United States District Court, D. Massachusetts
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,
Amit Kanodia, Defendant: Martin G. Weinberg, LEAD ATTORNEY,
PRO HAC VICE, Martin G. Weinberg, PC, Boston, MA.
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.
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.
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.
U.S. Attorney's Office, Intervenor: Sarah E. Walters,
LEAD ATTORNEY, United States Attorney's Office MA,
D. BURROUGHS, UNITED STATES DISTRICT JUDGE.
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.
RELEVANT PROCEDURAL HISTORY
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.
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.
GOVERNMENT'S MOTION FOR LEAVE TO INTERVENE
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 ...