Glisson Case SEC Brief

Case 2:09-cv-00104-LDG-GWF Document 105
Filed 04/02/12 Page 1 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
JOHN B. BULGOZDY, Cal Bar No. 219897 E-mail: bulgozdyj@sec.gov DAVID J. VAN HAVERMAAT, Cal. Bar No. 175761 E-mail: vanhavermaatd@sec.gov Attorney for Plaintiff Securities and Exchange Commission Rosalind R. Tyson, Regional Director Michele Wein Layne, Associate Regional Director John W. Berry, Regional Trial Counsel 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036 Telephone: (323) 965-3998 Facsimile: (323) 965-3908
UNITED STATES DISTRICT COURT DISTRICT OF NEVADA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. MARCO GLISSON, Defendant Case No. 2:09-cv-00104-LDG-GWF PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS TRIAL BRIEF Date: Time: Place: April 9, 2012 9:00 a.m. Courtroom 6B (Hon. Lloyd D. George)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 D. 5. 4. C. B. I. II.
TABLE OF CONTENTS Page INTRODUCTION ...........................................................................................1 STATEMENT OF EVIDENCE TO BE INTRODUCED AT TRIAL ...........3 A. Glissons Involvement With CMKM Before The Stock Was Deregistered (2003 To Late 2005) ................................................3 CMKMs Registration Was Revoked And Its Stock Delisted ..................................................................................................4 After CMKM Stock Was Deregistered And Delisted, Glisson Regularly Engaged In Transactions In CMKM Stock With Buyers And Sellers He Found Through The Internet ..................4 1. 2. Glisson Developed Methods For Buying CMKM Stock............6 Glissons Method For Selling Deregistered CMKM Shares ..........................................................................................8 Letters Of Instruction To 1st Global Show The Regularity Of Glissons Activity In Deregistered CMKM Stock ..............................................................................9 Bank Activity In Accounts Glisson Used For CMKM-Related Transactions Show The Regularity Of His Activity ..........................................................................10 Emails Produced By Glisson Provide Examples Of Glissons Solicitation Of Investors ......................................12
3.
Glisson Repeatedly Claimed That He Stopped His Activities In CMKM Shares, But Resumed Buying And Selling .......................13
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 C. B. III.
1.
In June 2006, Glissons Attorney Says Glisson Ceased His Activities, But Glisson Resumes In September 2006.........................................................................13 Glisson Swears To This Court In November 2009 That He Has No Intention Of Selling CMKM, Then Sells Billions Of Shares Beginning In Early 2010 ...................14
2.
E. Several Computers Glisson Used For CMKM Activities Were Lost Or Broken Before Documents Could Be Produced .....................14 LEGAL ARGUMENT ..................................................................................15 A. Glisson Violated Section 15(a)(1) Of The Exchange Act By Acting As An Unregistered Broker And Dealer ...........................15 1. Glisson Was A Dealer Of Unregistered CMKM Shares ........................................................................................17 Glisson Was A Broker Effecting Transactions In Unregistered CMKM Shares.....................................................21 Glisson Violated Section 15(a) Of The Exchange Act By Failing To Register As A Broker Or Dealer .......................24
2.
3.
Glisson Violated Section 5 Of The Securities Act By Offering To Purchase And Sell, And By Selling, Deregistered CMKM Stock .................................................................25 1. The Undisputed Evidence Establishes A Prima Facie Violation Of Section 5 By Glisson .................................25 Glisson Has The Burden Of Proving That He Is Entitled To Any Claimed Exemptions From Section 5 ............25
2.
Glisson Cannot Avail Himself Of A Reliance Of Counsel Defense ................................................................................................26
ii
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
D.
The Court Should Impose Appropriate Remedies, Including Injunctive Relief, Disgorgement, Prejudgment Interest Thereon, A Third Tier Civil Penalty, And A Penny Stock Bar ..........27 1. 2. Injunctive Relief Is Necessary And Appropriate ......................27 Glisson Should Be Ordered To Disgorge His Ill-Gotten Gains And Pay Prejudgment Interest ........................................29 The Court Should Impose A Third Tier Civil Penalty In The Amount Of $1.4 Million................................................30 Glisson Should Be Barred From Participating In Any Offering Of Penny Stock...................................................32
3.
4.
iii
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
TABLE OF AUTHORITIES Page CASES Couldock & Bohan, Inc. v. Societe Generale Sec. Corp. 93 F. Supp. 2d 220 (D. Conn. 2000) ................................................ 17, 18, 20 Eastside Church of Christ v. National Plan, Inc. 391 F.2d 357 (5th Cir. 1968) ............................................................ 17, 18, 22 Ernst & Ernst v. Hochfelder 425 U.S. 185 (1976).......................................................................................16 Joseph McCulley 1972-73 Transfer Binder Fed. Sec. L. Rep. (CCH) 78,982 (Aug. 2, 1972) .................................................................................22 Regional Properties, Inc. v. Financial and Real Estate Consulting Co. 678 F.2d 552 (5th Cir. 1982) .........................................................................17 SEC v. Abellan 2009 U.S. Dist. Lexis 113450 (W.D. Wash. Dec. 7, 2009) ..........................32 SEC v. Alliance Leasing Corp. 2000 WL 35612001 (S.D. Cal. Mar. 20, 2000) .............................................16 SEC v. Calvo 378 F.3d 1211 (11th Cir. 2004) .....................................................................29 SEC v. CMKM Diamonds, Inc. 2011 WL 3047476 (D. Nev. July 25, 2011) ..................................................25 SEC v. CMKM Diamonds, Inc. 635 F. Supp. 2d 1185 (D. Nev. 2009) ...........................................................30 SEC v. Deyon 977 F. Supp. 510 (D. Me. 1997) ....................................................................22
iv
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
SEC v. Earthly Mineral Solutions, Inc. 2011 WL 1103349 (D. Nev. March 23, 2011) ....................................... 21, 22 SEC v. Fehn 97 F.3d 1276 (9th Cir. 1996) .........................................................................28 SEC v. First Pacific Bancorp 142 F.3d 1186 (9th Cir. 1998) .......................................................................29 SEC v. Goldfield Deep Mines Company of Nevada 758 F.2d 459 (9th Cir. 1985) .........................................................................27 SEC v. Hansen 1984 WL 2413 (S.D.N.Y. Apr. 6, 1984) .......................................................23 SEC v. Holschuh 694 F.2d 130 (7th Cir. 1982) .........................................................................27 SEC v. Hughes Capital Corp. 917 F. Supp. 1080 (D.N.J. 1996), affd, 124 F.3d 449 (3d Cir. 1997) ..........29 SEC v. J.T. Wallenbrock & Assoc. 440 F.3d 1109 (9th Cir. 2006) .......................................................................29 SEC v. Kenton Capital, Ltd. 69 F. Supp. 2d 1 (D.D.C. 1998).............................................................. 21, 22 SEC v. Manor Nursing Ctrs., Inc. 458 F.2d 1082 (2d Cir. 1972) ........................................................................30 SEC v. Murphy 626 F.2d 633 (9th Cir. 1980) .................................................................. 26, 28 SEC v. National Executive Planners, Ltd. 503 F. Supp. 1066 (M.D.N.C. 1980) .............................................................22 SEC v. Offill 2012 WL 246061 (N.D. Tex. Jan. 26, 2012) .............................. 16, 18, 19, 21
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
SEC v. Phan 500 F.3d 895 (9th Cir. 2007) .........................................................................25 SEC v. Platforms Wireless International Corp. 617 F.3d 1072 (9th Cir. 2010) .......................................................................26 SEC v. Radical Bunny, LLC 2011 WL 1458698 (D. Ariz. April 12, 2011) ................................................16 SEC v. Ralston Purina Co. 346 U.S. 119 (1953).......................................................................................26 SEC v. Ridenour 913 F.2d 515 (8th Cir. 1990) .................................................................. 18, 19 SEC v. Softpoint, Inc. 958 F. Supp 846 (S.D.N.Y. 1997), affd 159 F.3d 1348 (2d Cir. 1998) .......25 SEC v. U.S. Pension Trust Corp. 2010 WL 3894082 (S.D. Fla. Sept. 30, 2010) ...............................................21 United States v. Evangelista 122 F.3d 112 (2d Cir. 1997) ..........................................................................27 Zubulake v. UBS Warburg LLC 229 F.R.D. 422 (S.D.N.Y. 2004) ...................................................................15
FEDERAL STATUTES Securities Act of 1933 Section 2(a)(1) [15 U.S.C. 77b(a)(1)] ..................................................................................25 Section 4(1) [15 U.S.C. 77d(1)] ......................................................................................26
vi
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Section 5 [15 U.S.C. 77e] .............................................................................. 26, 27, 28 Section 5(a) [15 U.S.C. 77e(a)].............................................................................. 1, 3, 25 Section 5(c) [15 U.S.C. 77e(c)].............................................................................. 1, 3, 25 Section 20(b) [15 U.S.C. 77t(b)] .......................................................................................27 Section 20(d) [15 U.S.C. 77t(d)] .......................................................................................30 Section 20(d)(2)(C) [15 U.S.C. 77t(d)(2)(C)] .............................................................................31 Securities Exchange Act of 1934 Section 3(a)(4)(A) [15 U.S.C. 78c(a)(4)(A)] ............................................................................21 Section 3(a)(5)(A) [15 U.S.C. 78c(a)(5)(A)] ............................................................................17 Section 3(a)(5)(B) [15 U.S.C. 78c(a)(5)(B)].............................................................................17 Section 3(a)(51) [15 U.S.C. 78c(a)(51)] ................................................................................32 Section 15 [15 U.S.C. 78o] ...........................................................................................21 Section 15(a) [15 U.S.C. 78o(a)] ........................................................... 1, 3, 16, 24, 27, 28 Section 15(a)(1) [15 U.S.C. 78o(a)(1)] ..................................................................................15
vii
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Section 21(d) [15 U.S.C. 78u(d)(1)] .................................................................................28 Section 21(d)(3) [15 U.S.C. 78u(d)(3)] .................................................................................30 Section 21(d)(3)(B)(iii) [15 U.S.C. 78u(d)(3)(B)(iii)] ......................................................................31 Section 21(d)(6) [15 U.S.C. 78u(d)(6)] .................................................................................32 Section 21(d)(6)(B) [15 U.S.C. 78u(d)(6)(B)] ............................................................................32
FEDERAL REGULATIONS Rule 3a51-1(d) [17 C.F.R. 240.3A51-1(d)] .........................................................................32
OTHER AUTHORITIES David A. Lipton, A Primer on Broker-Dealer Registration 36 Cath. U.L. Rev. 899 (1987) ......................................................................17
viii
Filed 04/02/12 Page 10 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
I.
INTRODUCTION Plaintiff Securities and Exchange Commission (Commission or SEC)
respectfully submits this trial brief in advance of the April 9, 2012 trial of its claims against defendant Marco Glisson. The Commission has charged Glisson with failing to register as a broker or dealer, as required by Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. 78o(a), and with offering for sale and selling unregistered securities of CMKM Diamonds, Inc. (CMKM), in violation of Sections 5(a) and (c) of the Securities Act of 1933 (Securities Act), 15 U.S.C. 77e(a) & (c). Many of the relevant facts are either undisputed, or have previously been admitted to by Glisson during sworn testimony, which narrows the issues to be decided at trial. It is undisputed that the registration of CMKMs stock was revoked in October 2005, and CMKM stock was delisted from trading. It is also undisputed that from December 2005 to May 2006, and from September 2006 to May 2007, Glisson bought and sold billions of shares of deregistered CMKM stock, in interstate commerce. In addition, it is undisputed that Glisson never registered with the Commission as a broker or a dealer, or associated with a broker or dealer. Given these undisputed facts, with respect to the Commissions Section 15 claim, the issue to be decided at trial is whether Glissons regular business of buying and selling CMKM stock after December 2005 made him a broker and/or a dealer such that he violated Section 15(a) of the Exchange Act. For the Section 5 claim, the undisputed facts establish the Commissions prima facie case that Glisson violated Section 5 when he purchased and sold unregistered CMKM stock in interstate commerce. As a result, the issue to be decided at trial for this claim is whether Glisson can prove he is entitled to an exemption from the registration provisions of Section 5(a) and (c) of the Securities Act because he contends he was not a dealer. 1
Filed 04/02/12 Page 11 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
In addressing both of these issues, the preponderance of the evidence will readily demonstrate that Glisson was both a broker and a dealer. The evidence will show that Glisson engaged in the business of effecting transactions in securities for his own account, and for the accounts of others, and Glisson was buying and selling CMKM as part of a regular business. Glisson solicited investors to buy and sell CMKM stock by posting on the Internet and in chat rooms, negotiated his purchases with sellers, and paid for CMKM shares from bank accounts he used for CMKM transactions. When an investor expressed interest in buying CMKM stock, Glisson sent them his instructions for purchases, which included a price list, a fee for each certificate, a requirement of payment in advance, and a demand for personal information including social security numbers. Glisson profited on the spread between his purchase price and his sale price. Other evidence will also establish that Glisson had a regular business in CMKM shares. There are numerous letters of instruction that Glisson sent to CMKMs transfer agent, to transfer billions of shares of CMKM from sellers to other third parties, to himself, or to his nominee. The regularity of Glissons business is also evidenced by bank records which confirm that Glisson was engaged in buying and selling CMKM stock on an almost daily basis when he was active. The evidence will show that over a roughly 15 month period, Glisson was in the middle of transfers of over 30 billion shares of CMKM stock, and collected over $4 million in revenues from sales of CMKM stock to over a thousand people. Glissons business was also profitable, since he controlled the spread, and a reasonable estimate of his profits is approximately $2,765,650. The evidence will show that Glisson transferred some CMKM shares into his name and resold them, thus qualifying as a dealer who traded for his own account. However, Glisson also arranged to transfer shares owned by third parties to other 2
Filed 04/02/12 Page 12 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
third parties, effectively acting as a broker. In both cases, Glisson acted as his own clearing house, receiving stock certificates, issuing instructions to cancel certificates and for new certificates, and delivering the new certificates to buyers, while also paying sellers and collecting from buyers. All of this evidence, much of undisputed or stipulated, will show that Glisson was a broker and/or dealer in CKMM stock. Therefore, the evidence will show that Glisson violated Section 15(a) of the Exchange Act by acting as an unregistered broker and dealer of delisted CMKM stock, and that he violated Section 5(a) and (c) of the Securities Act by engaging in unregistered transactions of that stock. The Commission thus asks that the Court (1) issue findings of fact and conclusions of law that these violations occurred; (2) issue a permanent injunction against future violations of these provisions by Glisson; (3) order Glisson to disgorge his ill-gotten gains of approximately $2,765,650, and pay prejudgment interest thereon in the amount of $670,574.79; (4) order Glisson to pay a third tier civil penalty in the amount of $1.4 million; and (5) impose a penny stock bar against Glisson. II. STATEMENT OF EVIDENCE TO BE INTRODUCED AT TRIAL A. Glissons Involvement With CMKM Before The Stock Was Deregistered (2003 To Late 2005) Glisson first became aware of CMKM in late 2002 or early 2003, through the Internet. In late 2003 or early 2004, Glisson decided to purchase some CMKM stock, which he did through his stock brokerage account at Ameritrade. CMKM stock had the ticker symbol CMKX, and persons who followed CMKM were sometimes referred to as CMKX-ers. After he purchased CMKM stock, he followed it on the Internet. Glisson also monitored Internet chat rooms and press releases issued by CMKM. Glisson became active in the CMKM community of shareholders, both over the Internet and in person. Glisson regularly visited 3
Filed 04/02/12 Page 13 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Internet chat rooms related to CMKM, where he used the screen name Deli Dog or Deli. Glisson apparently got this name from his then-wifes restaurant in Janesville, Wisconsin, which was called the Deli Dog House. In addition, Glisson attended CMKM-sponsored parties and events at various race car events. At some point in time, Glisson was no longer able to trade CMKM stock through Ameritrade, and he started trading CMKM stock through an account at ETrade. Around October or November 2005, Glisson could no longer trade CMKM stock through his E-Trade account. B. CMKMs Registration Was Revoked And Its Stock Delisted
On October 25, 2005, the Commission issued an order revoking the registration of the securities of CMKM. At all times subsequent to October 28, 2005, CMKM has not had a registration statement filed and declared effective under the Securities Act or the Exchange Act.1 Glisson testified that he learned though the Internet that CMKMs registration had been revoked and the stock was delisted on the day the order was posted. Glisson understood that CMKM was no longer tradeable, and it could not be bought or sold on the open market anymore. At the time CMKMs registration was revoked and it was delisted, Glisson owned millions of shares of CMKM, which, as a result of deregistration and delisting, were deemed worthless. C. After CMKM Stock Was Deregistered And Delisted, Glisson Regularly Engaged In Transactions In CMKM Stock With Buyers And Sellers He Found Through The Internet It is undisputed that from December 2005 through May 2007, Glisson bought and sold shares of CMKM securities in interstate commerce, and using
See Joint Pretrial Order, Section IV (Plaintiffs Facts Not Admitted and Not Contested) at 4-5. 4
Filed 04/02/12 Page 14 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
means and instrumentalities of interstate commerce to effect such transactions.2 According to Glissons sworn testimony, at some point in late December 2005, he contacted Helen Bagley,3 who was at the time the owner of CMKMs stock transfer agent 1st Global Stock Transfer, LLC (1st Global). 1st Globals offices were in Las Vegas, Nevada, while at this time Glisson lived in Janesville, Wisconsin. Glisson testified that he did not recall the exact conversation he had with Bagley, except that he asked for instructions on how to transfer a CMKM certificate. Bagley gave Glisson instructions on how to do it, and directed him to 1st Globals internet site. Glisson admits that he did not seek legal advice on whether it was legal to buy or sell unregistered CMKM securities at this time, or at any time. Around December 2005, Glisson began negotiating purchases and sales of CMKM stock with persons he found through the Internet. Glisson visited various Internet chat rooms, such as Pal Talk or Pro Board, and he exchanged posts about CMKM using the Deli Dog or Deli screen name. There was a chat room called the 66 Board, which was for people who were negative on CMKM stock, and Glisson posted on the 66 Board that he was willing to buy CMKM stock. Glisson visited other chat rooms that were for people who were positive on CMKM stock, such as Pro CMKX and The Belgiums Room, and in those rooms Glisson posted that he was willing to sell CMKM stock. In his posts, Glisson provided his email address and his telephone number. Glisson typically bought deregistered CMKM shares for $0.0001 per share, which he called trip one, although he sometimes paid $0.0002 (trip two) per share
2 Answer of Marco Glisson at 4, 11, 12, 15, 16 (Docket No. 9); Joint Pretrial Order, Section III (Admitted Facts) at 21, 38 (Docket No. 67). 3 Bagley was found to have violated Section 5 of the Securities Act in connection with her role in the distribution of CMKM stock. See SEC v. CMKM Diamonds, Inc., Case No. 2:08-cv-0437-LRH-RJJ, 2011 WL 3047476 (D. Nev. July 25, 2011).
Filed 04/02/12 Page 15 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
or more. In one large transaction, Glisson bought 7 billion CMKM shares $310,000, or about $0.00004 (quad four) per share. Glisson set the price at which he would sell CMKM shares, and he charged $0.0002 (trip two) per share, or higher. Glisson made a profit on the spread between his purchase price and his sales price. Glisson transferred CMKM shares by sending letters of instruction to 1st Global. These letters of instruction show that, sometimes, Glisson instructed the transfer agent to transfer stock owned by a third party, to various other third party purchasers, without Glisson ever taking title to the stock. In other letters, Glisson instructed the transfer agent to transfer CMKM stock into his name, or to a nominee such as his girlfriend (now wife), Thidarat Tungwongsathong. In yet other letters, Glisson transferred CMKM shares held in his name to various third parties. In all cases, Glisson sent the certificates to be cancelled to the transfer agent with instructions to issue new certificates with names and amounts, and instructed the transfer agent to give him the new CMKM certificates. Glisson paid his sellers from his bank accounts, using wire transfers or cashiers checks, and collected money from his buyers for CMKM shares, as well as a $50 fee per certificate. Glisson instructed buyers either to wire money into a designated account, or to send a check or money order payable to Glisson or to Tungwongsathong. After getting the new certificates from the transfer agent, Glisson made copies of them and filled out forms to register the certificates with something called the CMKM Task Force. Glisson then sent the certificates to his customers. 1. Glisson Developed Methods For Buying CMKM Stock
Glisson developed methods for buying CMKM stock, such as using forms to memorialize his purchases, and using finders, although Glissons methods changed over time. For example, between December 2005 and May 2006, Glisson used written agreements for his purchases of CMKM stock, which were titled Stock 6
Filed 04/02/12 Page 16 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Sell-Purchase Agreement.4 Glisson also had sellers execute letters waiving all rights to any dividends or cash settlements associated with the CMKM stock that he was purchasing.5 During the period from December 2005 through April or May 2006, there were various rumors that circulated in Internet chat rooms of a pending pay-out to CMKM shareholders. Glisson purportedly used these waiver letters to cut-off claims of his sellers to any such rumored payments. At least two persons, whom Glisson claims he met only through the Internet and telephone, found shares for Glisson to buy: Steve Brewer and Michael Wright. Glisson testified that he paid Wright several hundred thousand dollars for stock Wright found, which is confirmed by bank records showing substantial payments to Wright over a period of time, while letters of instruction to 1st Global do not show corresponding transfers of stock in Wrights name. Brewer found large amounts of CMKM stock that was owned by people who had been affiliated with CMKM. During 2006, Brewer supplied Glisson with several billion shares of stock that were owned by a man named Rendal Williams or a company associated with Williams named Monte Verde International Holdings LLC. Bank records do not show any payments by Glisson to Williams or Monte Verde, and Glisson apparently paid Brewer for the shares. Glisson testified that he knew Williams was the president of a company affiliated with CMKM called U.S. Canadian Minerals.
See Joint Pretrial Order, Section III (Admitted Facts) at 22. A number of Joint Exhibits are contracts that Glisson used when he purchased CMKM stock from third parties, such as Joint Exhibit 3233, which is a January 24, 2006 Stock Sell-Purchase Agreement between Marco Glisson and Eiji Toda and Sakae Toda. Other examples of such agreements are Joint Exhibits 3234, 3235, 3236, 3237, 3238, 3243, 3245, 3246, 3091, 3092, 3252, and 3253. 5 See Joint Pretrial Order, Section III (Admitted Facts) at 22. A number of Joint Exhibits are copies of such letters, such as Joint Exhibit 3231, which is a December 27, 2005 letter from Leor Zolman. Other examples of such letters are Joint Exhibits 3232, 3239, 3240, 3241, 3242, 3244, 3247, 3248, 3250, and 3254.
4
Filed 04/02/12 Page 17 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Brewer also arranged for Glisson to buy 7 billion shares of CMKM stock from Urban Casavant, the Chairman of the Board, President, and CEO of CMKM until mid-2006. Glisson paid $310,000 for these shares using cashiers checks drawn on Tungwongsathongs account at Bank of America. Glissons purchase of a large block of CMKM shares from Casavant apparently contradicts Glissons sworn statement to this Court, in opposition to the SECs motion for summary judgment, that Glisson never had any business relationship with Casavant: I have never had any business or other relationship with CMKM and/or its management or related persons including without limitation John Edwards, Urban Casavant, Brian Dvorak, Ginger Gutierrez and/or James Kinney.6 2. Glissons Method For Selling Deregistered CMKM Shares
Glisson admittedly followed a routine for his sale of deregistered CMKM shares, which was necessary in view of the large volume of transactions Glisson engaged in on a regular basis. When a prospective purchase contacted him, Glisson typically sent them an email with (1) his contact information, (2) a price schedule setting forth the prices he charged to sell CMKM, between trip 3 ($0.0003) and trip 25 ($0.00025) per share depending on the number of shares being purchased, and (3) payment instructions including either wire transfer information or an address to mail payment. Glisson typically required payment from a purchaser before he would consummate a sale.7 In addition to the price of the stock, Glisson charged a fee of $50 for each certificate that a customer wanted issued. After receiving payment, Glisson sent a letter of instruction to CMKMs stock transfer agent, 1st Global, with instructions to cancel certain certificates and
See Plaintiffs Exhibit 141(Declaration of Marco Glisson in Support of his Opposition to SECs Motion for Summary Judgment, dated November 13,2009, at 4 (Docket No. 28). 7 See Joint Pretrial Order, Section III (Admitted Facts) at 24, 25.
6
Filed 04/02/12 Page 18 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
to issue new certificates to the persons identified by Glisson in the letter of instruction. Glisson instructed 1st Global to either mail the certificates to him or to hold them for pick-up.8 As an additional service for his customers, Glisson registered the new CMKM certificates with the CMKM Task Force.9 The CMKM Task Force was a group affiliated with CMKM; it was not a governmental agency, or affiliated in any way with any governmental agency. 3. Letters Of Instruction To 1st Global Show The Regularity Of Glissons Activity In Deregistered CMKM Stock The vast majority of Glissons activity in deregistered CMKM stock after December 2005 was not transacted through a registered broker or dealer, so there are no reliable third party records of Glissons stock transactions. However, the letters of instruction that Glisson sent to 1st Global provide substantial evidence of the regularity of Glissons business in CMKM shares.10 In the six month period from December 2005 to May 2006, Glisson sent over 70 letters of instruction to 1st Global to transfer more than 8 million CMKM shares.11 Glisson produced nineteen (19) letters of instruction that he sent to 1st Global during the four month period from September 2006 to January 25, 2007. Although Glisson engaged in transactions in CMKM stock after January 25, 2007, he did not produce any letters to 1st Global after that date. The letters of instruction for this four-month period from September to January show that Glisson instructed CMKMs transfer agent to re-issue certificates for over 25
See Joint Pretrial Order, Section III (Admitted Facts) at 14, 26. 9 See Joint Pretrial Order, Section III (Admitted Facts) at 28, 29. 10 Glissons production of letters of instruction to 1st Global does not encompass the universe of his transactions. Glisson did not produce any letters of instruction for his CMKM transactions that occurred after January 25, 2007. 11 See, e.g., Plaintiffs Exhibit 509-1 (summary chart of letters 12-05 to 5-06); see also, e.g., Joint Exhibits 3042 to 3085.
8
Filed 04/02/12 Page 19 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
billion shares to over a thousand customers.12 On average, Glisson sent over two letters each week to the transfer agent during the 10 months period for which we have transfer letters. On some days, Glisson sent several letters of instruction to the transfer agent.13 At some times, Glisson sent letters more frequently: for example, he sent a total of four letters dated November 1, 2006; November 2, 2006; and November 7, 2006. In these letters, Glisson directed the transfer of 6 billion CMKM shares to over 400 people.14 Just twenty days later, in a November 27, 2006 letter of instruction, Glisson transferred 1,107,299,000 CMKM shares held in his name to over 190 different buyers.15 4. Bank Activity In Accounts Glisson Used For CMKMRelated Transactions Show The Regularity Of His Activity Between December 2005 and May 2007, Glisson used at least four different bank accounts for his CMKM transactions: three accounts at Blackhawk Community Credit Union (BCU), located in Janesville, Wisconsin; and a fourth account at Bank of America (BofA), in Las Vegas, Nevada. Glisson used different accounts at different times, depending on his location and his relationship with his ex-wife, Alma Padilla. In total, Glisson generated over $4 million in deposits into these four accounts from sales of CMKM stock during the relevant period.16 From December 2005 to May 2006, Glisson used two BCU accounts for CMKM related transactions: (1) a joint account he held with his then-wife, Alma See Plaintiffs Exhibit 509-2. 13 For example, Glisson sent seven (7) separate letters of instruction to 1st Global dated December 15, 2005; and he sent four (4) dated February 10, 2006. See, e.g., Plaintiffs Exhibit 509-1 (stock transfer letter summary). 14 See Plaintiffs Exhibit 509-2; Joint Exhibits 3008, 3009, 3010, 3018. 15 See Joint Exhibit 3019. 16 See Plaintiffs Exhibit 508-5.
12
10
Filed 04/02/12 Page 20 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Padilla, with an account number that ended in 8307 (BCU 8307 Account); or (2) an account held in his then-wifes name, Alma Padilla, with an account number that ended in 3788 (BCU 3788 Account). In May 2006, to keep his CMKM transactions away from Ms. Padilla, Glisson closed the joint account, BCU 8307 Account, and opened an account in his name at BCU, which account number ended in 7650 (BCU 7650 Account).17 Evidence at trial will show that there were regular CMKM related deposits and withdrawals into the three BCU accounts during the period from December 2005 to May 2006, and into the BCU 7650 Account from September 2006 to November 2006 with almost daily activity during that period.18 CMKM related deposits into BCU 3788 Account were $116,637.37; into BCU 8307 Account were $904,628.77; and into the BCU 7650 Account were $1,056,528.33.19 On or about October 29 or 31, 2006, Glisson abruptly left Janesville, Wisconsin, and moved to Las Vegas, where he met a woman named Thidarat Tungwongsathong in a Starbucks. On or about November 17, 2006, Glisson transferred $105,000 to a BofA bank account that had been held in the name of Tungwongsathong, but to which Glisson had been added to as a payable on death beneficiary an account that ends with the four digits 9145 (the BofA 9145 Account). Thereafter, Glisson told people who wanted to purchase CMKM stock to send their payments to Tungwongsathong, and funds were deposited into the BofA 9145 Account. Between November 2006 and May 2007, total CMKMSee Joint Pretrial Order, Section III (Admitted Facts) at 32, 33 (regarding the 8307 and 7650 accounts). 18 Plaintiff has prepared summary charts showing Glissons CMKM related bank activity, letters of instruction, and email activity, for the two periods, which show almost daily activity. See Plaintiffs Exhibits 529 and 530. This summary is consistent with Glissons claim that he talked to CMKM shareholders every day. 19 See, e.g., Plaintiffs Exhibit 508-5, which is a summary of Glissons CMKM related deposits by account.
17
11
Filed 04/02/12 Page 21 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
related deposits into the BofA 9145 Account were $2,332,841.18 not including the $105,000 from Glisson.20 Again, the volume of deposits, in terms of amount and individual payments that were deposited, shows the regularity of Glissons CMKM transactions. 5. Emails Produced By Glisson Provide Examples Of Glissons Solicitation Of Investors Glisson produced a limited amount of email correspondence that he had with persons about CMKM. Glissons production of emails covered a limited time period, from around December 2005 to May 2006, and Glisson did not produce all communications for that time period because the laptop he used purportedly went missing shortly after he was subpoenaed by the SEC. However, the limited universe of emails available shows how Glisson solicited investors to buy CMKM stock. In an email dated February 9, 2006, Glisson wrote a prospective purchaser: I would love to work with you on this, once in a life time stock, the best I can do for 5,000,000 shares of CMKX is 2,000, plus there is a 50.00 cert [sic] fee from the T/A. so the total would be 2050.00, and I feel we may be running out of time on this please move on it quickly. In a subsequent email in the chain, Glisson wrote: the more you buy the better the price, I can 10,000,000 for 3,000 plus 50.00 cert fee, that the best I can do, we are running out of shares, what a pay off it will be, and time is running out and getting low on shares. In a subsequent email in the same chain, Glisson wrote: when I get the cert back I will send it to you and do the paper work for the CMKX Task Force, all you will have to do is wait on any payments or div, we will get, it be send to this address of record. 21 In a January 13, 2006 email, Glisson instructed a potential purchaser to get
20 21
See Plaintiffs Exhibit 508-5. See Joint Exhibit 3086. 12
Filed 04/02/12 Page 22 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
the paper work to him ASAP the faster the better and we may be running out of time, if they payout some type of cash payment in the next 30 to 60 days would be great for all of us.22 In an April 20, 2006 email to another potential purchaser, Glisson wrote: Iam [sic] been told the deal done, just waithing [sic] on every one to sign, I think we will see cash by the end of May, no later than June, I sure hope so for all of us CMKXer, just let me know ASAP because Im running out of shares for sell [sic]. In an earlier email in that chain, Glisson wrote: If you know of any one [sic] else wanting shares let me know, I only have a few left.23 D. Glisson Repeatedly Claimed That He Stopped His Activities In CMKM Shares, But Resumed Buying And Selling On at least two occasions, in response to actions by government agencies, Glisson or his attorney represented that Glisson ceased his activities in CMKM shares, but Glisson then resumed his activities a short time later. 1. In June 2006, Glissons Attorney Says Glisson Ceased His Activities, But Glisson Resumes In September 2006 In March and April 2006, Glisson was contacted by the SEC and the Wisconsin Department of Financial Institutions (DFI) concerning his CMKM stock activities. Glisson retained attorney Terry Nelson, of Foley & Lardner, who wrote letters responding to the DFI and the SEC. In a June 6, 2006 letter to the DFI, Mr. Nelson wrote: Mr. Glisson has ceased such activities.24 In a letter to the SEC dated July 7, 2006, Mr. Nelson sent the SEC a copy of his letter to the DFI.25
22
25 26
23 24 25
See Joint Exhibit 3088. See Joint Exhibit 3090. See Plaintiffs Exhibit 9. See Plaintiffs Exhibit 8. 13
Filed 04/02/12 Page 23 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
26
However, contrary to the representation made by his attorney, Glisson resumed his activities in CMKM around September of 2006. When asked about this during testimony, Glisson testified if someone wanted him to stop buying and selling CMKM stock, then they needed to issue me a cease and desist order. 2. Glisson Swears To This Court In November 2009 That He Has No Intention Of Selling CMKM, Then Sells Billions Of Shares Beginning In Early 2010 In opposition to plaintiffs motion for summary judgment, Glisson promised the Court, in a sworn declaration, dated November 13, 2009, and filed with the Court on November 16, 2009, that he had no intention to purchase or sell any shares of any public company including without limitation CMKM at any time in the future; and I will so testify in person at the trial of this case where I can demonstrate to the satisfaction of the Court that I mean what I say about such future conduct.26 Shortly after Glissons declaration was filed by his attorney, and while plaintiffs motion for summary judgment was under submission, Glisson resumed selling CMKM shares. Glisson sold billions of CMKM shares during a few short months in 2010, and realized gross proceeds of approximately $1.6 million. Glisson did not advise the Court that he had reneged on his sworn statement and promise to the Court while his motion was pending, and indeed, seeks to exclude evidence of his 2010 conduct from the trial. E. Several Computers Glisson Used For CMKM Activities Were Lost Or Broken Before Documents Could Be Produced The Commission issued a subpoena to Glisson on March 15, 2007, which required Glisson to produce documents and testify. Glisson printed out about 176 See Plaintiffs Exhibit 141 (Declaration of Marco Glisson in Support of his Opposition to SECs Motion for Summary Judgment, dated November 13,2009, at 74 (Docket No. 28). 14
Filed 04/02/12 Page 24 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
pages of emails and other documents at some point after he received the subpoena. However, shortly thereafter, in May 2007, Glisson claimed that his laptop computer went missing from his vehicle at a race event he was attending in Rockingham, North Carolina. Glisson testified that the computer had CMKM related documents on it when it went missing, and which may not have been printed. Glisson testified that his ex-wife, Alma Padilla, had misplaced another laptop that he would have used prior to October 2006, and would not let him have access to the desktop computer he left in Wisconsin. At his deposition in 2011, Glisson reported that the laptop computer he had used for the prior couple of years had crashed and the hard drive burned up in mid-December 2010 at about the time that the Commission was moving to reopen discovery. Glisson testified that as a result he was able to recover very little from that laptop. Glissons failure to retain or secure these computers made it impossible for Glisson to comply with his obligations to preserve and then produce all relevant documents in response to validly issued subpoenas.27 III. LEGAL ARGUMENT A. Glisson Violated Section 15(a)(1) Of The Exchange Act By Acting As An Unregistered Broker And Dealer Glisson admits that he never registered as a broker or dealer, or associated with a broker or dealer, in connection with his purchases and sales of CMKM stock from December 2005 through May 2007.28 Section 15(a)(1) of the Exchange Act provides:
See, e.g., Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) (giving jury instruction that jury is to take adverse inference from fact that party did not preserve relevant emails). 28 See Answer at 3; Joint Pretrial Order, Section III (Admitted Facts) at 39, 40.
27
15
Filed 04/02/12 Page 25 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
It shall be unlawful for any broker or dealer which is either a person other than a natural person or a natural person not associated with a broker or dealer which is a person other than a natural person (other than such a broker or dealer whose business is exclusively intrastate and who does not make use of any facility of a national securities exchange) to make use of the mails or any means of interstate commerce to effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security (other than an exempted security or commercial paper, bankers acceptances, or commercial bills) unless such broker or dealer is registered in accordance with subsection (b) of this section. 15 U.S.C. 78o(a)(1). Scienter is not an element of a violation of Section 15(a). See SEC v. Offill, 2012 WL 246061, at *5 (N.D. Tex. Jan. 26, 2012); SEC v. Radical Bunny, LLC, Case No. CV-09-1560-PHX, 2011 WL 1458698, at *6 (D. Ariz. April 12, 2011) (citing SEC v. Alliance Leasing Corp., No. 98-CV-1810-J (CGA), 2000 WL 35612001, at *6 (S.D. Cal. Mar. 20, 2000)). The broker-dealer registration requirement of the Exchange Act is intended to protect investors against manipulation of stock prices through regulation of transactions upon securities exchanges and in over-the-counter markets. See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195 (1976) (citing S. Rep. No. 792, 73d Cong., 2d Sess., 1-5 (1934)). The requirement that brokers and dealers register is of the utmost importance in effecting the purposes of the Exchange Act. The registration requirement enables the SEC to exercise discipline over those who may engage in the securities business and it establishes necessary standards with respect to training, 16
Filed 04/02/12 Page 26 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
experience, and records. See, e.g., Regional Properties, Inc. v. Financial and Real Estate Consulting Co., 678 F.2d 552, 561 (5th Cir. 1982) (citing Eastside Church of Christ v. National Plan, Inc., 391 F.2d 357, 362 (5th Cir. 1968)). Many legitimate brokerage firms operate as both brokers and dealers, and because both brokers and dealers are subject to the registration requirements under the federal securities laws, the term broker-dealer is frequently used in the securities industry almost interchangeably with the terms broker and dealer, with little distinction given to the different type of trading activities involved. See Couldock & Bohan, Inc. v. Societe Generale Sec. Corp., 93 F. Supp. 2d 220, 223 n.1 (D. Conn. 2000) (citing David A. Lipton, A Primer on Broker-Dealer Registration, 36 Cath. U.L. Rev. 899, 909-10 (1987)). The Commission will establish by a preponderance of the evidence that Glisson was both a broker and a dealer. Glisson does not dispute that he did not register with the Commission as either a broker or a dealer. Therefore, a finding that he violated Section 15(a)(1) of the Exchange Act is warranted. 1. Glisson Was A Dealer Of Unregistered CMKM Shares
The evidence will establish that Glisson was a dealer. Section 3(a)(5)(A) of the Exchange Act defines the term dealer: In General.The term dealer means any person engaged in the business of buying and selling securities for such persons own account through a broker or otherwise. 15 U.S.C. 78c(a)(5)(A). Section 3(a)(5)(B) further provides: Exception for Person Not Engaged in the Business of Dealing.The term dealer does not include a person that buys or sells securities for such persons own account, either individually or in a fiduciary capacity, but not as part of a regular business. Several courts have explained that determining whether someone is engaged in the business of a dealer is the regularity of [his] participation in the 17
Filed 04/02/12 Page 27 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
buying and selling of securities for his own account. See, e.g., SEC v. Offill, 2012 WL 246061, at *7. See also SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990); Eastside Church of Christ v. National Plan, Inc., 391 F.2d 357 (5th Cir. 1968); Couldock & Bohan, Inc. v. Societe Generale Sec. Corp., 93 F. Supp. 2d 220 (D. Conn. 2000). In applying the test of what constitutes a dealer, one court addressed an analogous situation to Glissons in Couldock & Bohan, 93 F. Supp. 2d 220. In that case, plaintiff was a Connecticut corporation in the business of arranging purchases and sales of non-equity securities. Plaintiff contended that it was not required to register as a broker or dealer because it arranged matched purchases and sales by others. In these matched transactions, the seller knew the plaintiff as the purchaser and delivered the securities to the plaintiffs account; and on the other side of the transaction, the buyer also knew the plaintiff as the seller and delivered funds to the plaintiffs account. In other words, like Glisson, the plaintiff in Couldock & Bohan was in the middle of the transaction. The court explained why plaintiffs actions under such circumstances qualified it as a dealer as defined in the Exchange Act: In Plaintiffs transactions, however, the buyer and seller were never put in contact with each other, either directly or indirectly through their own clearing brokers. It is clear that Plaintiff was not merely matching buyers and sellers, but rather was placing itself squarely in the middle of each transaction in order to reap the profits from the spread, i.e., the price difference between the buy and sell sides of the transactions, for its own account. The Court thus has no difficulty in discerning from the undisputed facts that Plaintiff was a buyer and seller of securities for its own 18
Filed 04/02/12 Page 28 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Id. at 229.
account as part of its regular business, and thus was a dealer of securities as defined in the Exchange Act.
The decision in SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990), is also directly applicable to this case. In Ridenour, over a two year period between 1979 and 1981, defendant Ridenour effected on his own behalf over 100 matched transactions in which he would buy a security from a client, and then resell the same security within a short period of time at a profit. Id. at 516. The Eighth Circuit found Ridenours arguments that he was not required to register as a broker-dealer to be unavailing, because the level of activity over 100 matched transactions in two years made him more than an active investor. Id. at 517. Likewise, in SEC v. Offill, the defendant regularly bought and sold securities for his own account in transactions involving a substantial number of shares and money more than 3 million shares of two issuers for more than $250,000. The court found that such activity was not that of a person buying and selling as an individual investor making isolated transactions, but rather the only conclusion was that defendant was 'engag[ing] in the business of buying and selling securities, and was therefore a dealer under Section 3(a)(5) of the Exchange Act. SEC v. Offill, 2012 WL 246061, at *9. The evidence to be introduced at trial, as well as evidence from the Joint Exhibits, will establish that Glissons conduct meets the statutory definition of a dealer because he did a regular business in CMKM securities. Glissons letters of instruction to 1st Global establish the regularity of Glissons business by showing how often Glisson was ordering transfers CMKM shares (several times a day on some days, and several times a week in some weeks), the volume of shares Glisson was buying and selling (over 30 billion), and the number of people with whom 19
Filed 04/02/12 Page 29 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Glisson was transacting shares (over 1,000). The evidence at trial will also establish that Glisson developed a regular method for dealing with prospective buyers. Glisson sent prospective buyers his price list, informed them that he charged a fee for each certificate, required payment in advance, and provided the additional service of registering certificates with the CMKM Task Force. Although profitability is not one of the criteria for being a dealer, as the Couldock court observed, putting oneself in the middle of stock transactions and collecting the spread is another sign that a person is a dealer. Glisson was buying low and selling high wherever possible.29 Glisson set the price at which he would buy, and the price at which he would sell, and his profit was the spread or his mark-up. Glisson self-cleared his purchases and sales, handling the final exchange of securities for cash on delivery.30 Therefore, Glissons activity establishes that his trading in CMKM was more than just a hobby, or conduct of an active investor.31 Glisson bought and sold billions of shares to thousands of people, self-cleared the transactions, and collected millions of dollars, all in a stock that could not be bought and sold in the open market. Thus, Glisson was a dealer for the purposes of the Exchange Act. /// ///
Answer at 11, 12. 30 Clearing, in the context of securities, consists of the comparison of the details of a transaction between brokers prior to settlement, and the final exchange of securities for cash on delivery. Couldock &Bohan, 93 F. Supp. 2d at 223 n.4 (citing Dictionary of Finance and Investment Terms, 88-89 (Downes & Goodman, eds. 4th ed. 1995). 31 It is unclear how Glissons transactions in deregistered shares of CMKM would ever qualify as activities of a normal investor, since CMKM stock was not tradeable, but for Glisson setting himself up as a broker-dealer in CMKM stock.
29
20
Filed 04/02/12 Page 30 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
2.
Glisson Was A Broker Effecting Transactions In Unregistered CMKM Shares
Section 3(a)(4)(A) of the Exchange Act defines the term broker: In General.The term broker means any person engaged in the business of effecting transactions in securities for the accounts of others. 15 U.S.C. 78c(a)(4)(A). As with the definition of dealer, Section 3 of the Exchange Act does not specifically define the phrase engaged in the business of a broker, and similarly, various courts have described engaged in the business of a broker as effecting transactions in or buying and selling, securities. Offill, 2012 WL 246061, at *7. One court has held that regularity of participation is the primary indicia of being engaged in the business of a broker. Id. (citing SEC v. Kenton Capital, Ltd., 69 F. Supp. 2d 1, 12 (D.D.C. 1998)). Regularity of participation can be shown by such factors as the dollar amount of securities sold, and the extent to which advertisement or investor solicitation wee used. Id. The Exchange Act also does not define effecting transactions for the purposes of being a broker. In determining whether a person effected transactions, courts consider several factors, such as whether the person (1) solicited investors to purchase securities, (2) was involved in negotiations between the issuer and the investors, and (3) received transaction-related compensation. Id. (citing SEC v. Earthly Mineral Solutions, Inc., Case No. 2:07-cv-1057-JCM, 2011 WL 1103349, at *3 (D. Nev. March 23, 2011)). See also SEC v. U.S. Pension Trust Corp., 2010 WL 3894082, at *21 (S.D. Fla. Sept. 30, 2010) (listing 11 factors courts may consider when determining whether someone is a broker). Moreover, when assessing whether someone is considered a broker, courts have concluded that many of the activities that signify that one is a dealer under the federal securities laws also establish that one is a broker under the federal 21
Filed 04/02/12 Page 31 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
securities laws. For example, in Eastside Church of Christ v. National Plan, Inc., 391 F.2d at 362, after finding that the evidence showed conclusively that defendant was a broker, the Fifth Circuit addressed whether it was also a dealer. The Fifth Circuit found that the evidence that defendant bought and sold church bonds for its own account, and sold some bonds to others, demands a finding that defendant was a broker and a dealer: National purchased many church bonds prior to the ones in question for its own account as part of its regular business and sold some of them. Thus National was a broker and a dealer within the meaning of the [Exchange] Act. Id. In addition, courts have stated that regularity of participation is the primary indicia of being engaged in the business of being a broker, with courts looking to the same factors for brokers as they do for dealers. SEC v. Kenton Capital, Ltd., 69 F. Supp. 2d 1, 12 (D.D.C. 1998). There is no specific dollar amount of transactions that is necessary to qualify as a broker, or level of solicitation. See, e.g., SEC v. Kenton Capital, 69 F. Supp. 2d at 13 (defendants collected $1.745 million from 12 investors and actively solicited participation); SEC v. National Executive Planners, Ltd., 503 F. Supp. 1066, 1073 (M.D.N.C. 1980) ($4.3 million of securities sold and solicited clients actively); Joseph McCulley, SEC No-Action Letter, 1972-73 Transfer Binder Fed. Sec. L. Rep. (CCH) 78,982, at 82, 111 (Aug. 2, 1972) (advertising on a single isolated basis is not enough, but more than that would require registration); SEC v. Deyon, 977 F. Supp. 510, 518 (D. Me. 1997) (finding that defendants actively sought to effect securities transactions and therefore were brokers). Being engaged in the business of being a broker may also be shown by: (1) solicitation of investors to purchase securities, (2) involvement in negotiations between the issuer and the investor, and (3) receipt of transaction-related compensation. SEC v. Earthly Mineral Solutions, Inc., Case 22
Filed 04/02/12 Page 32 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
No. 2:07-cv-1057-JCM, 2011 WL 1103349, at *3 (citing SEC v. Hansen, 1984 WL 2413 (S.D.N.Y. Apr. 6, 1984)). Here, the evidence will establish that Glisson actively sought to effect securities transactions, and solicited investors, by posting on the Internet that he was buying and selling CMKM stock. As discussed above, Glisson received transaction-based compensation in two ways: (1) the spread between his purchase price and his sale price, and (2) a $50 per certificate fee. The evidence will also show that Glisson negotiated with buyers and with sellers. Moreover, as also discussed above, the evidence will establish the regularity of Glissons participation in transactions in CMKM stock. Glissons regular activity over a 15month period generated over $4.4 million in sales of CMKM stock, or average monthly revenues of over $293,000. Glisson was effecting transactions for the account of third parties, and not just for his own account. Glisson ordered the transfer of stock from third parties, to other third parties, without himself ever taking title to the stock, and Glisson collected money from buyers and paid sellers, and collected CMKM certificates from sellers and provided CMKM certificates to his buyers. For example, on December 15, 2005, Glisson ordered the transfer of 25 million shares held in the name of Thomas and Tracy Butcher, to four purchasers.32 Glisson collected payments from the purchasers, and paid the Butchers for their shares, and collected and reissued stock certificates. Similarly, on November 7, 2006, Glisson ordered the transfer of 5 billion shares held in the names of Life Line Entertainment, Sirinucha N. Mulasastra, and Rick Walker, with approximately 1.8 billion transferred to about 249 purchasers, and the remaining 3.1 billion transferred into
32
See Joint Exhibit 3045. 23
Filed 04/02/12 Page 33 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Glissons name.33 Again, Glisson did all the work cancelling the shares of the sellers, arranging for new certificates to be issued in the names of the buyers and distributing the certificates to the buyers, as well as collecting payments from the buyers, and paying the sellers for their shares. Thus, a preponderance of the evidence will show that Glisson was acting as a broker. 3. Glisson Violated Section 15(a) Of The Exchange Act By Failing To Register As A Broker Or Dealer Glisson concedes that he never registered as a broker or dealer, or associated with a broker or dealer. As a result, once the evidence at trial establishes that Glisson was either a broker, or a dealer, or both, the Commission will have made a prima facie case that Glisson violated Section 15(a) of the Exchange Act. Indeed, Glissons conduct demonstrates the importance of the broker-dealer registration requirements. In his emails, Glisson trafficked in rumors about an impending dividend or payout to CMKM shareholders. Despite the fact that Glisson had hundreds of millions, and billions, of shares of CMKM, in his emails to prospective buyers Glisson suggested that shares were scarce and buyers had to act fast. Moreover, through his actions Glisson effectively nullified the Commissions trading suspension, deregistration, and delisting of CMKM stock, which was done to protect investors from relying on unfounded rumors and inaccurate information. Instead, Glisson set himself up as a one man broker, dealer, and clearing agent for CMKM transactions. The Commission, therefore, asks that this Court find that Glisson violated Section 15(a) of the Exchange Act. /// ///
33
See Joint Exhibit 3018. 24
Filed 04/02/12 Page 34 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
B.
Glisson Violated Section 5 Of The Securities Act By Offering To Purchase And Sell, And By Selling, Deregistered CMKM Stock
Sections 5(a) and (c) of the Securities Act make it unlawful to offer or sell a security in interstate commerce if a registration statement has not been filed as to that security, unless the transactions qualifies as exempt from registration. 15 U.S.C. 77c(a) & (c). The definition of a security includes a companys stock. 15 U.S.C. 77b(a)(1). To state a prima facie case, the Commission must show: (1) no registration statement was in effect as to the securities; (2) the defendant, directly or indirectly, sold or offered to sell the securities; and (3) the sale or offer was made through interstate commerce or the mails. SEC v. Phan, 500 F.3d 895, 902 (9th Cir. 2007); SEC v. CMKM Diamonds, Inc., 2011 WL 3047476 (D. Nev. July 25, 2011). The Commission is not required to prove scienter to establish a violation. See Phan, 500 F.3d at 906; CMKM, 2011 WL 3047476, at * 2; SEC v. Softpoint, Inc., 958 F. Supp 846, 859 (S.D.N.Y. 1997), affd 159 F.3d 1348 (2d Cir. 1998). 1. The Undisputed Evidence Establishes A Prima Facie Violation Of Section 5 By Glisson Glisson has admitted and stipulated that he bought and sold CMKM securities in interstate commerce. Glisson does not contest that a registration statement was not in effect. Glisson has admitted that he learned that CMKM stock had been deregistered and delisted in November 2005. Thus, Glisson has essentially admitted to all the elements of a prima facie violation of Section 5. 2. Glisson Has The Burden Of Proving That He Is Entitled To Any Claimed Exemptions From Section 5 Once the Commission establishes a prima facie violation, the burden then shifts to Glisson to prove that the offer and sale transactions were exempt from the 25
Filed 04/02/12 Page 35 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
registration requirements. SEC v. Ralston Purina Co., 346 U.S. 119, 126 (1953); SEC v. Platforms Wireless International Corp., 617 F.3d 1072, 1086 (9th Cir. 2010). Section 5, by its terms, is all embracing; it prohibits the offer or sale of unregistered securities. See Phan, 500 F.3d at 902. Exemptions from registration provisions are construed narrowly in order to further the purpose of the Act, which is to provide full and fair disclosure of the character of the securities, and to prevent frauds in the sale thereof. Platforms Wireless, 617 F.3d at 1086 (quoting SEC v. Murphy, 626 F.2d 633, 641 (9th Cir. 1980)). Glisson asserts that his transactions are exempt from registration under Section 4(1) of the Securities Act, 15 U.S.C. 77d(1), which exempts from the registration provisions transactions by any person other than an issuer, underwriter, or dealer. Specifically, Glisson asserts that he was not a dealer in CMKM stock, and thus is entitled to this exemption.34 However, Glisson will not be able to carry his burden of showing that this exemption applies here. As a threshold matter, this provision exempts transactions, not persons. Moreover, as discussed above with respect to the Commissions Section 15 claim, the preponderance of the evidence at trial will establish that Glisson was a dealer in CMKM stock. As a result, Glisson will be unable to meet his burden of showing that his sales of CMKM were exempt under Section 4(1). C. Glisson Cannot Avail Himself Of A Reliance Of Counsel Defense
In the Joint Pretrial Order, Glisson asserts a reliance on counsel defense.35 The reliance on counsel defense may be asserted if it is established that the defendant (1) made a complete disclosure to counsel, (2) requested counsels
See Joint Pretrial Order at Section I.B (Defendants Contentions), at p. 4. 35 See Joint Pretrial Order at Section VI.B (Defendants Statement of Issues of Law (including fact and law)), at 14.
34
26
Filed 04/02/12 Page 36 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
advice as to the legality or appropriateness of the challenged conduct, (3) received advice that it was legal or appropriate, and (4) relied in good faith on that advice. SEC v. Goldfield Deep Mines Company of Nevada, 758 F.2d 459, 467 (9th Cir. 1985). The defendant has the burden of establishing each element of a reliance on counsel defense. Id. Moreover, if the defendant acted contrary to the advice or did not act in good faith, the defense is not available. United States v. Evangelista, 122 F.3d 112, 117 (2d Cir. 1997). This defense should be rejected here for a number of reasons. Glisson testified that he did not consult an attorney before he began selling CMKM in December 2005, or at any time, to determine if his actions were legal. Moreover because violations of Sections 5 and 15(a) are non-scienter based, an advice of counsel defense is not available. See SEC v. Holschuh, 694 F.2d 130, 137 n.10 (7th Cir. 1982) ([G]ood faith is not relevant to whether there has been a primary violation of the registration requirements.). In addition, to assert a reliance on counsel defense, a defendant must waive privilege to establish that the elements of the defense. Glisson has not done so, and the Court should reject any arguments by Glisson that he relied on advice of counsel. D. The Court Should Impose Appropriate Remedies, Including Injunctive Relief, Disgorgement, Prejudgment Interest Thereon, A Third Tier Civil Penalty, And A Penny Stock Bar 1. Injunctive Relief Is Necessary And Appropriate
The evidence at trial will demonstrate that a permanent injunction against Glisson is necessary to enjoin him from future violations of the securities registration and the broker-dealer registration provisions of the federal securities laws. Section 20(b) of the Securities Act, 15 U.S.C. 77t(b), and Section 21(d) of 27
Filed 04/02/12 Page 37 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
the Exchange Act, 15 U.S.C. 78u(d)(1), provide that a permanent injunction shall be granted upon a proper showing in actions brought by the Commission. To obtain a permanent injunction, the Commission must show there [is] a reasonable likelihood of future violations of the securities laws. Murphy, 626 F.2d at 655. In predicting the likelihood of future violations, a court must assess the totality of the circumstances surrounding the defendant and his violations. Id.; see also SEC v. Fehn, 97 F.3d 1276, 1295-96 (9th Cir. 1996). Foremost among these circumstances is the existence of past violations by the defendant, from which the Court may infer the likelihood of future violations. Murphy, 626 F.2d at 655. The factors that courts consider include the degree of scienter involved; the isolated or recurrent nature of the infraction; the defendants recognition of the wrongful nature of his conduct; the likelihood, because of defendants professional occupation, that future violations might occur; and the sincerity of his assurances against future violations. Murphy, 626 F.2d at 655; accord Fehn, 97 F.3d at 1295-96. Here, the evidence will establish that Glisson has violated Section 15(a) of the Exchange Act and Section 5 of the Securities Act, which weighs in favor of an injunction. Moreover, Glisson has shown that the Court cannot credit any assurances he may provide against future violations. In his 2009 Declaration, Glisson swore that he would never sell CMKM stock again. While that declaration was on file and the Commissions motion for summary judgment was pending, Glisson sold billions of shares of CMKM stock and realized additional profits of at least $1.6 million. Glisson has testified that he will buy and sell CMKM until a cease and desist order against him is put in place. Glissons conduct has extended over a period of almost five years, with stops and starts. Thus, the evidence will establish that injunctive relief is necessary in this case. 28
Filed 04/02/12 Page 38 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
2.
Glisson Should Be Ordered To Disgorge His Ill-Gotten Gains And Pay Prejudgment Interest
Federal courts have broad equitable powers to order disgorgement of illgotten gains from securities law violators. SEC v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998). Courts have broad equity powers to order the disgorgement of ill-gotten gains obtained through the violation of the securities laws. Id. The purpose of disgorgement is to prevent unjust enrichment and to deter others from violating securities laws. Id. The amount of disgorgement should include all gains flowing from the illegal activities. SEC v. J.T. Wallenbrock & Assoc., 440 F.3d 1109, 1114 (9th Cir. 2006). In calculating disgorgement, the Commission need only show a reasonable approximation of profits, or ill-gotten gains, causally connected to the violation. First Pacific Bancorp, 142 F.3d at 1192 n.6. A defendant may be ordered to disgorge the entire proceeds of an illegal offering whether or not he personally received the funds. Id. at 1191. Once the Commission has established that the disgorgement figure reasonably approximates the unlawful proceeds, the burden of proof shifts to the defendant, who must demonstrate that the disgorgement figure is not a reasonable approximation. SEC v. Calvo, 378 F.3d 1211, 1217 (11th Cir. 2004); SEC v. Hughes Capital Corp., 917 F. Supp. 1080, 1085 (D.N.J. 1996), affd, 124 F.3d 449 (3d Cir. 1997). The evidence at trial will establish that a reasonable approximation of Glissons profits from acting as an unregistered broker and dealer, and buying and selling deregistered CMKM stock, is $2,765,650. The Commission arrived at this number by adding CMKM-related deposits into various bank accounts Glisson used at different times between 2005 and 2007, which totaled $4,410,635.65. From this amount, the Commission deducted the costs Glisson incurred as a dealer in CMKM stock to buy stock, based upon available bank account information, 29
Filed 04/02/12 Page 39 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
which the Commission calculated as $1,644,985.00. This resulted in a reasonable estimate of profits of approximately $2,765,650.65. 36 The Court should award prejudgment interest on the disgorgement amounts. Courts order prejudgment interest to ensure that the wrongdoer does not profit from the illegal activity. SEC v. Manor Nursing Ctrs., Inc., 458 F.2d 1082, 1105 (2d Cir. 1972); SEC v. CMKM Diamonds, Inc., 635 F. Supp. 2d 1185, 1190 (D. Nev. 2009). The Commission has calculated prejudgment interest from July 1, 2007 around the time Glisson stopped his CMKM business in 2007, through the first date of trial, which amounts to $670,574.79, and a total of disgorgement and prejudgment interest of $3,436,225.44.37 3. The Court Should Impose A Third Tier Civil Penalty In The Amount Of $1.4 Million Section 20(d) of the Securities Act, 15 U.S.C. 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. 78u(d)(3), provide that the Commission may seek monetary civil penalties for violations of those Acts. The Securities Act and the Exchange Act provide that penalties be assessed according to a three tier system which corresponds to specified degrees of culpability. See 15 U.S.C. 77t(d) & 78u(d)(3); CMKM, 635 F. Supp. 2d at 1191. Here the Commission seeks the imposition of a third tier penalty, which applies to violations of the Securities Act and Exchange Act that (1) involve fraud, deceit, manipulation, or reckless disregard for a regulatory requirement; and (2) directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other
Plaintiffs Exhibits 508-5, 508-6, 527, and 528. Glisson has never produced a complete accounting of all his CMKM activities, or provided an estimate of his profit. Glisson has declared profits of around $1.2 million for tax purposes for 2006 and 2007, and Tungwongsathong declared profits of around $400,000 for 2007. 37 See Plaintiffs Exhibits 508-5, 508-6, 527, and 528.
36
30
Filed 04/02/12 Page 40 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
persons. 15 U.S.C. 77t(d)(2)(C) & 78u(d)(3)(B)(iii). The evidence will establish that in mid-2006, after being contacted by the SEC and the Wisconsin DFI, Glisson temporarily stopped his business of buying and selling CMKM securities. Glissons attorney sent letters to the DFI and SEC which stated that Glisson had ceased his activities in CMKM stock. However, Glisson stopped for only a short time, and resumed his activities in September 2006. In 2009, in connection with his effort to avoid summary judgment, Glisson swore to this Court that he would never sell CMKM again. Less than 6 months after making that sworn statement to the Court, and while the motion for summary judgment was pending, Glisson resumed his CMKM sales, deriving profits of $1.6 million. Glissons conduct, in stopping, assuring regulators and/or the Court that he will not do it again, and then reneging on such promises and oaths, is evidence of a reckless disregard of a regulatory requirement. Glissons conduct also directly or indirectly resulted in a substantial loss or risk of loss to investors. Glisson admitted that when CMKM stock was deregistered, it was deemed worthless and was not tradeable. Glissons brokerage account statements from that period show the stock as worthless. In 2009, Glisson asserted in a sworn statement that his holdings of CMKM stock were worthless. Yet Glisson peddled his admittedly worthless holdings of CMKM to thousands of gullible purchasers, raking in millions of dollars in profits, in early 2010. A third tier penalty can be in an amount equal to the defendants pecuniary gain. Glissons pecuniary gain, as measured by the disgorgement figure, is about $2.7 million. Glissons 2010 sales of deregistered CMKM generated another $1.6 million of pure profit. In view of Glissons reckless disregard for regulatory requirements and the substantial losses likely caused by Glissons conduct, the Commission requests that the Court impose a third tier civil penalty in the amount 31
Filed 04/02/12 Page 41 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
of $1.4 million against Glisson. 4. Glisson Should Be Barred From Participating In Any Offering Of Penny Stock Section 21(d)(6) of the Exchange Act, 15 U.S.C. 78u(d)(6), allows a federal court to impose a penny stock bar in Commission actions against any person participating in, or, at the time of the alleged misconduct, who was participating in, an offering of penny stock. Section 21(d)(6)(B) of the Exchange Act defines a person participating in a penny stock offering as any person engaging in activities with a broker, dealer, or issuer for the purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of, any penny stock. At all times, CMKM was a penny stock because it was an equity security priced at less than five dollars a share indeed, it was priced at fractions of a cent a share. See Section 3(a)(51) of the Exchange Act, 15 U.S.C. 78c(a)(51), and Rule 3a51-1(d), 17 C.F.R. 240.3A51-1(d) (For the purposes of Section 3(a)(51) of the Act, the term penny stock shall mean any equity security other than a security: (d) .that has a price of five dollars or more.) When deciding whether to impose a penny stock bar, courts consider a variety of factors, including: (1) the egregiousness of the underlying securities law violation; (2) the defendants repeat offender status; (3) the defendants role or position when he engaged in the fraud; (4) the defendants degree of scienter; (5) the defendants economic stake in the violation; and (6) the likelihood that the misconduct will recur. SEC v. Abellan, 2009 U.S. Dist. Lexis 113450 (W.D. Wash. Dec. 7, 2009). Here, Glisson was central to the violations of the federal securities laws involving a penny stock. Glissons conduct resulted in a Commission deregistration order being circumvented for the personal financial benefit of 32
Filed 04/02/12 Page 42 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Glisson. Glisson repeated the actions at different periods, and made false promises to this Court and regulatory authorities that he had ceased his activity, or would never do it again. In view of his past conduct, it is highly likely that Glissons misconduct will recur. A penny stock bar is therefore appropriate.
Date: April 2, 2012
Respectfully submitted,
/s/ John B. Bulgozdy John B. Bulgozdy David J. VanHavermaat Attorneys for Plaintiff Securities and Exchange Commission
33
Filed 04/02/12 Page 43 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Date: April 2, 2012 [ ] [X] [ ] [ ] [ ] [ ] [X]
PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648 Telephone No. (323) 965-3998; Facsimile No. (323) 965-3908.
On April 2, 2012, I caused to be served the document entitled PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS TRIAL BRIEF on all the parties to this action addressed as stated on the attached service list: [ ] OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agencys practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. [ ] PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid.
HAND DELIVERY: I caused to be hand delivered each such envelope to the office of the addressee as stated on the attached service list. UNITED PARCEL SERVICE: By placing in sealed envelope(s) designated by United Parcel Service (UPS) with delivery fees paid or provided for, which I deposited in a facility regularly maintained by UPS or delivered to a UPS courier, at Los Angeles, California. ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. E-FILING: By causing the document to be electronically filed via the Courts CM/ECF system, which effects electronic service on counsel who are registered with the CM/ECF system. FAX: By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. I declare under penalty of perjury that the foregoing is true and correct. /s/ John B. Bulgozdy John B. Bulgozdy
34
Filed 04/02/12 Page 44 of 44
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
SEC v. MARCO GLISSON United States District Court - District of Nevada Case No. 2:09-cv-00104-LDG-GWF (LA-3028) SERVICE LIST Frederick A. Santacroce, Esq. (served via CM/ECF only) 706 S. Eighth Street Las Vegas, NV 89101 Email: fasatty@yahoo.com Attorney for Marco Glisson Robert H. Bretz, Esq. (served via CM/ECF only) 578 Washington Boulevard, Suite 843 Marina del Rey, CA 90292 Email: Rhbretzpc@aol.com Attorney for Marco Glisson
35

Glisson Case SEC Brief

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Glisson Case SEC Brief

Uploaded by

Copyright:

Available Formats

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 1 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 2 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 3 of 44

Glisson Cannot Avail Himself Of A Reliance Of Counsel Defense ................................................................................................26

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 4 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 5 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 6 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 7 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 8 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 9 of 44

FEDERAL REGULATIONS Rule 3a51-1(d) [17 C.F.R. 240.3A51-1(d)] .........................................................................32

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 10 of 44

INTRODUCTION Plaintiff Securities and Exchange Commission (Commission or SEC)

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 11 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 12 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 13 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 14 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 15 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 16 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 17 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 18 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 19 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 20 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 21 of 44

See Plaintiffs Exhibit 508-5. See Joint Exhibit 3086. 12

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 22 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 23 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 24 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 25 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 26 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 27 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 28 of 44

Case 2:09-cv-00104-LDG-GWF Document 105

Filed 04/02/12 Page 29 of 44

Case 2:09-cv-00104-LDG-GWF Document 105