MEMORANDUM & ORDER

WILLIAM H. PAULEY, III, District Judge.

Plaintiff Securities and Exchange Commission (the "Commission") moves for the imposition of a one-time, third-tier civil monetary penalty of $150,000 against Defendant Joseph L. Pittera ("Pittera") pursuant to Section 20(d) of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. § 77t(d), and Section 21(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78u(d). For the reasons that follow, this Court imposes a civil penalty of $75,000.

BACKGROUND

I. Procedural History

On February 14, 2017, the Commission initiated this enforcement action against Terminus Energy, Inc. ("Terminus"), its directors and officers, and one of its brokers for violations of the federal securities laws in the offering of $7.9 million in Terminus securities to over 200 investors worldwide. (Compl., ECF No. 1 ("Compl."), ¶ 2.) Terminus was a Delaware corporation in the business of developing and selling fuel cell technology, (Compl. ¶ 16), and, during the relevant period, it sold its common stock as "penny stock," as defined in the Exchange Act, (Compl. ¶ 57). The Commission alleges that Terminus, along with its directors or officers, misled investors about the: (1) research, profitability, and viability of a fuel cell prototype that Terminus was purportedly developing, (see, e.g., Compl. ¶¶ 38-41); (2) misappropriation of investor proceeds and the diversion of those proceeds to pay unregistered brokers, (see, e.g., Compl. ¶¶ 29-31, 52-55); and (3) criminal and regulatory histories of certain Terminus control persons, (see, e.g., Compl. ¶¶ 42-47).

On August 2, 2019, this Court approved a partial settlement between the Commission and Pittera—Terminus's former president and legal counsel—and entered a judgment against Pittera consistent with the settlement agreement. The settlement agreement reserved the Commission's right to move for a civil monetary penalty against Pittera under Section 20(d) of the Securities Act and Section 21(d) of the Exchange Act. (ECF No. 89, Ex. 1 ¶ 3.) Pittera further agreed that:

(ECF No. 89, Ex. 1 ¶ 3.) The Commission's instant motion for a civil monetary penalty against Pittera is the only remaining issue in this action, as the Commission has settled with or voluntarily dismissed all other Defendants.

II. Relevant Facts as to Pittera1

The Commission contends that a one-time, third-tier civil monetary penalty of $150,000 is appropriate based on Pittera's conduct at Terminus between February 2012 and May 2014. (Pl.'s Mem. of Law in Supp. of its Mot. to Set a Civil Penalty Amount as to Joseph Pittera, ECF No. 96 ("Pl.'s Mem."), at 1.) For a portion of that period, Pittera served as Terminus's president, and throughout that entire period he served as Terminus's counsel. (Compl. ¶ 18.) In these roles, Pittera repeatedly drafted—and certified as true—disclosures to OTC Markets Group, Inc. (the "OTC Disclosures")2 that contained material misrepresentations about Defendant George Doumanis and non-party Joseph A. Mann.

In 2003, Doumanis pled guilty to securities fraud, and two years later the Commission barred him from participating in any penny stock offering or associating with any broker or dealer. (Compl. ¶ 19.) Although Pittera knew of Doumanis's legal and disciplinary history as early as 2004, Terminus's OTC Disclosures failed to: (1) disclose that Doumanis was acting as a de facto executive officer of Terminus and (2) list Doumanis as one of Terminus's control persons even though he beneficially owned more than five percent of Terminus's outstanding shares. (Compl. ¶¶ 23, 43.) Similarly, Mann—who was convicted of securities fraud and conspiracy in 2004—controlled several offshore entities that, in turn, owned large amounts of Terminus shares. (Compl. ¶¶ 33, 45.) The OTC Disclosures did not reveal that the offshore entities were controlled by Mann, but a Terminus investor nevertheless discovered Mann's criminal record and contacted Terminus. (Compl. ¶ 45.) Following a series of accusatory emails from the investor, Pittera prepared and filed OTC Disclosures that misleadingly omitted Mann's companies as Terminus control persons. (Compl. ¶ 45.) According to the Commission, these misrepresentations created a false sense of security for investors who unsuspectingly purchased Terminus shares while Doumanis and other Defendants misappropriated investor funds. (Pl.'s Mem., at 6-8.)

DISCUSSION

"Upon a proper showing, Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act permit a court to impose civil monetary penalties on those who have violated the Acts." SEC v. Universal Express, Inc., 646 F.Supp.2d 552, 567 (S.D.N.Y. 2009). "Such penalties are designed to deter future violations of the securities laws and thereby further the goals of `encouraging investor confidence, increasing the efficiency of financial markets, and promoting the stability of the securities industry.'" Universal Express, 646 F. Supp. 2d at 567 (quoting SEC v. Palmisano, 135 F.3d 860, 866 (2d Cir. 1998)); see also SEC v. Haligiannis, 470 F.Supp.2d 373, 386 (S.D.N.Y. 2007) ("Civil penalties are designed to punish the individual violator and deter future violations of the securities laws.").

Both the Securities Act and the Exchange Act "authorize three tiers of monetary penalties for statutory violations." SEC v. Razmilovic, 738 F.3d 14, 38 (2d Cir. 2013). A first-tier penalty may be imposed for any violation. 15 U.S.C. § 77t(d)(2)(A); 15 U.S.C. § 78u(d)(3)(B)(i). A second-tier penalty may be imposed if the violation "involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement." 15 U.S.C. § 77t(d)(2)(B); 15 U.S.C. § 78u(d)(3)(B)(ii). And a third-tier penalty may be imposed when the requirements of the second tier are met and the "violation directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons." 15 U.S.C. § 77t(d)(2)(C); 15 U.S.C. § 78u(d)(3)(B)(iii). "Each tier provides that, for each violation, the amount of the penalty `shall not exceed the greater of a specified monetary amount or the defendant's gross pecuniary gain.'" SEC v. Tourre, 4 F.Supp.3d 579, 592 (S.D.N.Y. 2014) (quoting 15 U.S.C. § 77t(d) and 15 U.S.C. § 78u(d)(3)). For violations occurring after March 3, 2009 and before March 5, 2013, the maximum third-tier penalty for natural persons is the greater of $150,000 per violation or the gross pecuniary gain to the violator from each violation. See 17 C.F.R. § 201.1004, Table IV (providing adjustments to statutory penalty amounts).

"Though the maximum penalty is set by statute on the basis of tier, the actual amount of the penalty is left up to the discretion of the district court." Tourre, 4 F.Supp.3d 579, 593 (S.D.N.Y. 2014) (citing SEC v. Kern, 425 F.3d 143, 153 (2d Cir. 2005)). In determining the penalty amount, courts weigh:

Haligiannis, 470 F. Supp. 2d at 386. However, "the Haligiannis factors . . . have not been deemed an exhaustive list by [the Second Circuit] and are not to be taken as talismanic." SEC v. Rajaratnam, 918 F.3d 36, 45 (2d Cir. 2019) (citations omitted); see also SEC v. Opulentica, LLC, 479 F.Supp.2d 319, 331 (S.D.N.Y. 2007) ("While these factors are helpful in characterizing a particular defendant's actions . . . each case has its own particular facts and circumstances which determine the appropriate penalty to be imposed." (quotation marks omitted)).

Here, this Court concludes that a third-tier penalty is appropriate. Indeed, as noted above, between February 2012 and May 2014, Pittera's conduct "involved fraud, deceit, [and] manipulation" because he repeatedly drafted and certified misleading OTC Disclosures. In doing so, Pittera "created a significant risk of substantial losses" to investors, who were unaware that Terminus was controlled, in part, by fraudsters. And that "significant risk" ultimately materialized through—among other consequences—Doumanis's misappropriation of nearly $600,000 of Terminus investor funds. (Compl. ¶ 52.)

Having determined that a third-tier penalty is appropriate, this Court next decides the amount of that penalty. Although the Commission seeks a $150,000 penalty, this Court declines to impose that amount. To be sure, the Haligiannis factors overwhelmingly weigh in favor of a hefty penalty. Pittera's conduct was egregious, willful, recurrent, and caused investor losses. Pittera, however, has represented to this Court that he currently "live[s] from client to client" as a solo legal practitioner. (Decl. of Joseph L. Pittera in Opp'n to Civil Penalty, ECF No. 98 ("Pittera Decl."), ¶ 19.) He has no savings or investments, does not own a home, and his wife is ill. (Pittera Decl. ¶ 19.) Notably, the Second Circuit has concluded "[without] hesitation. . . that[] in calculating the size of a penalty necessary to deter misconduct, the extent of a defendant's wealth is a relevant consideration." Rajaratnam, 918 F.3d at 45; see also SEC v. Juno Mother Earth Asset Mgmt., LLC., 2014 WL 1325912, at *5 (S.D.N.Y. Mar. 31, 2014) (imposing reduced penalty "[g]iven defendants['] demonstrated current and future financial condition and also [the need] to have the penalties within the realm of reason"); SEC v. Credit Bancorp, Ltd., 738 F.Supp.2d 376, 391 (S.D.N.Y. 2010) (finding that defendant's "current and future financial situation preclude[d] imposing a penalty"). Taking all facts and circumstances of this action into account and exercising its informed discretion, this Court imposes a penalty of $75,000 against Pittera.

CONCLUSION

For the foregoing reasons, Pittera shall pay a civil monetary penalty of $75,000. The Clerk of Court is directed to terminate the motion pending at ECF No. 95 and mark this case as closed.

SO ORDERED.