Securites and Exchange Commission v.Morriss et al

Filing 469

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that the receivers motion for approval of sale of interests in Clearbrook Global Advisors LLC [Doc. #462] is granted. IT IS FURTHER ORDERED that the receiver is authorized to sell the receiverships interests in Clearbrook Global Advisors LLC on the terms and conditions set forth in the Motion and in Exhibit B to the Motion. Signed by District Judge Carol E. Jackson on 6/8/2016. (KMS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
BURTON DOUGLAS MORRISS, et al.,
Defendants.

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Case No. 4:12-CV-80 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on the receiver’s motion for approval of sale
of interests in Clearbrook Global Advisors, LLC (Clearbrook).
On January 17, 2012, the Court appointed a receiver to oversee four
investment

entities

established

by

defendant

Burton

Douglas

Morriss.

The

appointment order empowered the receiver to “administer and manage” the
business affairs and property of the investment entities and to “marshal and
safeguard all of the assets of the Investment Entities and take whatever actions are
necessary for the protection of investors.” [Doc. #16, p. 1]. The receivership owns
Series B Preferred shares in Clearbrook, a holding company that provides
investment advisory and securities brokerage services through wholly owned
subsidiaries. The receiver seeks authorization to redeem all of the receivership’s
interests to Clearbrook for $100,000. The proposed redemption will increase the
liquid assets of the estate, increase the funds available for distribution to allowed
claimants, and avoid the risk of future diminution of the receivership’s interests in
Clearbrook.

The proposed sale is governed by 28 U.S.C. §§ 2001 and 2004. Section 2004
provides that “any personalty sold under any order or decree of any court in the
United States shall be sold in accordance with section 2001, unless the court orders
otherwise.” Under § 2001, property may be sold in a public sale or, as is necessary
here, in a private sale, provided that three separate appraisals have been
conducted, the terms are published, and the sale price is no less than two-thirds of
the valued price. SEC v. Goldfarb, No. C 11-00938 WHA, 2013 WL 4504271, at *2
(Aug. 21, 2013). Section 2001 “does express a preferential course to be followed in
connection with a court authorized sale of property and . . . the district court should
not order otherwise except under extraordinary circumstances.” Tanzer v. Huffines,
412 F.2d 221, 222 (3d Cir. 1969).
The pool of potential buyers of the Clearbrook interests is very limited. As a
privately-held

company,

Clearbrook is under

no

obligation

to

provide

the

information and diligence that a serious potential buyer would require. Thus, only
current shareholders and the company itself are in a position to make a genuine
offer. The accounting firm CliftonLarsonAllen LLP evaluated Clearbrook’s offer and
concluded that the offered redemption value is reasonable based on available
information. Furthermore, the proposed redemption avoids significant downside
risks of rejecting the offer. Ex. C [Doc. #463-3].
The Court finds that sufficient grounds exist to authorize the receiver’s sale
outside the statutory scheme set forth in 28 U.S.C. §§ 2001 and 2004. The Court
further finds that the redemption offer by Clearbrook represents the best price for
the interests under the circumstances.
Accordingly,

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IT IS HEREBY ORDERED that the receiver’s motion for approval of sale of
interests in Clearbrook Global Advisors LLC [Doc. #462] is granted.
IT IS FURTHER ORDERED that the receiver is authorized to sell the
receivership’s interests in Clearbrook Global Advisors LLC on the terms and
conditions set forth in the Motion and in Exhibit B to the Motion.

___________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 8th day of June, 2016.

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