Free Status Report - District Court of Arizona - Arizona

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MOLLY M. WHITE, Cal. Bar No. 171448 E-mail: [email protected] JOHN B. BULGOZDY, Cal. Bar No. 219897 E-mail: [email protected] Attorneys for Plaintiff Securities and Exchange Commission Randall R. Lee, Regional Director Michele Wein Layne, Associate Regional Director 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036 Telephone: (323) 965-3998 Facsimile: (323) 965-3908 UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. SECURITY TRUST COMPANY, N.A., et al., Defendants. Pursuant to the Court's Order dated December 13, 2006, the parties submit the following joint report. I. Case Status Plaintiff Securities and Exchange Commission ("Commission") filed this action on November 25, 2003. On May 6, 2004, upon motions by intervenor New York Attorney General ("NYAG") and defendants Seeger and Kenyon, this action was stayed. On August 30, 2005, in connection with the case brought by NYAG, Mr. Seeger pleaded guilty to grand larceny in the second degree and to violation of general business law § 352-c(6). On October 27, 2005, Mr. Seeger was sentenced to five years probation with certain written conditions. ///
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Case No.: CV-03-2323-PHX-JWS JOINT STATUS REPORT

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On September 20, 2005, the stay in the instant case was lifted. On May 6, 2006, the Court entered a scheduling order, setting the various deadlines in this case. As of December 6, 2006, the Commission had settled its action against Security Trust Company, Nicole McDermott, and William A. Kenyon. Grant Seeger is the last defendant in this action. Despite its efforts to settle the case against Grant Seeger, the Commission has been unable to reach settlement. II. Remaining Activities The Court's December 13, 2006 Order asks that the parties describe "all activities that need to be accomplished to resolve this case and suggest[ ] deadlines which . . . will promote the prompt disposition of this case." A. The Commission's Remaining Activities

The Commission believes that this is a straight-forward case. Mr. Seeger has already pleaded guilty to market timing in connection with the criminal action that was brought by the New York Attorney General's office. The Commission plans to use the criminal plea and allocution as res judicata in the instant case. The only remaining issues are the Commission's late-trading allegations and the amount of disgorgement, prejudgment interest and penalty that Mr. Seeger should pay. The Commission plans to take some additional discovery concerning these issues. 1. Settlement Discussions

The Commission also believes that because Mr. Seeger has already pleaded guilty in a related case, that this is a case in which the parties should be able to reach settlement. Commission counsel has pursued settlement discussions with Mr. Seeger. Other than indicating that he believes the amount of disgorgement that the Commission is seeking is too high, Mr. Seeger has refused to engage in additional settlement talks. For this reason, the Commission believes that Courtsupervised settlement discussions might help resolve this case. The Commission
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asks the Court to order the parties to attend such settlement discussions before a magistrate judge before February 28, 2007. 2. Rule 26 Disclosures

The Commission plans to supplement its Rule 26 disclosures before January 31, 2007, which is the date by which all disclosures, including expert disclosures, must be made. As required by the Court, the Commission will also provide Mr. Seeger a list of witnesses that the Commission may call at trial by January 31, 2007. 3. Discovery

The Commission plans to take several depositions of witnesses that the Commission will call at trial. The Court has currently set March 30, 2007, as the last day by which the parties must complete discovery. The Commission believes that it can conclude the depositions that it plans to take by this date. 4. Potential Discovery Motions

On September 27, 2006, the Commission served Mr. Seeger with written discovery, consisting of document requests, interrogatories, and requests for admissions. On October 26, 2006, Mr. Seeger served his responses to the Commission's written discovery. a. Document Requests: Mr. Seeger produced no documents in

response to the Commission's Requests for Production of documents. In response to the document requests, Mr. Seeger claims that the requested documents either a) are in the possession of his New York lawyers, or b) were already produced to the Commission. The problem with these responses are: a) Mr. Seeger is obligated to produce documents that are in the possession of his New York lawyers because those documents are under his possession, custody, or control; and b) the Commission has no record of Mr. Seeger previously producing documents to the

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Commission.1 Commission counsel has contacted Mr. Seeger's lawyer in an effort to work out these issues. It appears that the Commission may need to file a motion to compel Mr. Seeger's production of responsive documents. b. Interrogatories: The Commission served Mr. Seeger with

three interrogatories, one of which asked Mr. Seeger to "IDENTIFY all compensation" that he received as a result of his employment by Security Trust Company from January 1, 1998 through October 5, 2003. Mr. Seeger responded that "any and all documents relative to my compensation have been provided to the Securities and Exchange Commission." It is the Commission's position that Mr. Seeger's answer was not responsive to the interrogatory because the interrogatory did not ask Mr. Seeger to identify or produce any documents. Instead, it asks Mr. Seeger to identify all the compensation that he received. Counsel for Mr. Seeger has indicated that Mr. Seeger will prepare this information so that the interrogatory may be supplemented. Depending on Mr. Seeger's response, the Commission may file a motion to compel a response to this interrogatory. 5. Summary Judgment Motion

The Commission plans to file a motion for summary judgment against Mr. Seeger. The Court has set April 30, 2007, as the last day to file such motions. The Commission believes that this is a reasonable date by which to file all motions for summary judgment. The Commission plans to file its motion for summary judgment before April 30th. B. Grant Seeger's Remaining Activities 1. Settlement Discussions

Mr. Seeger agrees with the Commission that Court-supervised settlement

1 In March of 2006, Mr. Seeger's former lawyers sent the Commission a "Statement of Financial Condition" that Mr. Seeger prepared. Included with the 28 statement were portions of Mr. Seeger's tax returns for 2000, 2001, 2002, and 2003.
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discussions might help resolve this case. Mr. Seeger has no objection to holding Court-supervised settlement discussions before February 28, 2007. 2. Rule 26 Disclosures

Mr. Seeger plans to supplement his Rule 26 disclosures and provide a witness list before January 31, 2007. 3. a. in this case. b. Document Production: The documents that Mr. Seeger claims Discovery Depositions: Mr. Seeger does not plan to take any depositions

to have produced to the Commission will be provided to the Commission by January 31, 2007. The documents that are in the possession of Mr. Seeger's New York counsel have not been provided to Mr. Seeger, despite requests by Mr. Seeger and his existing counsel. c. Interrogatories: Mr. Seeger will supplement his responses to

the Commission's Interrogatories by January 31, 2007.

DATED: January 19, 2007

/s/ Molly M. White MOLLY M. WHITE JOHN B. BULGOZDY Attorneys for Plaintiff Securities and Exchange Commission

DATED: January 19, 2007

/s/ Jess Larona JESS LARONA Dodge, Anderson, Mableson, Steiner, Jones, and Horowitz, Ltd. Attorney for Defendant Grant D. Seeger

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PROOF OF SERVICE I am over the age of 18 years and not a party to this action. My business address is: [X] U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036.

Telephone: (323) 965-3998 Fax: (323) 965-3908 On January 19, 2007, I served the document entitled JOINT STATUS REPORT upon the parties to this action addressed as stated on the attached service list: [X] OFFICE MAIL: By placing in sealed envelope(s), which I placed for collection and mailing today following ordinary business practices. I am readily familiar with this agency's practice for collection and processing of correspondence for mailing; such correspondence would be deposited with the U.S. Postal Service on the same day in the ordinary course of business. [ ] PERSONAL DEPOSIT IN MAIL: By placing in sealed envelope(s), which I personally deposited with the U.S. Postal Service. Each such envelope was deposited with the U.S. Postal Service at Los Angeles, California, with first class postage thereon fully prepaid. EXPRESS U.S. MAIL: Each such envelope was deposited in a facility regularly maintained at the U.S. Postal Service for receipt of Express Mail at Los Angeles, California, with Express Mail postage paid.

[ ]

[ ] [ ]

PERSONAL SERVICE: I caused to be personally delivered each such envelope by hand to the office of the addressee. FEDERAL EXPRESS: By placing in sealed envelope(s) designated by Federal Express with delivery fees paid or provided for, which I deposited in a facility regularly maintained by Federal Express or delivered to a Federal Express courier, at Los Angeles, California. ELECTRONIC MAIL: By transmitting the document by electronic mail to the electronic mail address as stated on the attached service list. FAX (BY AGREEMENT ONLY): By transmitting the document by facsimile transmission. The transmission was reported as complete and without error. (Federal) I declare that I am employed in the office of a member of the bar of this Court, at whose direction the service was made. I declare under penalty of perjury that the foregoing is true and correct. /s/ Magnolia M. Marcelo MAGNOLIA M. MARCELO

[ ] [X]

[X]

Date: January 19, 2007

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SEC v. Security Trust Company, et al. United States District Court - District of Arizona Case No. CV 03-2323 PHX JWS (LA-2781) SERVICE LIST Jess A. Larona, Esq. Dodge Anderson Mableson Steiner Jones & Horowitz, Ltd. 3003 N. Central Avenue, Suite 1800 Phoenix, AZ 85012-2909 Email: [email protected] Attorney for Defendant Grant D. Seeger

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