A Bahamian broker/dealer's principal has warned US federal regulators that their efforts to obtain evidence from him over two alleged multi-million dollar securities frauds will be futile, as his lips will be sealed.

Warren Davis, head of now-defunct Gibraltar Global Securities, told the Securities & Exchange Commission (SEC) that he will "assert Fifth Amendment privilege" and refuse to answer all questions posed to him when it seeks to obtain his deposition.

Mr Davis's advance 'refusal to testify', as is his right, is revealed in an April 24, 2015, letter sent to the southern New York district court by his attorneys, De Feis, O'Connell & Rose.

The letter is the latest instalment in that law firm's efforts to withdraw from representing Mr Davis and Gibraltar, after the Bahamian duo effectively conceded defeat in their legal battle with the SEC.

Tribune Business last month revealed how Mr Davis had told his US attorneys to cease defending him in both SEC cases, as he had "exhausted his resources and ability to defend himself”.

This has left Mr Davis exposed to summary judgments he cannot pay, with De Feis, O'Connell & Rose revealing in their April 24 letter that his legal fee arrears were "over six months", and that he owed them a "six-figure" sum.

The SEC, though, is opposing the withdrawals of both Mr Davis and his law firm, and urging the US court to set four 'pre-conditions' for their departure to ensure Gibraltar's principal testifies in at least one case.

That case involves an alleged unregistered share offering for two companies, Pacific Blue and Tradeshow, which purportedly netted scheme participants other than Gibraltar and Mr Davis, some $11 million.

“There are nine remaining defendants,” the SEC alleged in previous court filings. “Davis can provide relevant testimony with respect to Ben Kirk, Dylan Boyle and James Hinton, and Luis Carrillo Jr, who all had accounts at Gibraltar (and in some cases several accounts), and Ben Kirk used these accounts to trade his Tradeshow and Pacific Blue stock.

“In addition, Carrillo Huettel [a law firm] purportedly served as counsel to Gibraltar, and the SEC has questions about the representation since it impacts the knowledge that the firm and its lawyers had about the fraudulent scheme and the identity of the true beneficial owners of the Tradeshow and Pacific Blue stock."

However, Mr Davis's US attorneys effectively argued that the SEC's insistence on his testimony was pointless, given that he had already informed the regulator he would answer no questions.

"The SEC's New York office takes the position that Mr Davis's deposition is necessary to its case," De Feis, O'Connell & Rose alleged.

"This assertion makes no sense given that we previously informed both SEC offices (and stated at oral argument) that Mr Davis would assert his Fifth Amendment privilege in response to all questions at a deposition in these actions, and that he was even prepared to sign an affidavit to that effect.

"Accordingly, both SEC offices knew before they filed their oppositions that they would develop substantive evidence during any deposition of Mr Davis."

Mr Davis has already sworn an affidavit confirming his request that De Feis, O'Connell & Rose stop defending him in the southern New York district court.

The US law firm, in its April 24 letter, said it had advised their client and his Bahamian attorneys "of the potential consequences of this decision".

"A secondary basis for our motions to withdraw is non-payment of legal fees," De Feis, O'Connell & Rose told the court. "This firm is owed in excess of six figures for legal services rendered in these actions, and the account has been in arrears for over six months.

"Even if the balance were current, Mr Davis has nevertheless directed this firm to cease legal work on his behalf and cannot be expected to pay for future legal work that he does not want."

The US law firm added that its, and Mr Davis's, withdrawals from the two cases should also come as no surprise to the SEC.

"We advised the SEC during settlement discussions that Mr Davis is simply unable to continue funding a defence against two SEC actions, and is unable to pay judgments in the amounts the SEC is apparently seeking," De Feis, O'Connell & Rose said.

"Additional consultation or advance warning would not have changed the SEC's position or our client's resolve."

With Mr Davis refusing to testify, his attorneys argued that his decision to cease defending himself would assist the "speedy and efficient resolution" of both SEC actions.

Arguing that there was no precedent in US law to impose pre-conditions on itself and Mr Davis/Gibraltar over their withdrawal, De Feis, O'Connell & Rose also questioned why the SEC had refused to use established regulatory co-operation channels with the Bahamas to obtain the documents it was seeking.

It had used such procedures in obtaining documents from other non-US defendants and sources in the same cases, but had repeatedly declined to do so where Mr Davis and Gibraltar were concerned, instead obtaining a New York court order against the Bahamian duo.

Mr Davis’s decision to effectively ‘throw in the towel’ and submit, having been ground down by the SEC’s financial muscle, came just one day before he had to comply with that order to produce thousands of documents held in the Bahamas.

The southern New York court has yet to rule on whether it will allow De Feis, O'Connell & Rose, and Mr Davis/Gibraltar, to withdraw from the two cases.

However, their battle with the SEC has not been totally-one sided. Mr Davis and Gibraltar were successful in getting the southern New York court to throw out the most serious charge against them - that of knowingly participating in, and facilitating, a securities fraud in relation to the Pacific Blue and Tradeshow matter.

In the second lawsuit, the SEC is alleging Mr Davis and Gibraltar were involved in another “illegal unregistered [share] offering and sale” for Magnum d’Or, a small, thinly-traded company.

Some 10 million shares were allegedly sold by Gibraltar on behalf of US customers, netting proceeds of more than $11.384 million.

The Bahamian duo were also alleged to have operated as an unlicensed broker by using their website to solicit US clients, facilitating the sale of $100 million worth of securities.