SEC Action Stayed After Indictments

In the summer of 2019, the U.S. Securities and Exchange Commission (“SEC”) brought various claims against investment adviser Don LaGuardia, Jr. (“LaGuardia”) based upon allegations that he, among other things, engaged in improper accounting practices to inflate the value of a private investment fund.[1] But before the year was out, a grand jury returned indictments against LaGuardia as a result of the same alleged securities-fraud scheme.

The United States attorney subsequently moved to both intervene and stay the SEC’s civil action.  The SEC took no position on the motions, but LaGuardia opposed the stay.  Noting that “the overlap of the issues in the criminal and civil cases is a significant factor,” the court proceeded to apply the remaining five (5) of the six (6) factors set forth in Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83 (2d Cir 2012). The court concluded that each factor weighed in favor of a stay, including the fact that an indictment had been returned and both the court’s and public’s interests would be served by a stay. See Opinion here.

The court’s rather efficient disposal of the Defendant’s opposition to the motion is instructive as to the historical preference for stays in the face of post-indictment collateral proceedings.  What is somewhat unusual about this case is the fact that it was Defendant clamoring for a simultaneous two-front war. If you have been the victim of a securities-fraud scheme, we are here to help.  


[1] Click here for SEC Complaint.