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1 I. INTRODUCTION
2 In opposing the Commission’s January 24, 2011 Motion to Extend or Clarify the
3 Discovery Cut-Off (“Discovery Cut-Off Motion”), which seeks a limited extension (or
4 clarification) of the discovery cut-off to allow the Commission to receive bank records it
5 subpoenaed on January 24, 2011, Defendant Marco Glisson (“Glisson”) makes of number of
6 factually, procedurally and legally deficient arguments, which collectively fail to refute the
7 Commission’s prior showing that good cause — namely, the delay caused by the refusal of
8 Glisson, as well as his wife Thidarat Tungwongsathong (“Tungwongsathong”), to satisfactorily
9 discharge their discovery obligations — exists for a limited extension or clarification of the
10 discovery cut-off.
11 In his Opposition Brief, Glisson brazenly attempts to capitalize upon his and
12 Tungwongsathong’s well documented failures to discharge their discovery obligations in a
13 timely manner. First, Glisson erroneously contends that the Commission agreed to their thirty
14 day delay in providing deposition testimony and responsive documents. It did not. Ignoring the
15 poor track record that he and Tungwongsathong accrued with respect to responding to the
16 Commission’s discovery requests, Glisson then makes the self-serving argument that, had only
17 the Commission served him with interrogatories, he would have provided the pertinent bank
18 information in a timely fashion.
19 Next, seemingly oblivious to the relevance standard set forth in Rule 26(b)(1), Glisson
20 makes the patently deficient argument that the bank records sought by the Commission are
21 irrelevant to the underlying litigation. In doing so, Glisson ignores the reality that such records,
22 which will show the frequency of Glisson’s transactions, as well as the amounts of money he
23 received in connection with such transactions, is plainly relevant to the Commission’s claims
24 under the securities laws, as well as its requests for disgorgement and injunctive relief.
25 Finally, Glisson attempts to invalidate the subpoenas by arguing that technical
26 deficiencies regarding the manner in which he received notice constitutes a basis upon which to
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1 quash the subpoenas. However, Glisson has not moved to quash any of the subpoenas, and his
2 own declarations of invalidity are ineffectual. Most importantly, the facts show that Glisson
3 received ample and adequate notice of the subpoenas, and suffered no prejudice whatsoever from
4 any defects in service. This fact is fatal to Glisson’s notice argument, as courts routinely deny
5 efforts to quash a subpoena on the basis of notice deficiencies that result in no prejudice. See,
6 Shell v. Hilliard, 2007 WL 509263, *3-4 (E.D.Tenn., February 13, 2007) (In refusing to quash
7 subpoena on the basis that plaintiff’s counsel had not been given prior notice, the court explained
8 that, “the Court cannot say that the plaintiff has suffered any prejudice as a result of this
9 technical violation of Rule 45.”); Crayton v. Rochester Medical Corportion, 2010 WL 1812594
10 (E.D.Cal., May 5, 2010) (In rejecting argument that subpoena should be quashed due to improper
11 service, the court explained that, “although plaintiff argues improper service, it is evident that he
12 received the document, therefore, any deficiencies in the proof of service were not prejudicial.”)
13 II. ARGUMENT
14 A. Good Cause Exists For An Extension Or Clarification Of The January 26,
15 2011 Discovery Cut-Off
16 In the Opening Brief, the Commission explained that: (1) an extension and/or
17 clarification of the discovery cut-off was needed to allow the Commission to obtain bank records
18 associated with accounts maintained by Glisson and Tungwongsathong, which the Commission
19 subpoenaed on January 24, 2011; and that (2) good cause exists for the limited
20 extension/clarification sought. Specifically, due to obstruction and delay on the part of Glisson
21 and Tungwongsathong, the accounts were only identified during their January 10 and 11, 2011
22 depositions, which did not take place until over 30 days after the dates upon which they had been
23 scheduled.1
24
25 1 The transcripts associated with the January 10 and 11, 2011 depositions of Glisson and
Tungwongsathong, though ordered on an expedited basis, were not received until the following
26 week. Upon receipt, the Commission reviewed such transcripts and determined that it was
necessary to subpoena bank records from the institutions identified in the transcripts.
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1 stock.3 Although the phrase “engaged in the business” is not defined by statute, courts have
2 explained that it can be demonstrated through, “such factors as the dollar amount of the
3 securities sold[.]” SEC v. Kenton Capital, 69 F.Supp. 2d (D.C. 1998), at 12-13. (emphasis
4 added.) Hence, in subpoenaing the bank records, the Commission is clearly seeking evidence
5 that is relevant to its claims—e.g., the dollar amount of the stock sold by Glisson and
6 Tunwongsathong, as well as manner in which Glisson consummated his transactions.4
7 Additionally, the bank records are directly relevant to the Commission’s disgorgement
8 claim, as well as Glisson’s “defense” that he did not obtain, and/or does not retain, any profits in
9 connection with his transactions. Subsequent to the January 9, 2009 filing of the operative
10 Complaint, Glisson and Tungwongsathong resumed their sales of CMKM stock to entities and
11 individuals throughout the world. The payments that Glisson and/or Tungwongsathong received
12 in connection with such sales are directly relevant to the Commission’s claims for
13 disgorgement.5
14 Finally, the bank records are directly relevant to the Commission’s claim for injunctive
15 relief. To prevail on this request, the Commission must demonstrate that — absent injunctive
16
17
3 In accordance with the Exchange Act, a broker-dealer is any person “engaged in the business”
18 of buying and selling securities for his own account(s), or for the account(s) of others. See,
19 Section 3(a)(4) and 3(a)(5) of the Exchange Act.
4 In the Opposition Brief, Glisson argues that, because he supposedly only sold — but did not
20 purchase — CMKM stock in 2010, his 2010 CMKM conduct is (1) insufficient to support a
21 finding that he acted as a unregistered dealer in 2010; and (2) thus irrelevant to the
Commission claims. This is nonsense. Between 2005 and 2010, Glisson engaged in the
22 business of purchasing and selling unregistered CMKM stock. Even if Glisson did only sell
CMKM stock in 2010, Glisson argument remains deficient as Glisson pre-2010 purchases of
23 CMKM remain relevant to the determination of whether he acted as an unregistered broker-
dealer in 2010.
24
5 Of course, amending the pleadings in view of newly discovery evidence is routine. In view of
25 the evidence it has discovered subsequent to the reopening of discovery on October 29, 2010,
the Commission is likely to amend its Complaint to add Tungwongsathong as a party-
26 defendant and include allegations concerning Glisson’s 2010 sales of unregistered CMKM
stock.
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1 relief — Glisson is likely to continue his unlawful CMKM stock transactions. The bank records
2 are squarely relevant to this determination, as they will demonstrate that, despite making a 2009
3 promise to this Court that “I…have no intention to…sell any shares of...CMKM at any time
4 in the future[,]” , Glisson sold billions of shares of CMKM in 2010.6 (see Docket Entry No. 28-
5 1 (“Glisson Declaration”), ¶¶ 74-75.)
6 C. Glisson’s Notice Argument is Factually, Procedurally and Legally Deficient
7 In his Opposition Brief, Glisson offers the quasi-judicial findings that: (1) the
8 Commission’s January 24, 2011 subpoenas are “defective” due to supposedly inadequate notice;
9 and that therefore; the (2) Commission’s discovery motion has been rendered moot. In support
10 of his “ruling,” Glisson contends that the Commission “did not provide…the notice required
11 under…Rule 45” prior to serving the subpoenas, and that the Commission “prepared and
12 attempted to late serve Glisson’s attorney with the required notices on January 27, 2011[.]”
13 (Opp., at 3.) In total, however, Glisson’s “notice” argument is factually, procedurally and legally
14 erroneous.
15 First of all, and irrespective of Glisson’s supposition to the contrary, all six of the
16 Commission’s January 24, 2011 subpoenas are valid as they were issued in conformity with Rule
17 45(a). Second, although lack of notice to a party—which results in actual prejudice—may
18 constitute a basis upon which to quash a subpoena, Glisson has not moved to quash any of the
19 Commission’s January 24, 2011 subpoenas. Third, by any measure, Glisson was provided with
20 ample and adequate notice of the subpoenas. Finally, and most importantly, because Glisson has
21 not—and indeed cannot—articulate any prejudice associated with the technical notice issues that
22 he identifies, there is no basis upon which to quash the subpoenas.
23
24
25 6 Upon information and belief, the subpoenaed banks records will include copies of checks and
money orders, which reflect written notations from customers indicating that they were
26 tendered to Glisson and/or Tungwongsathong in connection with purchases of specific amounts
of CMKM stock.
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1 The next day, on January 27, 2007, the Commission made inquiries of pertinent staff
2 members and determined that no formal notices had been sent to Glisson’s counsel regarding the
3 three subpoenas directed to Glisson’s banks on January 24, 2011. (Wynn Decl., ¶7.) After
4 determining that formal notices of the subpoenas had not been sent — and irrespective of the fact
5 that the actual subpoenas had been forwarded to Glisson’s counsel on January 26, 2011, on
6 January 27, 2011, the Commission took the additional step of sending formal notices of the three
7 Glisson bank subpoenas via electronic mail to Glisson’s counsel. (Wynn Decl., ¶8, Ex. 10)
8 With respect to the three subpoenas directed at Tungwongsthong’s accounts, on January
9 24, 2011, the Commission sent copies of each of the three subpoenas — along with the detailed
10 and comprehensive notice packages required by the RFPA — to Glisson’s counsel. (Wynn Dec.,
11 ¶9.) However, after the close of business, at approximately 5:52 p.m. on January 26, 2011,
12 Glisson’s counsel informed the Commission that he did not receive the subpoena attachments
13 associated with two of the subpoenas directed to Tungwongsathong’s accounts. Immediately
14 thereafter, the Commission sent Glisson’s counsel the attachments the he indicated was missing,
15 thus adequately addressing his concerns. (Id.)7
16 Finally, out of an abundance of caution, on February 3, 2011, the Commission sent letters
17 to each of the three banks instructing them not to produce any records until the objections raised
18 by Glisson herein had been resolved, and forwarded copies of such letters — along with
19 additional copies of all six subpoenas — to counsel for Glisson and Tungwongsathong. (Wynn
20 Decl., ¶10, Ex. 11-12.)
21 2. As They Caused No Prejudice, The Technical Notice Arguments
22 Raised By Glisson Do Not Constitute A Basis Upon Which To Quash
23 The Subpoena
24
7 Indeed, the sufficiency of the notice given of three Tungwongsathong subpoenas is not
25
challenged in either Glisson’s Opposition Brief, or the Declaration of Robert Bretz, Esq., which
26 was filed in support.
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1 Id. at 3-4.
2 In view of the reasoning employed by the courts in Shell, Crayton and McClendon,
3 Glisson’s notice argument fails as he cannot demonstrate any prejudice that resulted from the
4 notice problems he identifies. Indeed, in his Opposition, Glisson makes no attempt whatsoever
5 to identify any prejudice that he incurred as result of the problems associated with the notice he
6 received of the January 24, 2011 subpoenas. Plainly, Glisson’s inability to identify any prejudice
7 is indicative of the fact that he suffered no prejudice as result of any mistakes made providing
8 him with notice of the six subpoenas. All six of the subpoenas have return dates of February 14,
9 2011, thus Glisson and Tungwongsathong had and still have ample time to raise objections —
10 and via the Opposition Brief, have already raised objections. Moreover, out of an abundance of
11 caution, on February 3, 2011, the Commission instructed the pertinent banks not to produce any
12 records until the instant motion was resolved, and sent Glisson’s counsel additional copies
13 of all six subpoenas.
14 In view of the aforementioned facts, Glisson’s “notice” argument exclusively rests upon
15 technical and harmless errors, which do not warrant that any of the Commission’s January 24,
16 2011 subpoenas be quashed.
17 III. CONCLUSION
18 In light of the aforementioned considerations, the Commission respectfully requests that
19 the Court issue an order extending the discovery cut-off to February 21, 2011, for the sole
20 purpose of allowing the Commission to complete the third-party discovery that it has
21 propounded upon three banks that were identified by Glisson and Tungwonsathong during their
22 January 10 and 11, 2011 depositions. In the alternative, the Commission respectfully requests
23 that Court issue an order clarifying that, so long as the Commission propounded its remaining
24 discovery prior to the January 26, 2011 discovery cut-off, such discovery is appropriate under the
25 Court’s October 29, 2010 Order, which re-opened discovery until January 26, 2011.
26
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PROOF OF SERVICE
1
I am over the age of 18 years and not a party to this action. My business address is:
2
[X] U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 Wilshire
3 Boulevard, 11th Floor, Los Angeles, California 90036-3648
Telephone No. (323) 965-3998; Facsimile No. (323) 965-3908.
4
On February 4, 2011, I caused to be served the document entitled PLAINTIFF’S
5 REPLY BRIEF IN SUPPORT OF MOTION TO EXTEND OR CLARIFY
THE DISCOVERY CUT-OFF DATE on all the parties to this action addressed as
6 stated on the attached service list:
7 [X] OFFICE MAIL: By placing in sealed envelope(s), which I placed for
collection and mailing today following ordinary business practices. I am
8 readily familiar with this agency’s practice for collection and processing of
correspondence for mailing; such correspondence would be deposited with
9 the U.S. Postal Service on the same day in the ordinary course of business.
10 [ ] PERSONAL DEPOSIT IN MAIL: By placing in sealed
envelope(s), which I personally deposited with the U.S. Postal Service.
11 Each such envelope was deposited with the U.S. Postal Service at Los
Angeles, California, with first class postage thereon fully prepaid.
12
[ ] EXPRESS U.S. MAIL: Each such envelope was deposited in a
13 facility regularly maintained at the U.S. Postal Service for receipt of
Express Mail at Los Angeles, California, with Express Mail postage
14 paid.
15 [ ] HAND DELIVERY: I caused to be hand delivered each such envelope to
the office of the addressee as stated on the attached service list.
16
[ ] UNITED PARCEL SERVICE: By placing in sealed envelope(s)
17 designated by United Parcel Service (“UPS”) with delivery fees paid or
provided for, which I deposited in a facility regularly maintained by UPS or
18 delivered to a UPS courier, at Los Angeles, California.
19 [ ] ELECTRONIC MAIL: By transmitting the document by electronic mail
to the electronic mail address as stated on the attached service list.
20
[X] E-FILING: By causing the document to be electronically filed via the
21 Court’s CM/ECF system, which effects electronic service on counsel who
are registered with the CM/ECF system.
22
[ ] FAX: By transmitting the document by facsimile transmission. The
23 transmission was reported as complete and without error.
24 I declare under penalty of perjury that the foregoing is true and correct.
25
26 Date: February 4, 2011 /s/ Paris A. Wynn
Paris A. Wynn
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