United States District Court, D. New Jersey
Michael A. Shipp, United States District Judge.
matter comes before the Court on Plaintiff United States
Securities and Exchange Commission's (“SEC")
Motion for Summary Judgment against Defendant Steven Metro
("Defendant" or "Metro"). (ECF No. 34.)
Defendant filed opposition (ECF No. 38) and the SEC replied
(ECF No. 40). The Court has carefully considered the
parties' submissions and decides the matter without oral
argument pursuant to Local Civil Rule 78.1. For the reasons
set forth below, and for other good cause shown, Plaintiffs
Motion for Summary Judgment is granted in part.
March 19, 2014, Metro was arrested on charges of insider
trading. (SEC's Statement of Undisputed Material Facts
"SOMF" ¶¶ 4, 51, ECF No. 35; Compl., ECF
No. I.) The SEC filed its Complaint on the same day.
(Id.) Due to the ongoing criminal proceedings, on
September 16, 2014, the Court stayed the civil action. (ECF
No. 18.) On November 12, 2015, Metro pleaded guilty to the
criminal charges. (Def.'s Opp'n Br. 5.) On September
14, 2016, the Court sentenced Metro to forty-six months
incarceration, three years supervised release, and a fine of
$10, 000. (Id.) On October 5, 2016, the Court lifted
the stay of the civil matter (ECF No. 25) and the parties
engaged in a short period of discovery.
Complaint alleges three counts of civil violations: (1)
Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b)
and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5; (2)
Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a);
and (3) Section 14(e) of the Exchange Act, 15 U.S.C. §
78n(e), and Rule 14e-3 thereunder, 17 C.F.R. §
240.14e-3. (Compl., ECF No.1.) On May 16, 2017, the SEC moved
for summary judgment against Metro on all counts. (ECF No.
34.) The SEC seeks an injunction prohibiting future
violations of the federal securities laws and a monetary
penalty of more than two million dollars. (SEC's Moving
Defendant disputes certain underlying facts in the SEC's
Complaint, Defendant concedes that liability on Counts
I and II are satisfied by his plea allocution. (Def.'s
Opp'n Br. 7.) As to Count III, Defendant contends that
the evidence on the record does not entitle the SEC to
summary judgment on this Count. (Id. at 8-10.)
Nevertheless, Metro is willing to stipulate to liability on
Count III if an agreement can be reached with the SEC
regarding the amount of the civil penalty, which Metro
asserts should be ten thousand dollars. (Id. at
9-10, 17-22.) As to the injunction, Metro does not object to
the SEC's request that Metro be permanently enjoined from
engaging in future violations of the laws at
issue. (Id. at 10 n.7.)
core of this dispute is the amount of the civil penalty that
should be imposed on Metro. The motion papers reflect that
Metro and the SEC have engaged in settlement negotiations
that have, thus far, been unsuccessful. (Id. at
9-10) According to Defendant, although Defendant is willing
to concede liability, the SEC will not agree to a settlement,
even solely as to the issue of liability, unless Metro
assents to the truthfulness of each paragraph in the
Complaint, including the paragraphs Metro contends are
inaccurate. (Id.) Given the procedural posture of
this matter, the Court finds that it may be beneficial for
the parties to engage in a settlement conference with the
Magistrate Judge to attempt to resolve the outstanding
issues, including the appropriate amount of the civil
for the reasons set forth above, and based on the Court's
inherent power to control the matters on its docket, and for
other good cause shown, IT IS on this 11 day of October, 2017
1. The Court GRANTS summary judgment to the
SEC on Counts I and II of the Complaint.
2. The Court RESERVES on summary judgment as
to Count III of the Complaint.
3. The Court RESERVES on the SEC's
request for a permanent injunction.
4. Within seven days of the date of this Memorandum Order,
the parties shall contact Magistrate Judge Bongiovani to
schedule a settlement conference.
5. Should the settlement conference prove unsuccessful,
within seven days of the conference, Plaintiff shall e-file
correspondence to request reinstatement of the summary
judgment motion as to any outstanding issues.