United States Securities & Exchange Commission v. Conradt, 696 F. App'x 46

Conradt entered a civil consent judgment with the SEC resolving insider-trading allegations and agreed to cooperate; the consent was voluntary and based on the parties’ agreement.
Separately, Conradt pleaded guilty in a parallel criminal case; that guilty plea was later vacated.
Conradt moved under Fed. R. Civ. P. 60(b) to vacate the civil consent judgment, arguing changed law and the vacatur of his guilty plea undermined the civil judgment.
The SEC opposed vacatur, asserted Conradt materially breached his cooperation agreement by giving inconsistent testimony, and sought a civil penalty.
The district court found (1) the consent judgment rested on the parties’ contract, not the criminal plea, (2) Conradt materially breached cooperation by altering testimony without justification, and (3) imposed a $980,229 civil penalty (within the statutory 3x cap).
Conradt appealed; the Second Circuit affirmed, rejecting Rule 60(b) relief, upholding the breach finding, and affirming the penalty.

Issue	Plaintiff's Argument (SEC)	Defendant's Argument (Conradt)	Held
Whether the consent judgment should be vacated under Rule 60(b) after vacatur of Conradt’s criminal plea and intervening case law	Consent judgment was valid and based on the parties’ agreement; no extraordinary circumstances justify vacatur	Vacatur of the guilty plea and changed law (Newman/Salman) make enforcement inequitable and warrant relief	Denied: consent judgment was based on the parties’ consent, not collateral estoppel from the criminal plea; no exceptional circumstances for Rule 60(b) relief
Whether Conradt materially breached his cooperation agreement by providing inconsistent testimony	Conradt failed to cooperate truthfully; his trial testimony materially contradicted prior deposition statements	Discrepancies resulted from SEC’s failure to prepare him; differences were immaterial given convictions of co-conspirators	Held that Conradt breached: court credited credibility findings and found unjustified, material changes in testimony; cooperation benefits denied
Whether the $980,229 civil penalty was excessive	Penalty is within statutory limits and justified in exercise of district court’s discretion	Argued penalty was erroneous or excessive	Affirmed: penalty within permissible 3x profit cap and within district court’s discretion

United States v. Bank of New York, 14 F.3d 756 (2d Cir.) (consent judgments rest on parties’ agreement, not collateral criminal plea)
United States v. Int'l Bhd. of Teamsters, 247 F.3d 370 (2d Cir. 2001) (Rule 60(b) ‘‘exceptional circumstances’’ standard)
In re Bongiorno, 694 F.2d 917 (2d Cir. 1982) (false claim of inability to remember undermines full and truthful cooperation)
United States v. Newman, 773 F.3d 438 (2d Cir. 2014) (insider-trading law at issue)
Salman v. United States, 137 S. Ct. 420 (2016) (Supreme Court decision affecting insider-trading law)
United States v. Kern, 425 F.3d 143 (2d Cir.) (district court discretion in setting SEC civil penalties)