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D.L. CROMWELL INVESTMENTS, INC. v. NASD REGULATION

United States District Court, Southern District of New York


July 30, 2003

D.L. CROMWELL INVESTMENTS, INC., ET AL., PLAINTIFFS,
v.
NASD REGULATION, INC., DEFENDANT.

The opinion of the court was delivered by: Lewis Kaplan, District Judge.

ORDER

In January 2001, D.L. Cromwell Investments, Inc. ("Cromwell"), Lloyd Beirne and David S. Davidson, the plaintiffs in this case, and others commenced an action in this Court in which they alleged that they were targets of a grand jury investigation in the Eastern District of New York. They sought an injunction barring defendant NASD Regulation, Inc. ("Regulation") from compelling the individual plaintiffs to testify in an investigation regarding the issuance and trading of certain securities and other relief, all on the premise that Regulation was acting as the agent of federal prosecutors. Following an expedited trial, the Court dismissed the action, and the judgment was affirmed on appeal. D.L. Cromwell Investments, Inc. v. NASD Regulation, Inc., 132 F. Supp.2d 248 (S.D.N.Y. 2001), aff'd, 279 F.3d 155 (2d Cir. 2002).

On May 20, 2002, plaintiffs commenced this action to set aside the judgment in and reinstate the first action, essentially on the ground that Regulation procured the prior judgment by fraud. There now is pending before the Court Regulation's motion to dismiss the complaint.

It now appears that subsequent developments may have overtaken this case. Beirne and Davidson were indicted in the Eastern District of New York on June 7, 2002. They pleaded guilty to one count of a superseding information on June 20, 2003 and now are awaiting sentencing. Docket sheet, United States v. Davidson, 02 Cr. 0681 (JG) (E.D.N.Y. filed June 7, 2002). As the object of the initial action, and therefore of this suit to vacate the judgment dismissing the initial action, was to preclude Regulation from compelling Beirne, Davidson and perhaps others from testifying on the theory that Regulation was the cat's paw of the prosecutors, and as the criminal investigation and prosecutions appear now to have been concluded, this action appears to be moot.

Accordingly, the parties are directed to show cause, on or before August 8, 2003, why this action should not be dismissed as moot.

SO ORDERED.

20030730

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