A Bahamian broker/dealer’s principal has been accused of “disregard for the court’s authority”, resulting in a New York judge blocking his bid to retreat from two multi-million dollar securities fraud lawsuits.

Judge James Francis, in a 10-page ruling, prevented the US attorneys for Warren Davis and Gibraltar Global Securities from ceasing to represent the Bahamian duo until the demands of US federal regulators were met.

The ruling, released late last Friday, effectively blocks the De Feis, O’Connell & Rose law firm’s withdrawal until Mr Davis and Gibraltar comply with the New York court’s order to produce documents held in the Bahamas.

And Mr Davis, who is Gibraltar’s president and sole shareholder, must also give evidence at depositions before Securities & Exchange Commission (SEC) investigators.

Mr Davis and his attorneys, as revealed by Tribune Business yesterday, have effectively warned the SEC that the depositions are a ‘waste of time’, as he will invoke his right not to answer any questions.

But a clearly-irked Judge Francis has taken particular issue with the failure by Mr Davis and Gibraltar to comply with his April 1, 2015, order that required them to hand over potentially thousands of documents relevant to the two SEC lawsuits against them by April 15.

The Bahamian duo, instead of complying with the order, decided to stop defending both actions and instructed their US attorneys to withdraw - via a motion filed on April 14, just one day before the document production deadline.

And Judge Francis also found that Mr Davis had delayed giving evidence by failing to co-operate with the SEC on agreeing dates.

“It would be inappropriate to reward these dilatory tactics and Mr Davis’ disregard for the court’s authority by granting the withdrawal motion at this time, thereby significantly disrupting the prosecution of both” SEC cases, Judge Francis ruled.

Finding that De Feis, O’Connell & Rose’s withdrawal would only cause “disruption”, Judge Francis blocked its exit for now.

However, he left the door open for this to occur in the future, once Mr Davis had fulfilled his document production and deposition (testimony) obligations, plus provided the SEC with contact details to facilitate the serving of court documents.

Detailing the background to De Feis, O’Connell & Rose’s attempt to withdraw from defending its Bahamian clients, Judge Francis wrote: “In early April 2015, I ordered that Mr Davis and Gibraltar produce certain documents identified in their initial disclosures no later than April 15, 2015; that their depositions take place in New York; and that the SEC bear the reasonable cost of travel and accommodation for the depositions.

“To date, the defendants have not produced the ordered documents or responded to inquiries from the SEC’s counsel regarding the scheduling of their depositions.

“Mr Davis now represents that he does not intend to defend either action or to participate in discovery, and that no party is willing to fund the defense of Gibraltar, which has no assets.”

Judge Francis said De Feis, O’Connell & Rose’s withdrawal was based on two factors - Mr Davis’s instructions to stop representing him, and the fact he owed his US attorneys a ‘six-figure’ legal fees debt that had been in arrears for more than six months.

However, he backed the SEC’s argument that De Feis, O’Connell & Rose had failed to provide specifics showing how much Mr Davis and Gibraltar owed.

Nor was there any accounting of their Bahamian clients’ assets, or evidence of “future inability to pay” other than a one-page affidavit from Mr Davis which gave no details.

The SEC’s opposition to De Feis, O’Connell & Rose’s withdrawal alleged that it would “complicate discovery” in both lawsuits.

Judge Francis agreed, finding: “To date, Gibraltar and Mr Davis have several unfulfilled discovery obligations. These obligations include those unambiguously set forth in my April 1, 2015 order, which compelled them to produce documents by April 15, 2015.

“Instead of complying with my order - and without any advance notice to the SEC - De Feis, O’Connell & Rose filed the instant motion” to withdraw.

The New York judge dismissed Mr Davis’s belief that his decision to withdraw would render production of the Bahamas-based documents ‘moot’, adding: “Regardless of whether he intends to defend these cases in the future, no default judgment has been entered against him, and he continues to be bound to comply with discovery obligations and court orders.

“His continued insistence that he lacks custody or control over the documents I ordered him to produce - a contention that I rejected - also does not excuse him from these obligations.

“Nor does the filing of this motion the day before the production was due. Furthermore, none of these circumstances excuses Mr Davis from appearing for his deposition, which, as I previously ordered, will take place in New York at the SEC’s expense.”

The judge continued: “it is clear that De Feis, O’Connell & Rose’s withdrawal would further delay - perhaps indefinitely - the already overdue production of documents and the scheduling of the defendants’ depositions.

“Indeed, the withdrawal appears to be designed for that purpose. The defendants and their counsel have already delayed the depositions of Mr Davis and Gibraltar by failing to cooperate with the SEC regarding scheduling.

“De Feis, O’Connell & Rose then filed this motion the day before the defendants were required to produce documents pursuant to my order, without requesting an extension of time to produce such documents or notifying the SEC that they would not be timely produced.

“Mr Davis professes that he does not believe he is obligated to engage with the litigation, that he does not intend to do so, and that he will not hire replacement counsel. The SEC’s efforts to obtain discovery and testimony would be further frustrated in the event of withdrawal because they have no means of communicating directly with Mr Davis or Gibraltar.”

The battle with the SEC has not been totally-one sided. Mr Davis and Gibraltar have been 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.

That related to just one case, in which the SEC is claiming the Bahamian duo participated in an unregistered share offering for two companies, Pacific Blue and Tradeshow, which netted $11 million.

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.