Securities and Exchange Commission v. Stifel Nicolaus & Co Inc et al

Filing 342

ORDER signed by Judge J.P. Stadtmueller on 6/23/2017 GRANTING 340 Plaintiff's Motion To Appoint a Tax Administrator. See Order for further details regarding the appointment, obligations, and payment of the tax administrator. (cc: all counsel) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
STIFEL NICOLAUS & COMPANY,
INCORPORATED and DAVID W.
NOACK,

Case No. 11-CV-755-JPS

ORDER

Defendants.
On December 6, 2016, the Court entered Final Judgment in this case,
ordering disgorgement of profits and imposing civil penalties on the
defendants. (Docket #338). The Court further ordered that a Fair Fund be
created pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as
amended, for the distribution of the civil penalties and disgorgement
referenced in the Final Judgement. Id. at 4-5. The Court directed the staff of
the Securities and Exchange Commission (“SEC”) to engage a tax
administrator for the Fair Fund (the “Fund”), and explained that taxes, if
any, and related administrative expenses of the tax administrator shall be
paid from the Fund. Id. at 5.
On May 2, 2017, the SEC filed a motion to appoint Damasco &
Associates LLP as the tax administrator. (Docket #340). Defendant Stifel
Nicolaus & Co., Inc. (“Stifel”) filed a response, indicating that although it
did not object to the SEC’s motion, it sought clarification that it would not
be required to reimburse the fees and costs associated with the tax

administrator. (Docket #341). The concern Stifel raises is dispelled by the
Court’s Final Judgment, which makes clear that taxes and expenses related
to the tax administrator shall be paid from the Fund. (Docket #338 at 5).
Therefore, finding the SEC’s motion to appoint a tax administrator
appropriate and having no independent basis to reject it, the Court will
grant it.
Accordingly,
IT IS ORDERED that the Securities and Exchange Commission’s
motion to appoint a tax administrator (Docket #340) be and the same is
hereby GRANTED; and
IT IS FURTHER ORDERED that:
1.

Damasco & Associates LLP is appointed as Tax Administrator

to execute all income tax reporting requirements, including the preparation
and filing of tax returns, with respect to the Fund.
2.

Damasco & Associates LLP shall be designated the Tax

Administrator of the Fund, pursuant to Section 468B(g) of the Internal
Revenue Code, 26 U.S.C. § 468B(g), and related regulations, and shall
satisfy the administrative requirements imposed by those regulations,
including but not limited to (a) obtaining a taxpayer identification number,
(b) filing applicable federal, state, and local tax returns and paying taxes
reported thereon out of the Fund, and (c) satisfying any information,
reporting, or withholding requirements imposed on distributions from the
Fund. The Tax Administrator shall contemporaneously provide copies of
all such filings to the Commission’s counsel of record.
3.

The Tax Administrator shall, at such times as the Tax

Administrator deems necessary to fulfill the tax obligations of the Fund,
request that the Commission’s counsel of record file with the Court a
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motion, supported by the Tax Administrator’s declaration of the amount of
taxes due, to transfer funds from the Fund on deposit with the Court to pay
any tax obligations of the Fund.
4.

The Tax Administrator shall be entitled to charge reasonable

fees for tax compliance services and related expenses in accordance with its
agreement with the Commission. The Tax Administrator shall, at such
times as the Tax Administrator deems appropriate, submit a declaration of
fees and expenses to the Commission’s counsel of record for submission to
the Court for approval and for payment from the Fund. No fees or expenses
may be paid absent the Court’s prior approval.
5.

At least ten (10) days before any motion to pay fees and

expenses is filed with the Court, the Tax Administrator shall provide the
Commission’s counsel of record with a draft of the supporting declaration
for review. If the Commission has any corrections or objections to the
declaration, the Tax Administrator and the Commission’s counsel of record
shall attempt to resolve them on a consensual basis. If a consensual
resolution is not reached, the Commission may submit with the motion any
objections along with the Tax Administrator’s response thereto.
Dated at Milwaukee, Wisconsin, this 23rd day of June, 2017.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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