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SEC v. Thompson

SEC v. Thompson

United States District Court for the Southern District of New York

March 2, 2017, Decided; March 2, 2017, Filed

14-cv-9126 (KBF)

Opinion

 [*582]  OPINION & ORDER

KATHERINE B. FORREST, District Judge:

This is an enforcement action brought by the New York office of the Securities and Exchange Commission ("SEC") against defendants Anthony J. Thompson Jr., Jay Fung and Eric Van Nguyen—three alleged penny stock promoters—and three relief defendants. (ECF No. 1 ("Compl.") ¶¶ 9-13.) The SEC alleges that, from November 2009 to September 2010, defendants conducted five penny stock "pump-and-dump"/"scalping" schemes in which they touted certain securities to the investing public without disclosing the extent of their financial stakes in those securities. The SEC alleges that, in perpetrating these schemes, the defendants [**2]  violated several provisions of the securities laws: Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 promulgated thereunder, as well as Sections 17(a) and 17(b) of the Securities Act of 1933 ("Securities Act").

The SEC instituted this action after its Florida office prosecuted Thompson and other defendants for securities violations in connection with a penny stock scheme involving a separate issuer, and after the New York office unsuccessfully engaged in settlement negotiations with Thompson. This case is in the early stages. Discovery has been stayed until the earlier of August 11, 2017 or the resolution of a parallel criminal proceeding that Thompson is currently defending in New York state court. (ECF No. 39.)

Now before the Court is Thompson's motion for summary judgment. (ECF No. 42.) Thompson originally filed the motion as a motion to dismiss; the Court converted it to one for summary judgment because Thompson cited materials outside the pleadings. (ECF No. 47.) Thompson advances three arguments in support of his motion. First, he asserts that this action is barred in its entirety by the Florida Action under principles of res judicata. Second, he argues that the SEC should be obligated [**3]  to settle the charges against him under principles of New York contract law or promissory estoppel. Third, Thompson submits that the SEC has failed to allege securities laws violations against him as a matter of law.

 [*583]  For the reasons set forth below, Thompson's motion for summary judgment (ECF No. 42) is DENIED.

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238 F. Supp. 3d 575 *; 2017 U.S. Dist. LEXIS 30380 **; Fed. Sec. L. Rep. (CCH) P99,642

SECURITIES AND EXCHANGE COMMISSION, Plaintiff, -v- ANTHONY J. THOMPSON, JR., JAY FUNG, and ERIC VAN NGUYEN, Defendants, -and- JOHN BABIKIAN and KENDALL THOMPSON, Relief Defendants, NEW YORK COUNTY DISTRICT ATTORNEY, Intervenor.

Subsequent History: Partial summary judgment granted by, in part, Partial summary judgment denied by, in part, Costs and fees proceeding at, Request denied by SEC v. Thompson, 2019 U.S. Dist. LEXIS 168704, 2019 WL 4747678 (S.D.N.Y., Sept. 27, 2019)

Injunction granted at, Motion granted by, Judgment entered by SEC v. Thompson, 2021 U.S. Dist. LEXIS 205204 (S.D.N.Y., Oct. 20, 2021)

Prior History: SEC v. Recycle Tech, Inc., 2012 U.S. Dist. LEXIS 194473 (S.D. Fla., Nov. 16, 2012)

CORE TERMS

allegations, stock, newsletters, disclosure, issuers, res judicata, misleading, bespeaks, caution, violations, disclose, penny stock, settlement, Gem, Holdings, duty to disclose, bids, million shares, disclaimers, discovery, recommend, Securities Act, forward-looking, lawsuit, schemes, argues, misstated, promotion, auction, parties