Securities & Exchange Commission v. Tome

Summary

The Second Circuit affirmed a judgment finding Giuseppe B. Tome, affiliated Panamanian corporations, and other defendants liable for insider trading in violation of Sections 10(b) and 14(e) of the Securities Exchange Act and related SEC rules. The court rejected challenges concerning personal jurisdiction and service by publication, admissibility of co-conspirator deposition testimony, sufficiency of the evidence, and disgorgement. The district court had imposed injunctions and ordered disgorgement of trading profits with prejudgment interest.

Holdings

1. Service by publication in the International Herald Tribune, together with the defendants' actual knowledge of the action and opportunity to appear, satisfied due process and supported personal jurisdiction where the SEC reasonably treated them as unknown defendants because their own misleading submissions concealed their identities and involvement.
2. The district court properly admitted Csopey's deposition testimony under the coconspirator exception to the hearsay rule.
3. The evidence amply supported the district court's findings that the defendants traded on material nonpublic information in breach of fiduciary duties and violated the federal securities laws.
4. The district court properly enjoined Leati and Lombardfin because the record established a reasonable likelihood that their past violations would recur.
5. Once the SEC established violations of the securities laws, the district court had equitable authority to order disgorgement of the defendants' illegal profits without determining whether identifiable private investors suffered compensable damages.

Questions Presented

1. Whether service by publication and related notice satisfied due process and gave the district court personal jurisdiction over Leati and Lombardfin.
2. Whether Dionisio Csopey's deposition testimony was admissible under the coconspirator exception to the hearsay rule.
3. Whether the evidence supported the findings that the defendants traded on material nonpublic information in violation of the federal securities laws.
4. Whether the evidence supported injunctive relief against Leati and Lombardfin.
5. Whether the district court had equitable authority to order disgorgement of profits without proof of identifiable investor damages.

Disposition

affirmed