The opinion of the court was delivered by: Kram, District Judge.
On September 1, 1998, the SEC filed a complaint alleging that
from in or about September 1993, through December 1994,
defendants*fn2 violated the anti-fraud, registration and filing
provisions of the federal securities laws as part of a scheme to
manipulate the common stock of Marcorp Inc. ("Marcorp").*fn3 The
SEC seeks the following equitable relief: (1) permanent
injunctions enjoining defendants from future securities laws
violations; (2) disgorgement of illegal profits; and (3) orders
enjoining each of the defendants from serving as officers of any
public companies (collectively, the "equitable remedies"). The
SEC also seeks civil penalties. In their answer, defendants
assert, inter alia, the following affirmative defenses: (1)
statute of limitations; (2) estoppel; and (3) laches. Defendants
also assert a counterclaim against the SEC and have filed a
third-party complaint against Gruntal and others.
I. Third Party Complaint and Counterclaim
The SEC and Gruntal argue that defendants' third-party
complaint is expressly barred by 15 U.S.C. § 78u(g). Likewise,
the SEC argues that Section 78u(g) also bars defendants'
counterclaim. Section 78u(g) provides:
Notwithstanding the provisions of section 1407(a) of
Title 28, or any other provision of law, no action
for equitable relief instituted by the Commission
pursuant to the securities laws shall be consolidated
or coordinated with other actions not brought by the
Commission, even though such other actions may
involve common questions of fact, unless such
consolidation is consented to by the Commission.
15 U.S.C. § 78u(g). The purpose of Section 78u(g) is to ensure
speedy resolution of SEC enforcement actions, see SEC v.
Thrasher, No. 92 Civ. 6987, 1995 WL 456402, at *2-*5 (S.D.N Y
Aug. 2, 1995), and it has routinely been employed to dismiss
third-party complaints, id., and counterclaims, see SEC v.
Better Life Club of America, Inc., 995 F. Supp. 167, 179-80
(D.D.C. 1998), because such additional claims protract
In this case, the SEC has brought an action seeking equitable
relief and civil penalties and has not consented to consolidation
of this action with defendants' third-party complaint or
counterclaim. Accordingly, defendants' third-party complaint and
counterclaim must be dismissed. The caption shall be amended to
reflect the removal of third-party defendants, as well as the
striking of the counterclaim against the SEC.*fn4
Federal Rule of Civil Procedure 12(f) allows the Court to
"order stricken from any pleading any insufficient defense or any
redundant, immaterial, impertinent
or scandalous matter." Fed.R.Civ.P. 12(f); China Trust Bank of
New York v. Standard Chartered Bank, PLC, No. 96 Civ. 9764, 1998
WL 574391, at *2 (S.D.N.Y. Sept.4, 1998). Motions to strike
defenses are generally not favored. See William Z. Salcer,
Panfeld, Edelman v. Envicon Equities Corp., 744 F.2d 935, 939
(2d Cir. 1984), vacated on other grounds, 478 U.S. 1015, 106
S.Ct. 3324, 92 L.Ed.2d 731 (1986). In order to prevail on a
motion to strike, a plaintiff must show that: (1) there is no
question of fact which might allow the defense to succeed; (2)
there is no question of law which might allow the defense to
succeed; and (3) the plaintiff would be prejudiced by inclusion
of the defense. See id. An increase in the time, expense and
complexity of a trial may constitute sufficient prejudice to
warrant granting a plaintiff's motion to strike. See SEC v.
Toomey, 866 F. Supp. 719, 722 (S.D.N.Y. 1992); SEC v. Thrasher,
1995 WL 456402, at * ...