United States Securities and Exchange Commission v. Sanchez
- P. Castel
- 1:21-cv-08085
- U.S. District Court · Southern District of New York
- 7
In Securities and Exchange Commission v. Jose Luis Casero Sanchez, Judge Castel entered default judgment, issued a permanent injunction, and ordered monetary payments.
The SEC obtained default judgment and monetary relief against Jose Luis Casero Sanchez. Sanchez was permanently enjoined and ordered to pay the stated amounts. Jose Luis Casero Abellan and Maria Isabel Sanchez Gonzalez, named as relief defendants, were affected by the dismissal of the claim against them and the transfer of their released interests in frozen assets toward the judgment.
What happened
Securities and Exchange Commission v. Jose Luis Casero Sanchez involved the Securities and Exchange Commission’s allegations that Sanchez used confidential information from an investment bank to trade before public announcements involving 45 companies. Sanchez did not appear, and the court accepted the complaint’s properly stated allegations as admitted.
The court granted the SEC’s request for default judgment. It found liability for insider-trading violations under federal securities laws, permanently barred Sanchez from future violations, and ordered him to pay $471,725.65 in trading profits, $14,330.89 in interest, and $1,415,176.95 in civil penalties. The court also dismissed the claim against Sanchez’s parents, who were named as relief defendants, under the parties’ stipulations.
Judge Castel directed that frozen assets be paid to the SEC toward those amounts, entered final judgment against Sanchez, and closed the case.
The detailed version
- United States Securities and Exchange Commission v. Sanchez · No. 1:21-cv-08085
- P. Castel
- Apr. 6, 2022
Background
The Securities and Exchange Commission (SEC) sued Jose Luis Casero Sanchez, alleging that he engaged in repeated insider trading while working as a compliance analyst at a prominent United States-based investment bank. The complaint alleged that Sanchez obtained material, nonpublic information from the bank’s confidential database concerning 45 publicly traded entities, including pending or potential mergers, acquisitions, and equity offerings. It alleged that he bought securities before the relevant corporate events were announced and sold them afterward for illegal profits.
The SEC asserted claims under section 10(b) of the Securities Exchange Act and Rule 10b-5, section 17(a) of the Securities Act, and section 14(e) of the Exchange Act and Rule 14e-3. The complaint also sought disgorgement from Sanchez’s parents, Jose Luis Casero Abellan and Maria Isabel Sanchez Gonzalez, as relief defendants, based on allegations that Sanchez’s illicit profits were held in accounts in their names.
Service, Default, and Liability
The court’s temporary restraining order authorized service on Sanchez by email or through digital-asset exchanges where he maintained accounts. The SEC served the temporary restraining order by email and through the exchanges, and served the summons and complaint by email. Sanchez did not appear. The Clerk entered a certificate of default on December 15, 2021.
The court concluded that it had personal jurisdiction because Sanchez was alleged to have placed unlawful trades on the New York Stock Exchange, the NASDAQ Stock Exchange, and the NASDAQ Options market, all located in the district. It also found subject-matter jurisdiction because the complaint asserted claims under the Securities Act and Exchange Act.
Because Sanchez defaulted, the well-pleaded allegations of the complaint were treated as admitted. The court concluded that the allegations adequately established violations of section 17(a), section 10(b), and Rule 10b-5. It also concluded that the allegations adequately established violations of section 14(e) and Rule 14e-3 involving trades in securities of AMAG Pharmaceuticals, Inc., Viela Bio, Inc., and HD Supply Holdings before public announcements of tender offers.
Relief
The court granted the SEC’s motion for entry of default judgment. It granted permanent injunctive relief barring Sanchez from further violations of section 17(a) of the Securities Act, sections 10(b) and 14(e) of the Exchange Act, and Rules 10b-5 and 14e-3.
The court ordered Sanchez to disgorge $471,725.65 in unlawful trading profits and pay $14,330.89 in prejudgment interest. It also granted the SEC’s request for $1,415,176.95 in civil penalties, which the court described as the maximum penalty based on three times the unlawful gains.
The court granted the SEC’s request to use previously frozen assets toward satisfaction of the disgorgement, interest, and penalties. The claim against the relief defendants was dismissed pursuant to the parties’ stipulations. The Clerk was directed to enter final judgment against Sanchez and close the case.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.