in 2005, the u.s. securities and exchange commission filed a lawsuit that accused him of misleading kmart investors prior to the company's bankruptcy in 2002. the s.e.c. originally sought $22 million from conaway. a jury found him liable in a trial four years later, in 2009. while he initially appealed the decision, conaway dropped his appeal in november 2010 and agreed to pay a $5.5 million settlement.