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Gentile v. SEC

United States District Court for the District of New Jersey

May 14, 2019, Decided; May 14, 2019, Filed

Civil Action No.: 19-5155 (JLL) (JAD)


LINARES, Chief District Judge.

This matter comes before the Court by way of Plaintiff Guy Gentile's motion for a preliminary injunction against Defendant Securities and Exchange Commission ("SEC"), (ECF No. 5), and the SEC's motion to dismiss, (ECF No. 11). The Court decides this matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons set forth below, the Court grants the SEC's motion to dismiss and denies Plaintiff's motion for a preliminary injunction as moot.


The Court has previously summarized the facts underlying this dispute in its March 8, 2019 Opinion denying Plaintiff's ex parte application for a temporary restraining order ("TRO"). (ECF No. 6). The Court therefore includes an abbreviated statement of the factual and procedural history to the extent such background is relevant to the instant motions.

On February 8, 2019, Plaintiff filed this action for declaratory and injunctive relief to prevent an ongoing investigation into his activities conducted by the Miami Regional Office of the SEC. (Compl. ¶ 1). Since around August of 2015, Plaintiff has [*2]  been aware of an SEC investigation out of the Miami Regional Office into whether Plaintiff and his Bahamas-based broker-dealer, SureTrader, improperly solicited United States customers. (Compl. ¶¶ 27, 36-37, 88). According to Plaintiff, the Florida SEC investigation relies on a formal order of investigation ("FOI") dated November 5, 2013 entitled "In the matter of Traders Café, LLC," which authorizes an investigation into individuals related to an entity called Traders Café. (Compl. ¶ 2). The Traders Café FOI "makes no reference to [Plaintiff] or anyone or anything related to him." (Compl. ¶ 2). Indeed, Plaintiff alleges that there is no connection whatsoever between Traders Café and Plaintiff's Bahamian broker-dealer, other than the fact that Traders Café maintains or maintained an account at Plaintiff's broker-dealer. (Compl. ¶¶ 2, 27, 30). Plaintiff therefore argues that the Traders Café FOI is an improper basis for an investigation into Plaintiff and his broker-dealer, and that the SEC Miami Regional Office lacks the necessary authority to proceed or to enforce existing subpoenas absent a proper FOI. (Compl. ¶¶ 3, 33). Accordingly, Plaintiff's action seeks "to quash several subpoenas [*3]  and any evidence obtained through them that [were] served . . . pursuant to the Traders Café FOI." (Compl. ¶ 5). He also seeks "a declaration ordering the SEC to cease its unauthorized 'investigation.'" (Compl. ¶ 5).

Plaintiff further alleges that the Florida investigation is an attempt by the SEC to revive claims against Plaintiff that were dismissed by this Court in 2017. (Compl. ¶¶ 60-61). The Court assumes the parties' familiarity with the facts underlying the prior SEC civil enforcement proceedings against Plaintiff before this Court, but a brief summary is provided to the extent the facts are relevant to the instant motions. In March of 2016, the SEC Northeast Regional Office filed a complaint against Plaintiff seeking equitable relief in connection with two penny stock manipulation schemes. SEC v. Gentile, No. 16-1619, 2017 U.S. Dist. LEXIS 204883, 2017 WL 6371301, at *1 (D.N.J. Dec. 13, 2017). On December 13, 2017, this Court dismissed the SEC's complaint, concluding that the action was barred by a five-year statute of limitations under 28 U.S.C. § 2462. 2017 U.S. Dist. LEXIS 204883, [WL] at *4. The SEC appealed that decision, which remains under review by the Third Circuit. See SEC v. Gentile, No. 18-1242 (3d Cir., filed Feb. 2, 2018). Plaintiff alleges that the SEC is using the Florida investigation as a pretext to gather additional [*4]  information to further its case in New Jersey and to overcome the statute of limitations. (Compl. ¶¶ 60-61). He also argues that, to the extent the Florida investigation was ongoing during periods when the New Jersey enforcement proceedings were stayed, any subpoenas issued during that time violated the stay. (Compl. ¶ 62).

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2019 U.S. Dist. LEXIS 81012 *; Fed. Sec. L. Rep. (CCH) P100,414; 2019 WL 2098832


Subsequent History: Affirmed by Gentile v. SEC, 2020 U.S. App. LEXIS 28629 (3d Cir. N.J., Sept. 10, 2020)

Prior History: Gentile v. SEC, 2019 U.S. Dist. LEXIS 37248, 2019 WL 1091068 (D.N.J., Mar. 8, 2019)


subpoena, sovereign, injunction, waive, intervene, broker-dealer, collateral, enjoin