The SEC claims that insider trading defendant Thomas Condradt committed perjury at the trial of his co-defendant Daryl Payton in breach of his cooperation agreement and, instead of the agreed-upon penalty of $2,533, the SEC is now seeking a penalty of almost $3 million. The jury ultimately convicted Payton, even though the SEC was clearly displeased with Conradt. (We have covered this case in several posts, see here, including Mr. Payton’s own troubles with perjury allegations, see here. More color is provided by an article in the WSJ (h/t) today).

The SEC argued that Conradt had to be repeatedly impeached with his prior deposition testimony at trial, at should be punished in a way that deters others from doing the same:

Conradt’s egregious conduct did not end with his insider trading. Even after violating the law, and then conspiring to cover up his wrongdoing, he went on to enter into a Cooperation Agreement with law enforcement that he willfully breached. This continued disregard for his obligations under the law — by a licensed broker and attorney, no less — should be appropriately punished so that others know that they will be held accountable for their actions should they consider the same path as Conradt.

Conradt’s lawyers argued that he held up his end of the bargain, and accuse the SEC of overreach:

Instead of recommending a penalty to this Court consistent with the Cooperation Agreement and reflective of the limited $2533 of personal financial gain Mr. Conradt received, the SEC seeks to have this Corut impose a penalty of approximately $2,900,000 – almost 1,200 times greater than his personal profit – on a man who they well know has little to no assets and a negative net worth . . . .

While he may not have agreed to embrace the SEC’s theories (something the SEC was aware of in advance of his testimony and chose to ignore) he testified truthfully regarding the source of the tupe and how and what he tipped . . . . [A]ccepting the SEC’s position creates the very real hazard that cooperating witnesses will feel compelled to testify consistent with the government’s theory at the expense of the truth for fear that the government will unilaterally decide to tear up the cooperation agremetment because it does not like what it hears.