The opinion of the court was delivered by: Wood, U.S.D.J.
Plaintiff Securities and Exchange Commission ("SEC") brings this motion for a default judgment against Defendant Sonja Anticevic ("Anticevic"), who the SEC alleges was involved in an insider-trading scheme. In its motion, the SEC also requests that the Court award damages against Anticevic in the form of: (1) a permanent injunction enjoining Anticevic from future violations of the securities laws; (2) disgorgement of Anticevic's ill-gotten gains plus prejudgment interest; and (3) civil penalties in the amount of three times Anticevic's ill-gotten gains.
For the reasons set forth below, the Court GRANTS the SEC's motion for a default judgment. The Court GRANTS in part and DENIES in part the SEC's request for damages.
This case involves three alleged insider-trading schemes (the "Schemes"), allegedly perpetrated by a group of seventeen individuals located in the United States and Croatia, including Anticevic. Anticevic is a 63 year-old retired seamstress who lives in Croatia. She is the aunt of one of the ringleaders of the Schemes. The SEC alleges that Anticevic held two brokerage accounts in her name ("Accounts"), which were used to execute some of the illegal trading. (Fourth Amended Complaint, ¶ 9 [hereinafter Complaint].) The SEC alleges that Anticevic gave Defendant David Pajcin ("Pajcin") permission to execute trades through the Accounts, that Pajcin repeatedly did so, and that Pajcin promised Anticevic proceeds from his trading in exchange for use of the Accounts. (Complaint ¶¶ 9, 43, 44, 45, 46, 61, 62, 72, 75, 78.) According to the SEC's Fourth Amended Complaint, a total of $2,056,055.15 in trades were executed through the Accounts. The Fourth Amended Complaint charges Anticevic with violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5, and Section 17(a) of the Securities Act of 1933 ("Securities Act"). (Complaint ¶¶ 88, 91, 135-49, 150-64, 165-79, 193-215, 216-277.)
Anticevic was the first and only defendant named in the SEC's original complaint, which was filed on August 5, 2005 and properly served on Anticevic. Anticevic never filed an answer to the original complaint. Following the filing of the original complaint, the SEC filed three amended complaints, all of which were served properly on Anticevic. Anticevic filed an answer to the First Amended Complaint, but she did not file answers to the Second or Third Amended Complaints. On August 30, 2006, the SEC filed the Fourth Amended Complaint, which was also properly served on Anticevic.
On December 8, 2008, the SEC noticed Anticevic's deposition to take place at its offices on January 5, 2009. The SEC properly served notice of the deposition on Anticevic's lawyer, Jonathan Kaye ("Kaye"), as required by Federal Rule of Civil Procedure 5(b). Kaye acknowledged receipt of the notice, and told the SEC that he had been unable to contact Anticevic and did not believe that she would appear for her deposition. Anticevic did not appear for her deposition on January 5, 2009.
As of March 11, 2009, Anticevic had not answered the Fourth Amended Complaint. On that date, the Clerk of Court issued a Certificate of Default against Anticevic. On March 30, 2009, the SEC moved for a default judgment against Anticevic, pursuant to FRCP 55(b), or, in the alternative, FRCP 37(b), as a sanction for Anticevic's failure to appear at her deposition.
On April 1, 2009, Kaye filed on Anticevic's behalf an answer to the Complaint and an opposition to the SEC's motion for a default judgment. In his submissions, Kaye stated that he had been unable to locate or contact Anticevic for some time.
On June 22, 2009, in response to an order from the Court, the SEC and Kaye submitted a joint status update in which Kaye stated that he no longer intended to oppose the SEC's motion.
On July 21, 2009, the Court issued an order denying the SEC's motion for a default judgment, and directing Kaye that, by July 27, 2009, he was either (1) to file a motion to be relieved as Anticevic's counsel, or (2) to write to the Court stating that he remained Anticevic's counsel and had authority to act on her behalf. In its order, the Court further directed that if Kaye withdrew as counsel, Anticevic was to have a new attorney file a notice of appearance on her behalf by August 31, 2009. The Court stated that if no such notice of appearance was filed, the SEC could submit a renewed motion for default judgment against Anticevic, and that default could be entered against her at that point.
On July 26, 2009, Kaye submitted a motion withdrawing as Anticevic's counsel. The Court granted Kaye's motion in an order that also reaffirmed Anticevic's August 31, 2009 deadline to have a new attorney file a notice of appearance on her behalf. The SEC sent a copy of the Court's order, translated into Croatian, to Anticevic's last-known address in Croatia. To date, no new attorney has filed a notice of appearance on behalf of Anticevic.
On September 16, 2009, the SEC filed this renewed motion for default judgment against Anticevic, pursuant to FRCP 55(b) or, in the ...