Securities and Exchange Commission v. Skelley
- Lorna Schofield
- 1:18-cv-08803
- U.S. District Court · Southern District of New York
- 5
In SEC v. Skelley, Judge Freeman set a deadline for Skelley to challenge proposed damages before recommending a monetary award.
William C. Skelley, whose liability had already been determined by default, was given a deadline to challenge the SEC’s proposed disgorgement, prejudgment interest, and civil penalties. The SEC had to serve the order and could proceed on its written submissions if Skelley did not respond.
What happened
In Securities and Exchange Commission v. Skelley, Skelley did not respond to the complaint, so the court entered a default against him. Judge Lorna G. Schofield later ruled that he was liable and permanently barred him from violating certain securities laws, while the amount of money owed remained undecided.
The Securities and Exchange Commission asked for repayment of alleged ill-gotten gains, interest, and civil penalties. The court had not previously told Skelley how to challenge those amounts or request a hearing, so it ordered him to respond by January 29, 2021 if he wished to contest them.
Judge Debra Freeman ordered that, if Skelley did not respond by the deadline, the court would prepare a recommendation about damages based only on the SEC’s written submissions and would not hold a hearing unless he requested one in writing. The SEC also had to serve the order on Skelley and file proof of service.
The detailed version
- Securities and Exchange Commission v. Skelley · No. 1:18-cv-08803
- Lorna Schofield
- Jan. 11, 2021
Background
The Securities and Exchange Commission (SEC) asserted federal securities-law claims against William C. Skelley and Sohin S. Shah. Skelley failed to answer or otherwise respond, and the Clerk entered a default against him on April 23, 2019. The SEC then sought a default judgment requiring Skelley to comply permanently with an injunction against violating specified antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, to repay alleged ill-gotten gains with prejudgment interest, and to pay third-tier civil penalties.
On July 8, 2019, Judge Lorna G. Schofield granted default judgment against Skelley as to liability and permanently enjoined him from violating certain securities laws. She referred the case for calculation of the monetary award. The SEC later submitted additional material explaining the factual and legal basis for the requested civil penalties. Shah had separately settled with the SEC, and a final judgment was entered against him on July 15, 2019.
Order
The order states that Skelley had not responded to the SEC’s damages submissions. It also states that the court had not expressly told him that he could oppose the requested amounts or request a damages hearing, had not set a response deadline, and had not warned him that the court could determine damages from the SEC’s submissions alone.
The court therefore ordered Skelley to respond by January 29, 2021 if he wished to contest the SEC’s calculations for disgorgement, interest, or civil penalties. The order explained how he could file without a lawyer during the COVID-19 pandemic. If Skelley did not respond by the deadline, the court would issue a report and recommendation concerning damages based only on the SEC’s written submissions. The court would not hold a damages hearing unless Skelley requested one in writing by that date. The SEC was ordered to serve the order on Skelley and file proof of service by January 14, 2021.
Disposition and Effect
This was a scheduling and notice order, not a final decision on the amount of damages. It preserved an opportunity for Skelley to challenge the requested monetary amounts or request a hearing before the court recommended the amount of the award. Judge Debra Freeman did not determine the amount of disgorgement, prejudgment interest, or civil penalties in this order.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.