U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17113 /SEPTEMBER 4, 2001
Securities and Exchange Commission v. Samuel M. Fodale, MBD No. 01-MC-10280-WGY (D. Mass. August 27, 2001)
U.S. DISTRICT COURT ISSUES ORDER REQUIRING COMPLIANCE IN SEC SUBPOENA ENFORCEMENT ACTION AGAINST SAMUEL M. FODALE
The Securities and Exchange Commission ("Commission") announced that on August 27, 2001, the United States District Court for the District of Massachusetts granted its application for enforcement of an investigative subpoena against Samuel M. Fodale. The court ordered Fodale to comply with the subpoena by producing documents on or before August 31, 2001. Fodale, a resident of Detroit, Michigan, is a director and significant shareholder of Competitive Technologies, Inc. ("Competitive Technologies"), located in Fairfield, Connecticut. According to the Commission's court filings, documents were sought from Fodale in connection with an investigation to determine whether a former registered representative in the Hyannis MA office of a brokerage firm and/or others may have violated anti-fraud provisions of the securities laws by effecting manipulative transactions in the securities of Competitive Technologies that affected its price and market.
According to Court filings, Commission staff in May, 2001 issued an investigative subpoena to Fodale for the production of certain documents relating to, among other things, the purchase and sale of Competitive Technologies stock, agreements between Fodale and others related to the sale of the stock, and brokerage and bank account records. Fodale, however, failed to produce requested documents by the return date of the subpoena and extended deadlines set by the Commission staff. The Commission filed its application for enforcement of its subpoena on August 2, 2001. Fodale opposed the enforcement application claiming, among other things, 1) that he should be allowed to provide brokerage account numbers and bank account numbers rather than producing the actual records for such accounts, 2) that the specified time period in the subpoena was overly broad because it called for the production of documents predating the time period specified in the Commission's Formal Order of investigation, notwithstanding the fact that the Formal Order referenced that information had been reported to the Commission tending to show potential violations of the law "from at least October 1, 1999 to at least October 31, 2000," and 3) any production by him beyond the time period specified in the Formal Order should be conditioned upon the Commission's payment of his production costs.
After considering the parties' arguments, the court granted the Commission's application to enforce its subpoena and ordered that Fodale produce specified categories of documents at the Commission's Boston District Office by August 31, 2001. Specifically, with respect to the arguments raised by Fodale in opposing the enforcement action, the Court a) ordered full compliance with the items in the subpoena calling for the production of brokerage account and bank account records, b) did not limit compliance to the time period specified in the Formal Order, and c) did not condition compliance withthe subpoena on, or otherwise require payment of production costs by the Commission. The Court further found that, unrelated to any arguments made by Fodale, no additional production was required as to certain categories of documents.