Securities and Exchange Commission v. Gallagher
- P. Castel
- 1:21-cv-08739
- U.S. District Court · Southern District of New York
- 3
In Securities and Exchange Commission v. Gallagher, Judge Castel modified the asset freeze to allow tax payments while limiting certain arguments.
Steven M. Gallagher, whose frozen Citibank funds may be used only to pay the specified Internal Revenue Service tax bill; the Securities and Exchange Commission, which remains subject to the existing preliminary-injunction protections; and the parties’ future arguments about the asset freeze under SEC v. Govil.
What happened
Securities and Exchange Commission v. Gallagher concerns a preliminary injunction that froze some of Steven M. Gallagher’s assets while the case remains pending. The court had previously allowed limited access to frozen funds for specified purposes.
The parties agreed to another modification. The court allowed Gallagher to use funds in two Citibank accounts only to pay his outstanding Internal Revenue Service tax bill dated June 6, 2022.
Judge Castel also ordered that the court would not consider Gallagher’s arguments that the asset freeze should be lifted based on SEC v. Govil until June 1, 2024, unless good cause is shown. All other provisions of the preliminary injunction remained in effect.
The detailed version
- Securities and Exchange Commission v. Gallagher · No. 1:21-cv-08739
- P. Castel
- Nov. 17, 2023
Background
The court had entered a temporary restraining order in October 2021 that barred Steven M. Gallagher from violating specified federal securities-law provisions and froze certain assets. In November 2021, the court entered a stipulated preliminary injunction, meaning an injunction agreed to by the parties and entered before final judgment. That order froze Gallagher’s assets up to $6.9 million, subject to specified exceptions for business, living, educational, and legal expenses.
The court later modified the injunction in March 2022 to permit Gallagher and Kristen Gallagher to sell securities in certain frozen brokerage accounts under specified conditions. After a June 2022 hearing on Gallagher’s request to vacate the asset freeze entirely, the court denied that request but reduced the freeze to up to $3,172,990. The court entered that modification in July 2022.
The November 2023 modification
The parties informed the court that they had agreed to another modification. Under the agreement, Gallagher could use funds in Citibank accounts ending in x7455 and x3678 to pay his outstanding tax bill. Gallagher also agreed not to argue that the asset freeze should be modified under SEC v. Govil until a final judgment, except for good cause shown and not before June 1, 2024. The order states that Gallagher reserved all arguments, including arguments related to Govil, concerning any potential disgorgement in the case.
Ruling
Judge P. Castel modified the preliminary injunction to allow Gallagher to use the Citibank account funds solely to pay his outstanding Internal Revenue Service tax bill dated June 6, 2022. The order expressly barred use of those funds for any other purpose. Based on the parties’ agreement, the court also stated that it would not entertain arguments seeking to lift the asset freeze based in whole or in part on SEC v. Govil, except for good cause shown and in no instance before June 1, 2024. All other provisions of the preliminary injunction, including its earlier modifications, remained in effect.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.