Securities and Exchange Commission v. McGinnis
A District Court can transfer venue, pursuant to 28 United States Code §1404(a), "[f]or the convenience of the parties and witnesses, in the interest of justice . . . to any other district or division where it might have been brought." The Securities and Exchange Commission filed an enforcement action in Connecticut District Court and alleged that the defendant, Chad McGinnis, possessed material, nonpublic information about Green Mountain Coffee Roasters, which is headquartered in Vermont, days before the information was released to the public, and engaged in an insider trading scheme with his co-defendant, Sergey Pugach. Allegedly, the defendants communicated 116 times via phone or text between Jan. 24, 2010 and March 1, 2013. McGinnis, who resides in Vermont, moved to dismiss or to transfer to the District of Vermont and argued that Connecticut bears no meaningful connection to the locus of operative facts and that most of the witnesses reside in Vermont. The plaintiff’s complaint adequately alleged that McGinnis passed information to Pugach in Connecticut and participated in an illegal scheme that result in illegal trades being made from Connecticut. Venue is proper in Connecticut, and the District Court denied the motion to dismiss. The District Court also found that most of the critical events alleged in the complaint took place in Vermont. A Vermont forum would be more convenient for the potential witnesses who reside or work in Vermont. Most documents and sources of proof are located in Vermont. The balance of conveniences and exceptional circumstances merit transfer to Vermont, and the court transferred the case to the District of Vermont.