United States Securities and Exchange Commission v. Taylor

Background

The Securities and Exchange Commission brought this civil enforcement action against Benjamin Taylor and others. It alleges that Taylor provided Joseph Abdul Noor El-Khouri with material, non-public information from two global investment banks in exchange for cash or gifts.

On February 22, 2023, the United States Government, which was not previously a party, moved to intervene under Federal Rule of Civil Procedure 24 and to stay the proceedings as to Taylor until the conclusion of a parallel criminal case arising from the same facts and circumstances. Taylor consented to the requested stay. The Securities and Exchange Commission took no position.

Intervention

Rule 24(a)(2) requires intervention as of right when a movant claims an interest related to the action, may have that interest impaired by the action, and is not adequately represented by the existing parties. The court had previously found that the Government met those requirements in seeking to intervene as to El-Khouri. Because the same facts applied here, the court found that the Government had demonstrated its right to intervene. It also relied on its earlier alternative finding that permissive intervention under Rule 24(b) was appropriate.

The court therefore granted the Government’s request to intervene.

Stay

The Government also requested a stay, meaning a pause, of the civil proceeding as to Taylor. The court considered the factors used for parallel civil and criminal cases: the degree of overlap, the status of the criminal case, the interests and possible prejudice of the civil plaintiff, the interests and burden affecting the defendant, the court’s interests, and the public interest.

The court found that the same considerations supporting the earlier stay as to El-Khouri supported a stay as to Taylor. The civil and criminal cases significantly overlap; Taylor had been indicted; Taylor consented to the stay; the Securities and Exchange Commission did not object; and judicial efficiency and the public interest favored allowing the criminal prosecution to proceed without the civil case continuing at the same time.

Disposition

The court granted the Government’s motion to intervene. It also granted the Government’s motion to stay discovery in the civil case as to Benjamin Taylor and asked the Clerk of Court to stay the action as to Taylor until the conclusion of the parallel criminal case. The Government must notify the court about the status of Taylor’s criminal case at the same time it provides updates concerning El-Khouri’s criminal case, except that it did not have to provide a Taylor update on April 1, 2023.

This order addressed intervention and pausing the civil case; it did not decide the underlying allegations against Taylor.