Securities and Exchange Commission v. Rayat

Background

The Securities and Exchange Commission (SEC) asked for permission under Federal Rule of Civil Procedure 30(a)(2) to take more than ten depositions. The SEC specifically identified John Conklin and Alfred Greco and also requested two additional depositions without identifying those witnesses. The motion was opposed by RenovaCare, Inc., Harmel S. Rayat, Jeetenderyjit Sidhu, Jatinder Bhogal, and Relief Defendant 1420527 Alberta Ltd.

Court’s analysis

Rule 30(a)(2) requires court permission for more than ten depositions when the parties have not agreed otherwise. The court explained that the requested discovery must be relevant and proportional to the needs of the case, and that the SEC had to show that each additional witness would provide sufficiently unique information.

The court held that the SEC had not met that burden. It found that neither Conklin nor Greco was central to the SEC’s case. The SEC said Conklin could test Bhogal’s denials that he knew about StreetAuthority’s promotion, but did not explain why Conklin’s testimony would not duplicate other evidence or why it was necessary. The SEC similarly sought Greco’s testimony to test denials by attorney Joseph Sierchio concerning his alleged involvement in drafting a legal disclaimer used in StreetAuthority’s promotion, but did not identify critical, non-duplicative testimony that Greco would provide.

The court also found that the SEC had not adequately explained why it waited to request the depositions. The court noted that relevant information concerning Bhogal had been available earlier, as had documents concerning Sierchio. It further emphasized that the case had been pending since May 2021, discovery deadlines had been extended several times, and fact discovery was nearing its end. Several deposition days were already scheduled for September, so the court concluded that the burden of the requested discovery appeared to outweigh its likely benefit. Because the SEC did not identify the other two proposed deponents, the court could not evaluate whether those depositions should be allowed.

Ruling

Judge Liman denied the motion for leave to take additional depositions and directed the Clerk of Court to close the motion docket entry, Dkt. No. 230. In a footnote, the court also denied a request by counsel for Bhogal and Relief Defendant 1420527 Alberta Ltd. to strike the SEC’s allegation that its investigation was impeded by misleading testimony and deletion of key electronic messages. The order addressed discovery and related requests; it did not decide the underlying securities claims.