview because neither Phan nor his lawyer
was given an opportunity to attend it. Accordingly, Phan
argues, the transcript’s use violated the requirement in the
Federal Rules of Civil Procedure that depositions may be used
only “against any party who was present or represented at the
taking of the deposition.” FED. R. CIV. P. 32(a). An interview
given under penalty of perjury may, however, be treated as a
declaration — and therefore may be considered in ruling on
a summary judgment motion, FED. R. CIV. P. 56(e) — even
though Rule 32(a) prevents its use as a formal deposition.
Hoover v. Switlik Parachute Co., 663 F.2d 964, 966 (9th Cir.
1981); see also SEC v. Am. Commodity Exch., Inc., 546 F.2d
1361, 1369 (10th Cir. 1976) (holding that transcripts from a
SEC investigation may be considered in ruling on summary
judgment as the equivalent to a declaration).

                                    V.

   [15] Fully accepting Phan’s position that Wu received one
million shares of Hartcourt in exchange for a $1.25 million
loan to compensate Yang’s service as a consultant and resold
most of those shares to repay the loan, Phan is nonetheless lia-
ble under Section 5 for the unregistered resale of Hartcourt’s
stock. The district court therefore correctly granted summary
judgment in favor of the SEC on the Section 5 cause of
action. But the fact that this transaction differed from the
  24
    The district court did not err in admitting the transcript even if Phan
is correct that the certification erred by two or four pages in listing the
transcript’s length. This discrepancy by itself does not raise a significant
doubt concerning whether the transcript “is what its proponent claims.”
FED. R. EVID. 901(a).
10808                    SEC v. PHAN
arrangement Hartcourt detailed in registering those one mil-
lion shares with the SEC does not establish as a matter of law
— although it raises the distinct possibility — that Phan com-
mitted securities fraud by making a material misstatement.
We therefore reverse the grant of summary judgment in favor
of the SEC on these claims but affirm the denial of Phan’s
motion for summary judgment. Because the district court’s
award of penalties and injunctive relief against Phan was
partly based on the determination that he violated the anti-
fraud provisions, we also vacate that award except for the per-
manent injunction prohibiting Phan from violating Section 5.

  AFFIRMED in part; REVERSED in part; VACATED
in part. REMANDED for further proceedings consistent
with this opinion. Each party shall bear its own cost on
appeal.
