By NEIL HARTNELL
Tribune Business Editor
US federal regulators have dismissed fears that a Bahamian broker/dealer will suffer “irreparable harm” as a result of its probe, accusing its principal of “forum shopping” to defeat their efforts.
The Securities & Exchange Commission (SEC), in legal arguments against Guy Gentile’s bid for a temporary injunction to halt its investigation, said the subpoenas it was issuing to his company’s banks and clearing houses did not come close to the standard required for the New Jersey federal court to impose the remedy he was seeking.
The US capital markets regulator also alleged that the head of MintBroker International, the former Bay Street-based Swiss America Securities, was engaged in “forum shopping” by initiating legal action in New Jersey when the actual investigation - and hearings on subpoenas it wants to issue to his associates - are taking place in the South Florida courts.
However, attorneys for one of Mr Gentile’s US-based legal representatives, who is the subject of one such subpoena, recently argued before the south Florida court that it was the SEC which was guilty of “forum shopping” given that all its previous legal actions against the MintBroker chief were heard in New Jersey.
Mr Gentile defeated those actions on legal technicalities, and continued to brand the SEC’s continuing probe of himself and his Bahamian broker/dealer as a witchhunt and “vendetta” after he refused to stop working and co-operating with it as an undercover informant.
He, and the attorneys for his US legal representative, are arguing that the SEC is using an investigation that initially never involved him or MintBroker/Swiss America as an “open ended” tool to get him.
However, the SEC is arguing that there is no connection between the now-closed New Jersey cases and South Florida probe, and that it has every right and obligation to investigate where it suspects US securities laws have been breached.
The crux of its latest case is that Mr Gentile and MintBroker violated the US Exchange Act by soliciting business from US clients despite being an unregistered broker/dealer that lacked the necessary permits and approvals to do so.
Mr Gentile and his Bahamian company vehemently deny this, and filed their New Jersey action to block the SEC probe, prompting the regulator’s March 29, 2019, riposte that has been obtained by Tribune Business.
Urging the court to rule that Mr Gentile must come to south Florida, the SEC also argued against granting him a temporary injunction to block its investigation until the substantive case was heard.
“His complaint and motion for preliminary injunction demonstrate that he is not facing any harm - let alone irreparable harm - warranting injunctive relief,” the SEC alleged. “Gentile has generally alleged a reputational harm stemming from the subpoenas issued in the Miami investigation, and the past and future termination of business relationships allegedly as a result of the subpoenas.
“Gentile’s alleged harms could be remedied by money damages from those entities he claims have severed business relationships with him. And the risk of future termination of business relationships is merely speculative. Neither alleged harm presents the extraordinary situation requiring injunctive relief.
“Moreover, the balance of equities and public interest weigh against enjoining an investigation into possible violations of federal securities laws that has been committed to the SEC’s discretion.”
Confirming that neither Mr Gentile nor MintBroker were registered in the US, the SEC then confirmed: “In the Miami Investigation, the SEC has been investigating Swiss America Securities, formerly known as SureTrader and currently known as MintBroker International, a Bahamas-based broker/dealer registered with the Securities Commission of the Bahamas, but not with the SEC, and its owner, Gentile, in connection with potential violations of the broker-dealer registration provisions of the federal securities law.
“The Court should not countenance Gentile’s forum shopping, and should dismiss this matter in recognition of the first-filed subpoena enforcement actions in the southern district of Florida, which were filed two days before Gentile’s complaint.
“Under long-standing precedent, where there are parallel proceedings in different federal courts, the first court in which jurisdiction attaches has priority to consider the case.”