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United States Securities and Exchange Commission v. Kanodia

United States District Court, D. Massachusetts

December 17, 2015

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
AMIT KANODIA and IFTIKAR AHMED, et al., Defendants

          For United States Securities and Exchange Commission, Plaintiff: John B. Hughes, LEAD ATTORNEY, U.S. Attorney's Office, New Haven, CT; Nicholas P. Heinke, LEAD ATTORNEY, Mark L. Williams, U.S. Securities and Exchange Commission, Denver, CO; Sarah E. Walters, United States Attorney's Office MA, Boston, MA.

         For Amit Kanodia, Defendant: Martin G. Weinberg, LEAD ATTORNEY, PRO HAC VICE, Martin G. Weinberg, PC, Boston, MA.

         For Iftikar Ahmed, Defendant: Alex Lipman, Ashley L. Baynham, Jill L. Forster, LEAD ATTORNEYS, PRO HAC VICE, Brown Rudnick LLP, New York, NY; Martin G. Weinberg, LEAD ATTORNEY, PRO HAC VICE, Martin G. Weinberg, PC, Boston, MA; Jessica T. Lu, Brown Rudnick LLP, Boston, MA.

         For RAKITFI HOLDINGS, LLC, a Virginia Limited Liability Company, ThirdParty Defendant: Alex Lipman, Ashley L. Baynham, Jill L. Forster, LEAD ATTORNEYS, PRO HAC VICE, Brown Rudnick LLP, New York, NY; Jessica T. Lu, Brown Rudnick LLP, Boston, MA.

         For LINCOLN CHARITABLE FOUNDATION, a supposed charity, ThirdParty Defendant: Richard R. Brown, LEAD ATTORNEY, Federal Programs Branch, Washington, DC; Martin G. Weinberg, Martin G. Weinberg, PC, Boston, MA.

         For U.S. Attorney's Office, Intervenor: Sarah E. Walters, LEAD ATTORNEY, United States Attorney's Office MA, Boston, MA.

         ORDER

         ALLISON D. BURROUGHS, UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         The United States Department of Justice (" government" ) has moved to intervene in this action for the limited purpose of moving for a stay of discovery pending the conclusion of parallel criminal proceedings (Docket No. 52). For the reasons set forth below, the government's motion to intervene is ALLOWED. The government's motion to stay discovery is DENIED, except that (1) the depositions of Defendant Amit Kanodia (" Mr. Kanodia" ) and the individual identified in the Complaint as " Tippee 1" are stayed until further order of this Court, and (2) the government retains the right to object to particular discovery requests, which objections will be dealt with by the Court as they arise.

         II. RELEVANT PROCEDURAL HISTORY

         The United States Securities and Exchange Commission (" SEC" ) filed the instant action against Mr. Kanodia, co-defendant Iftikar Ahmed (" Mr. Ahmed" ), and several relief defendants on April 2, 2015, alleging violations relating to insider trading activities (Docket No. 1). This is a civil case. There is also a parallel criminal case pending against Mr. Kanodia and Mr. Ahmed arising out of the same alleged insider trading activity. See United States v. Kanodia and Ahmed, No. 15-cr-10131-NMG (D. Mass.). Specifically, on May 28, 2015, Mr. Kanodia and Mr. Ahmed were charged by a grand jury with conspiring to commit securities fraud in violation of 18 U.S.C. § 371, and securities fraud in violation of 15 U.S.C. § § 78j(b), 78ff(a) and 17 C.F.R. § 240.10b-5. See 15-cr-10131-NMG (Docket No. 27, Indictment). Mr. Kanodia entered a plea of not guilty on June 23, 2015. See id. (Docket No. 34). Although the criminal case against Mr. Kanodia is proceeding, Mr. Ahmed is currently a fugitive.

         On November 16, 2015, the government filed the instant Motion for Leave to Intervene and for a Stay of Further Discovery Pending Resolution of Parallel Criminal Proceedings. (Docket No. 52). The SEC assents to the government's request to intervene and does not object to the motion for a stay of discovery. (Id., p. 1). Although Mr. Kanodia does not oppose the government's intervention, he does oppose the government's motion to stay. (Docket No. 53). The Court heard oral argument on December 9, 2015.

         III. GOVERNMENT'S MOTION FOR LEAVE TO INTERVENE

         Pursuant to Rule 24 of the Federal Rules of Civil Procedure, the government seeks to intervene in this action for the limited purpose of moving for a stay of discovery pending resolution of the parallel criminal case against Mr. Kanodia. The Court has discretion to grant permissive intervention pursuant to Rule 24(b) where the prospective intervenor " has a claim or defense that shares with the main action a common question of law or fact." Fed.R.Civ.P. 24(b)(1)(B). Here, where the same facts underlie both the civil and criminal actions, the government arguably has an ...


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