Based on previous comments it sounds like their business is fundamentally illegal anyway (prostitution?) and thus it's pointless for them to comply with SEC regulations. But this approach doesn't generalize.
For example, lots of drug dealers get busted on tax related charges. Being the pimps busted on securities laws isn't impossible, especially if you set that up as a slam-dunk case while making the other hard to prosecute.
Not commenting on their specific case, but that reasoning is dubious.
The SEC thing was probably unavoidable anyways.