SEC v. Jack Brewer, No. 1:20-cv-06175, Southern District of New York (June 10, 2025) — Judgment

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
-v.-
JACK BREWER,
Defendant.
20 Civ. 06175 (JHR)
OPINION & ORDER
JENNIFER H. REARDEN, District Judge:
Plaintiff, the U.S. Securities and Exchange Commission (the “SEC”), brought this
enforcement action against Defendant Jack Brewer, a professional football player turned
investment advisor, alleging violations of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a
et seq., the Investment Advisers Act of 1940, 15 U.S.C. §§ 80b et seq., and the regulations
promulgated under those statutes.  See ECF No. 1 (Compl.).
1
  The SEC asserted claims
for violations of (1) Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5
thereunder, 17 C.F.R. § 240.10b-5; and (2) Section 15(a) of the Exchange Act, 15 U.S.C.
§ 78o(a); as well as for aiding and abetting violations of (3) Section 204A of the Advisers Act,
15 U.S.C. § 80b-4a, and Rule 204A-1 thereunder, 17 C.F.R. § 275.204A-1.
Following discovery, the SEC moved for partial summary judgment on its claim for
violations of Section 10(b) and Rule 10b-5.  ECF No. 74 (Mot.).
2
  The Court granted the SEC’s
motion.  ECF No. 87.  This Opinion sets forth the context and bases for that ruling.
1
 The case was originally assigned to the Honorable Paul G. Gardephe and reassigned to this
Court in 2023.
2
 The SEC did not seek summary judgment on its claims for aiding and abetting violations of
Section 204A of the Advisers Act and Rule 204A-1 thereunder, see Compl. ¶¶ 148-52, or for
violations of Section 15(a) of the Exchange Act, see id. ¶¶ 153-55.

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I. BACKGROUND
A. Factual Background
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i. Brewer’s Experience as a Securities Professional
Brewer was a professional football player in the National Football League from
approximately 2002 to 2007.  ECF No. 74-1 (Pl.’s 56.1 ¶ 2).  After retiring, he accepted a
position as a Wealth Manager with Merrill Lynch, Pierce, Fenner & Smith Inc. (“Merrill
Lynch”).  Id. ¶ 3.  In late 2007, Brewer took and passed his Series 7 securities examination—an
exam that “measures the degree to which each candidate possesses the knowledge needed to
perform the critical functions of a general securities representative,” id. ¶ 5 —and received his
Series 7 securities license, id. ¶ 4.  The Series 7 exam includes a section concerning the
prohibition against trading while in possession of material non-public information.  Id. ¶  7.
4

Brewer possessed extensive knowledge regarding securities practice.  See generally id. ¶¶
1-  10.  After obtaining his Series 7 license, Brewer had a successful career with Merrill Lynch,

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 The facts herein are drawn from the SEC’s Local Civil Rule 56.1 Statement of Material Facts
Not in Dispute in Support of its Motion for Summary Judgment Against Defendant Jack Brewer
pursuant to Local Civil Rule 56.1(a) (“Pl.’ s 56.1”).  Brewer failed to file a document containing
“a correspondingly numbered paragraph responding to each numbered paragraph” in the SEC’s
56.1 Statement, as required by Local Civil Rule 56.1(b).  Because the SEC’s Rule 56.1 Statement
was not “specifically controverted,” each numbered paragraph therein is “deemed to be admitted
for purposes of the motion.”  See Local Civ. R. 56.1(c).  The “Court accepts the facts put forward
in [the SEC’s] 56.1, noting any disagreement where appropriate.”  See S.E.C. v. Afriyie, No. 16
Civ. 2777 (JSR), 2018 WL 6991097, at *1 n.1 (S.D.N.Y. Nov. 26, 2018), aff’d, 788 F. App’x 59
(2d Cir. 2019) (granting SEC’s motion for summary judgment on insider trading claim); see also
Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004) (“[T]he failure to
respond [to a Local Rule 56.1 statement] may allow the district court to accept the movant’s
factual assertions as true.”).  Although Brewer’s Memorandum of Law refers to an “Affidavit of
Jack Brewer” (Opp. at 5), “Brewer’s counsel did not serve any such affidavit on the SEC and did
not respond to the SEC’s email to him confirming the documents the SEC had received in
support of Brewer’s Opposition.”  Reply at 12 n.6.  Brewer’s counsel did file an affidavit
attaching selected deposition exhibits.  See ECF No. 82 (Affidavit of Lee A. Hutton, III).  For
consistency, the Court cites to the numbers that were assigned to those exhibits in the SEC’s
submission.  See ECF No. 86.
4
 In 2008, Defendant also obtained a Series 66 securities license, id. ¶ 8.

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ranking in the top one percent in his class across the firm.  Id. ¶ 9.  From 2007 through 2017,
Brewer was associated with six SEC-registered broker dealers.  Id. ¶ 10.  Brewer also completed
Executive Business Programs at the Harvard School of Business in 2005 and the Wharton School
of Business in 2006.  Id. ¶ 20.  He pursued an M.B.A. degree at the University of Miami, i  d.
¶ 20, and attended a masters’ program at Columbia University, i  d. ¶ 21.
ii. The Brewer Group and Affiliated Entities
While still playing for the New York Giants, Brewer founded The Brewer Group, Inc.
(the “Brewer Group”), which described itself as a “private investment fund.”  Id. ¶ 11.  Brewer
owned 100% of the Brewer Group and was its chief executive officer.  Id. ¶ 13.  This holding
company, see id. ¶ 12, contained several portfolio companies, including BSI Wealth
Management LLC d/b/  a Brewer Capital Management (“Brewer Capital”), an SEC-registered
investment adviser, i  d. ¶ 15, and Brewer & Associates Consulting, LLC (“Brewer &
Associates”), i  d. ¶ 22.  Brewer was the portfolio manager for the Brewer Group, meaning that he
oversaw all of the companies under the Brewer Group umbrella.  Id. ¶ 14.
iii. Brewer Capital’s Insider Trading Policies and Brewer’s Awareness Thereof
Brewer Capital policy prohibited trading while in possession of insider knowledge, as
Brewer was aware.  See generally id. ¶¶ 26-45.  Brewer Capital had a Compliance Manual and
Written Supervisory Procedures (“WSPs”).  Id. ¶ 26.  On October 25, 2016, Brewer received the
WSPs by email from Jesse Meehan (“Meehan”), the Chief Compliance Officer of Brewer
Capital, i  d. ¶ 27, and Chief Operating Officer of the Brewer Group, id ¶  28.  The WSPs stated
that, “  as you are responsible for ensuring your familiarity with statutes and rules governing your
actions, we expect you to be thoroughly familiar with our procedures and policies set forth in this
manual.”  Id. ¶ 30.  Pursuant to the WSPs, all persons associated with Brewer Capital were
“prohibited from engaging in any securities transaction . . . while in possession of [a.] Material,

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non-public information concerning such securities which is known to [] any person by virtue of
his position as an insider with respect to the issuer of such securities . . . [b.] Material, nonpublic
information concerning such securities where the information has been obtained by []any person
either through theft or misappropriation[.]”  Id. ¶ 33.  The WSPs defined the term “insider” to
“include officers, directors, or supervised persons of a company as well as ‘temporary insiders,’
which the WSPs explained are persons who ‘enter[] into a special confidential relationship in the
conduct of a company’s affairs and as a result [are] given access to information solely for the
company’s purposes.’”  Id. ¶ 34.  According to the WSPs, “‘temporary insiders’ can include ‘a
company’s attorneys, accountants, consultants, advisers, bank lending officers, and the Access
Persons of such organizations.’”  Id. ¶ 35 (emphasis added).  Further, “material information” was
defined as “information which a reasonable investor would consider important in making his or
her investment decisions, or information which is reasonably certain to have a substantial effect
on the price of a company’s securities.”  Id. ¶ 36.  The WSPs also provided that, “  if Brewer was
unsure whether acting on the information would be in violation of the law, he was required to
refrain from trading and have ‘immediate’ conversations with Meehan.”  Id. ¶ 38.
Brewer understood that information concerning private placements of securities was
material information.  Id. ¶ 42.  The WSPs required that each person acknowledge his or her
receipt thereof.  Id. ¶ 29.  In addition, Brewer reviewed and discussed the insider trading policies
with Meehan and with Brewer Capital’s compliance attorneys.  Id. ¶ 39.
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  Accordingly, Brewer
understood “what it meant to be an insider.”  Id. ¶ 45.

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 The SEC suggests that, “[a]s a person in the securities industry[,] Brewer thought about the
issue of whether information that he possessed was material non-public information.”  I  d. ¶ 44.
The Court “declines to credit [this] conclusory statement[].”  Cf. Nguedi v. City of New York, No.
16 Civ. 4430 (RA), 2018 WL 4636837, at *2 (S.D.N.Y. Sept. 27, 2018), aff’d sub nom. Nguedi
v. Caulfield, 813 F. App’x 1 (2d Cir. 2020) (disregarding “conclusory allegations”).

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iv. Brewer’s Relationship with Copsync Inc.
In August 2015, Brewer & Associates entered into a business development and marketing
services agreement (the “Advisory Agreement”) with Copsync Inc. (“Copsync”), i  d. ¶ 50—a
public company whose core business was selling “a real-time, in-car information sharing,
communication and data interoperability network for law enforcement agencies,”  i d. ¶ 47.
Copsync was a Delaware corporation with its principal place of business in Addison, Texas.  Id.
¶ 46.  Copsync’s common stock was listed on the NASDAQ Capital Market Exchange
(“NASDAQ”) under the symbol “COYN.”  Id. ¶ 48.  Brewer signed the Advisory Agreement in
his capacity as CEO of Brewer & Associates.  Id. ¶ 55.  The Advisory Agreement provided that
Brewer & Associates would participate in Company conference calls and meetings as requested.
Id. ¶ 51 (citing Ex. 15).  It contained a confidentiality provision stating that Brewer & Associates
would “maintain in confidence all proprietary, non-published information obtained by [Brewer &
Associates] with respect to the Company during the course of the performance of [Brewer &
Associates’s] services hereunder, and [Brewer & Associates] shall not use any of the same for its
own benefit.”  Id. ¶ 52 (citing Ex. 15).  In exchange for its services under the Advisory
Agreement, Brewer & Associates was to receive both cash and restricted stock.  Id. ¶ 54.
On December 1, 2015, Brewer & Associates and Copsync entered into an agreement
expanding Brewer & Associates’s services ( the “Expansion Agreement”).  Id. ¶ 56.  Pursuant to
the Expansion Agreement, all of the terms and provisions in the Advisory Agreement were
ratified and confirmed in all respects except to the extent that the Expansion Agreement
expressly amended the Advisory Agreement.  Id. ¶ 57.  Brewer signed the Expansion Agreement
as CEO of Brewer & Associates.  Id. ¶ 59.
A month later, on January 1, 2016, Brewer entered into a personal endorsement
agreement with Copsync, (the “Endorsement Agreement”).  Id. ¶ 60.  Pursuant to the

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Endorsement Agreement, Brewer agreed, in his individual capacity, “to ‘[e]ndorse and serve as a
public facing figure for’ Copsync.”   Id. (quoting Ex. 20).  The Endorsement Agreement was also
signed by Brewer.  Id. ¶  61.  It contained a confidentiality provision, which provided that Brewer
would have access to Copsync’s confidential and proprietary information.  Id.  Brewer “agree[d]
to hold in trust and confidence all Confidential Information disclosed to [him] and further
agree[d] not to exploit or disclose the Confidential Information to any other person or entity or
use the Confidential Information directly or indirectly for any purpose other than for [Brewer’s]
work with the Company.”  Id. (quoting Ex. 20).
Because of his role as a consultant to Copsync—and as a key public face for the
company—Brewer was granted access to high-level, sensitive meetings, which provided him
with at least some information regarding internal deliberations.  See generally, e.g., id. at ¶¶ 51,
64, 65.  Brewer attended a Copsync Board of Directors Meeting in Dallas in August 2016, for
instance.  Id. ¶ 64.  He was also invited to Copsync’s “Trusted Advisors Meeting” in New York
on December 9, 2016, although he testified that “when he arrived at the meeting location, the
meeting was over.”  Id. ¶  65.
In exchange for his services, Brewer was to receive both cash and restricted stock.  Id.
¶ 62.  Pursuant to the Endorsement Agreement, Copsync irrevocably agreed to issue and deliver
200,000 shares of Copsync restricted common stock to Brewer.  Id. ¶ 66.  In its Q1 2016 Form
10-Q, Copsync disclosed that the shares issued to Brewer were valued at $2.06, id. ¶ 68, which
was “[t]he closing price for Copsync stock on December 31, 2015,” id. ¶ 67.  Copsync actually
issued the first 100,000 shares of its restricted stock to Brewer pursuant to the Endorsement
Agreement on approximately February 12, 2016.  Id. ¶ 69.  Brewer deposited those shares in his
account at Alpine Securities.  Id. ¶ 71.  Then, in August 2016, Brewer transferred the 100,000
restricted Copsync shares to his personal account at Morgan Stanley Smith Barney LLC.  Id.

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¶ 72.  On September 14, 2016, Brewer instructed Chief Compliance Officer and Chief Operating
Officer Meehan, by text message, to “get the restricted legend removed from the 100,000 shares
of Copsync that Brewer [had] received pursuant to the Endorsement Agreement.”  Id. ¶ 74.  A
week later, on September 21, 2016, Meehan sent Brewer’s broker at Morgan Stanley the
documentation necessary for Morgan Stanley to facilitate removal of the restricted legend from
those shares.  Id. ¶ 75.  In the “Rule 144 Non-Affiliate Seller’s Representation Letter,” Brewer
represented that he “was not and had not been an ‘affiliate’ of Copsync, a term which the form
defined as ‘a person that directly or indirectly, through one of more intermediaries, controls, or is
controlled by or is in common control with’ Copsync,” id. ¶ 78 (quoting Ex. 29), and “that the
100,000 shares of Copsync [had been] beneficially owned by him for a period of at least six
months,” id. ¶ 79.
Brewer’s broker received written approval from Copsync for Brewer to sell his restricted
shares on November 28, 2016.  Id. ¶ 85.  By November 30, 2016, Brewer was free to sell or trade
the 100,000 shares of Copsync that he had received pursuant to the Endorsement Agreement.  Id.
¶ 88.  Brewer exchanged the 100,000 restricted shares for freely trading Copsync shares on
approximately November 30, 2016.  Id. ¶ 87.  Brewer sold those securities prior to March 29,
2017, which was the expiration date for Morgan Stanley’s permission to sell the securities.  Id.
¶ 86.
v. Copsync’s Need to Raise Money to Fund Operations and to Meet NASDAQ’s
Requirements
Although Copsync had incurred some losses since its founding, id. ¶ 89, its performance
began to decline appreciably in 2016.  The company sustained losses from operations in each of
the first three quarters of 2016.  Id. ¶¶ 90-92.  In May 2016, Brewer was informed (and
“responded that he was aware”) that Copsync’s “burn rate” (i.e., the company’s cash spending

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rate) was $1 million/month and that, given this rate of spending, Copsync would run out of cash
by August 2016.  Id. ¶ 94.  Copsync’s financial condition continued to deteriorate, id. ¶¶ 95-98,
and “Brewer was aware of Copsync’s financial condition ‘as much as [he] could have been.’”
Id. ¶ 99 (quoting Ex. 2 (Brewer Dep. Tr.) at 79:13-15).
On May 20, 2017, Copsync filed a Form 8-K disclosing that it had received notice from
NASDAQ that it no longer met NASDAQ’s continuing listing requirements.  Id. ¶ 100.  Brewer
“knew that ‘a delisting [wa]s never good’ and c[ould] have a negative impact on a company’s
stock price and c[ould] also have a negative impact on a company’s ability to raise capital in the
future.”  Id. ¶ 103 (quoting Brewer Dep. Tr. 95:23-96:14).  But “ [t]he only realistic way for
Copsync to meet NASDAQ’s continuing listing requirement at th[at] time was to increase its
stockholder equity by selling stock.”  Id. ¶ 102.  On May 27, 2016, Copsync’s CEO Ronald
Woessner emailed Brewer that “the amount that the company needed to raise to meet the
NASDAQ continuing listing requirement (as of June 30, 2016) was $3 million.”  Id. ¶ 104.
Copsync filed a Form S-3 registration statement with the SEC on July 1, 2016, id. ¶ 107,
which was declared effective on July 13, 2016.  Id. ¶ 108.  The Form S-3 did not disclose any
information regarding specific amounts, prices, or terms of securities to be offered pursuant to
the registration statement.  Id. ¶ 110.  At some point between July and September 2016,
Woessner told Brewer that the S-3 Offering, when it happened, would be for $4 million.  Id.
¶ 111.
On October 26, 2016, Woessner emailed Brewer a copy of an October 16, 2016 research
report on Copsync prepared by equity research company Sidoti & Company, LLC (“Sidoti”).  Id.
¶¶ 112, 114.  Sidoti’s October 16 research report estimated that Copsync would suffer net losses
through 2018, and the model included in the report did not reflect any profitable years.  Id. ¶ 116.
The report noted that “Copsync [wa]s not yet profitable and require[d] external funding to build

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out its business, which could dilute current shareholders.”   Id. ¶ 117 (quoting Ex. 45).  The report
also stated that Copsync was “not compliant with NASDAQ listing requirements and could face
de-listing if it d[id] not raise” a sum of “$4-$5 million in equity.”   Id. ¶¶ 117-18.  Brewer
forwarded the Sidoti report to Meehan and to Chase Womack, the Chief Investment Officer of
the Brewer Group.  Id. ¶ 115.
vi. Copsync’s December 2016 Offering of Securities
On November 18, 2016, Copsync filed a Form 8-K disclosing that, “  unless the company
timely requested a hearing with NASDAQ, its securities were subject to suspension and
subsequent delisting from the exchange and that the company planned to present a plan to the
NASDAQ to satisfy the $2.5 million stockholder’s equity requirement.”  Id. ¶ 120.  The
Company then considered possible ways to raise the required capital to meet the NASDAQ
listing obligations.  At a December 9, 2016 board meeting, Copsync’s Board of Directors
authorized conducting a securities offering of up to 2 million shares of the company’s common
stock, along with up to 200% warrant coverage to purchase additional Copsync shares (the
“Offering”).  Id. ¶ 121.  On December 12, 2016, Woessner sent Brewer an email attaching three
documents relating to the Offering: (a) an investor presentation; (b) a summary of proposed
offering terms; and (c) a contact sheet.  Id. ¶ 122.
The investor presentation stated that the Offering was for the sale of up to 2 million units,
which included common stock and warrants.  Id. ¶ 123.  The summary of proposed offering
terms also included that each share of common stock would be accompanied by two warrants
representing the right to purchase one additional share of common stock (the “Unit”); and that
the purchase price for each Unit would be “the lesser of (a) the 10-day volume weighted average
price of the common stock measured as of the close of market on the date of the offering, or
(b) $0.90.”  Id. ¶ 127.  The $0.90 maximum price of the offering for each Unit was below the

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market price for Copsync common stock on the date when Copsync emailed the investor
presentation and summary of proposed offering terms to Brewer.  Id. ¶ 130.  Moreover, when
including the value of the warrants, “the maximum offering price of $0.90 per unit represent[ed]
a discount of at least 25% relative to contemporaneous market prices for COPsync’s stock and
warrants.”  Id. ¶ 130.  Brewer was aware that, “  [u]sually in a secondary offering . . . the price of
the stock goes down after the offering is announced.”  Id. ¶ 131.
Brewer was informed that the information he had received was confidential.  “On each
page, the investor presentation stated that it was ‘strictly confidential, not for distribution to the
public.’”  Id. ¶ 124 (quoting Ex. 49).  The investor presentation contained a confidentiality
provision which further provided that “this presentation is strictly confidential and may not be
distributed to any other person, and may not be reproduced or published, in whole or in part, in
any form.  Failure to comply with this restriction may constitute a violation of applicable
securities laws.”  Id. ¶ 125 (quoting Ex. 49).
The price for a share of Copsync common stock was $0.95 at the market’s close on
Friday, December 9, 2016.  Id. ¶ 128.  On Monday, December 12, 2016, Brewer forwarded the
email from Copsync’s CEO containing the investor presentation, summary of proposed offering
terms, and contact sheet to the Brewer Group’s Chief Investment Officer Womack, and to
another individual stating:  “Let’s discuss again if you can.” Id. ¶ 133 (quoting Ex. 52).  That
day, the price of a share of Copsync common stock was $0.96 at the market’s close.  Id. ¶ 129.
The same day, Womack responded to Brewer by email: “Terms will end up being expensive
money—this will be death spiral deal if he can even raise the capital.  For it not to be—it would
have to be raised from complete new-to-the-game investors.  Warrants will act as the asset and
call option to upside for investors, as the common gets flushed into the market on close of
transaction.”  Id. ¶ 134 (quoting Ex. 52).

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On or about December 16, 2016, Brewer signed a waiver that Copsync had provided,
which reiterated that Copsync was “proposing to sell 2 million shares of its common stock along
with warrants to purchase up to an amount of 200% of the number of shares sold, but stated that
the number of securities sold as well as their price was subject to change.”  Id. ¶ 137.  On
December 21, 2016, Copsync’s investment banker sent Brewer by email a copy of the Securities
Purchase Agreement for the Offering.  Id. ¶ 138.  Section 4.14 of the Securities Purchase
Agreement provided that “[e]ach Purchaser . . . covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial
press release . . . such Purchaser will maintain the confidentiality of the existence and terms of
this transaction.”  Id. ¶ 139 (quoting Ex. 54).  That section also provided that “[e]ach
Purchaser . . . covenants that neither it nor any Affiliate acting on its behalf . . . will execute any
purchases or sales, including Short Sales or any of the Company’s securities during the period
commencing with the execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the initial press
release.”  Id. ¶ 140 (quoting Ex. 54).
On December 22, 2016, Chief Compliance Officer and Chief Operating Officer Meehan
texted Brewer that “the amount of proceeds that Copsync was going to raise in the Offering was
$1.08 million.”  Id. ¶ 141.  In other words, according to Meehan, the Offering was likely to raise
less than the $2.5 million necessary to meet the NASDAQ stockholder’s equity requirement.  See
id. ¶ 120.
Brewer instructed Meehan by text on December 27, 2016 to “[s]ign and send the
[Securities Purchase Agreement] tomorrow am.”  Id. ¶ 142 (quoting Ex. 56).  Meehan emailed
the signed Securities Purchase Agreement to Copsync’s investment bankers on December 28,
2016.  Id. ¶ 143.  The email was also sent to Brewer and to Copsync senior management.  Id.

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¶ 143.  That same day, Woessner conveyed to Brewer by email that Copsync did not have
sufficient funds to cover payroll and other expenses.  Id. ¶ 144.
vii. Brewer’s Sale of His Copsync Stock
In light of that news, on January 4, 2017, Brewer instructed Meehan by text message to
facilitate the sale of his shares of Copsync.  Id. ¶ 145.  Specifically, Brewer and Meehan had the
following exchange:
Meehan:  You see COYN [Copsync]
Brewer:  Clear that [expletive]!!
Meehan:  ... [Broker] has 100k in your account ready. What do
you want to trade it at?
Brewer:  $1.00
Meehan:  All 100k?
Brewer:  5k a day.
Meehan:  On it.

Id. ¶ 145 (quoting Ex. 59) (modifications in original).  Meehan texted Brewer’s broker and,
pursuant to Brewer’s instructions, placed an order to sell 5,000 shares per day of Copsync stock
at $1.00.  Id. ¶ 146.  That day, Brewer sold 5,000 shares of Copsync.  Id. ¶ 147.  The price at
which Brewer sold the stock was approximately $1.01 per share.  Id. ¶ 148.  The proceeds to
Brewer from the sale of the 5,000 shares were $5,063.88.  Id. ¶ 149.  In addition, in response to
an inquiry from Brewer, Meehan sent Brewer “a list of all of his positions .   . . that could be sold,
including Brewer’s personal position in Copsync.”  Id. ¶ 153.  After communicating with his
broker, Brewer changed the order from 5,000 shares to “sell all 95,000 remaining shares.”  Id.
¶ 154.  Brewer gave his broker the sale order for execution, id. ¶ 155, and on January 5, 2017,
Brewer sold 95,000 shares of Copsync, i  d. ¶ 156.  The average price at which Brewer sold the
shares was $1.04 per share.  Id. ¶ 157.  The sale of the 95,000 shares yielded $99,114.29.  Id.
¶ 158.

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The next day, January 6, 2017, prior to the market opening, Copsync issued a press
release entitled “Copsync Announces $1.15 Million Registered Direct Offering.”  Id. ¶ 166
(quoting Ex. 63).  This press release stated that the combined purchase price for each unit
consisting of one share of common stock and two warrants was $0.65.  Id. ¶ 167.  The market
price for a share of Copsync common stock at the close of the market on January 5, 2017 was
$1.03.  Id. ¶ 171.  But on January 6, 2017, the market price at the close of the market fell to
$0.69, id. ¶ 172, which represented a decrease of 32.5% from the prior day’s closing price.  Id.
¶ 173.  “Had Brewer sold his 100,000 shares of Copsync at the closing stock price after the
offering announcement on January 6, 2017, he would have received proceeds of $69,000 instead
of $104,178, a difference of $35,178.”  Id. ¶ 175.
Brewer never revealed to the others involved in the trades that he had insider information
related to the transactions.  Id. ¶ 161-63.  He “never told his broker that he was in possession of
material non-public information concerning Copsync or any company,” i d. ¶ 161, nor did he
“discuss the Offering with his broker before the Offering was publicly announced on January 6,
2017,” i d. ¶ 163.  Moreover, “Brewer never told Meehan that he might be in possession of
material non-public information regarding the Offering[,] and the only time Brewer ever told
Meehan that he was in possession of material non-public information was in connection with an
unrelated Copsync press release.”  Id. ¶ 162.
B. Procedural History
On August 6, 2020, the SEC filed a Complaint against Brewer alleging violations of the
Exchange Act and the Advisers Act.  ECF No. 1.  Brewer answered the Complaint on May 14,
2021.  ECF No. 33.  Thereafter, the SEC moved for partial summary judgment on Count I of the
Complaint, ECF No. 74 (Notice of Mot.), and submitted a Local Civil Rule 56.1 Statement of
Material Facts Not in Dispute, ECF No. 74-1 (Pl.’s 56.1).  The SEC also filed a Memorandum of

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Law in Support of its Motion for Partial Summary Judgment.  ECF No. 79 (Br.).  Following
reassignment to this Court, Brewer opposed the Motion.  ECF No. 81 (Opp.).  The SEC replied
in further support of its Motion (Reply), and in response to an Order from this Court, see ECF
No. 85, the SEC filed a supplemental declaration that attached the exhibits cited in the SEC’s
Rule 56.1 Statement.  ECF No. 86.
II. LEGAL STANDARDS
To prevail on a motion for summary judgment, the movant must “show[] that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.”  Fed. R. Civ. P. 56(a).  “The moving party bears the burden to demonstrate the absence of
any genuine disputes of material fact[.]”  Silipigno v. United States, 749 F. App’x 59, 60 (2d Cir.
2019).  Facts are “material” if they “might affect the outcome of the suit under the governing
law.”  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).  Disputes are “genuine” if “a
reasonable jury could return a verdict for the nonmoving party.”  Id.; Aetna Life Ins. Co. v. Big Y
Foods, Inc., 52 F.4th 66, 72 (2d Cir. 2022) (similar).
“In determining whether there are genuine disputes of material fact, [the Court is]
‘required to resolve all ambiguities and draw all permissible factual inferences in favor of the
party against whom summary judgment is sought.’”  Union Mut. Fire Ins. Co. v. Ace Caribbean
Mkt., 64 F.4th 441, 445 (2d Cir. 2023) (quoting Estate of Gustafson ex rel. Reginella v. Target
Corp., 819 F.3d 673, 675 (2d Cir. 2016)).  But “a party may not rely on mere speculation or
conjecture as to the true nature of the facts to overcome a motion for summary judgment.”  Fed.
Trade Comm’n v. Moses, 913 F.3d 297, 305 (2d Cir. 2019).  Instead, the party opposing
summary judgment must establish a genuine issue of fact by “citing to particular parts of
materials in the record.”  Fed. R. Civ. P. 56(c)(1)(A).  Summary judgment is appropriate
“[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-

15
moving party.”  Michel v. Yale Univ., 110 F.4th 551, 560 (2d Cir. 2024) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
III. DISCUSSION
A. Insider Trading in Violation of Section 10(b) and Rule 10b-5
Section 10(b) of the Exchange Act makes it “unlawful for any person . . . [t]o use or
employ, in connection with the purchase or sale of any security[,] . . . any manipulative or
deceptive device or contrivance in contravention of such rules and regulations as the
Commission may prescribe.”  15 U.S.C. § 78j.  Rule 10b-5, which implements Section 10(b),
prohibits the use of “any device, scheme, or artifice to defraud” or “any act, practice, or course of
business which operates or would operate as a fraud or deceit upon any person . . . in connection
with the purchase or sale of any security.”  17 C.F.R. § 240.10b-5.  “Insider trading—unlawful
trading in securities based on material non-public information—is well established as a violation
of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.”  S.E.C. v. Obus, 693
F.3d 276, 284 (2d Cir. 2012); In re Nat’l Instruments Corp. Sec. Litig., No. 23 Civ. 10488
(DLC), 2024 WL 4108011, at *5 (S.D.N.Y. Sept. 6, 2024) ( “Section 10(b) and Rule 10b-5 ‘are
violated when a corporate insider trades in the securities of his corporation on the basis of
material, nonpublic information.’”) (quoting United States v. Chow, 993 F.3d 125, 136 (2d Cir.
2021)); United States v. Cusimano, 123 F.3d 83, 87 (2d Cir. 1997) (citing United States v.
O’Hagan, 521 U.S. 642, 650-52 (1997)) (similar).
“There are two theories of insider trading[.]”  United States v. Rajaratnam, 719 F.3d 139,
158 (2d Cir. 2013); see also S.E.C. v. Watson, 659 F. Supp. 3d 409, 415 (S.D.N.Y. 2023)
(describing both theories).  First, “[u]nder the classical theory of insider trading, a corporate
insider is prohibited from trading shares of that corporation based on material non-public
information in violation of the duty of trust and confidence insiders owe to shareholders.”  Obus,

16
693 F.3d at 284.  “A second theory, grounded in misappropriation, targets persons who are not
corporate insiders but to whom material non-public information has been entrusted in confidence
and who breach a fiduciary duty to the source of the information to gain personal profit in the
securities market.”  Id.  “  The core difference between the two theories is the source of the duty.
Under the classical theory, the duty is owed to the corporation; under the misappropriation
theory, the duty is owed to the source of the information.”  Watson, 659 F. Supp. 3d at 415.
Here, under the classical theory, the duty was owed to the shareholders, and under the
misappropriation theory, the duty was owed to Copsync.  See Br. at 6.  The SEC contends that
“Brewer is liable under both theories as a matter of law based on the undisputed facts.”  Br. at
19.
“Under both theories, the fiduciary duty of trust and confidence requires the person who
knows material nonpublic information either to abstain from trading on the information or to
make a disclosure before trading.”  S.E.C. v. One or More Unknown Traders in Sec. of Onyx
Pharms., Inc., No. 13 Civ. 4645 (JPO), 2014 WL 5026153, at *5 (S.D.N.Y. Sept. 29, 2014)
(citing Dirks v. SEC, 463 U.S. 646, 654 (1983) (classical theory); O’Hagan, 521 U.S. at 655
(misappropriation theory)); see also Chow, 993 F.3d at 137 (explaining the two options).  With
respect to the classical theory, “[a]n insider can avoid liability by disclosing the relevant
information publicly so that she is not at a trading advantage over the corporation’s
shareholders.”  One or More Unknown Traders in Sec. of Onyx Pharms., Inc., 2014 WL
5026153, at *5 (emphasis added) (citing Dirks, 463 U.S. at 654).  As for the misappropriation
theory, “[a] misappropriator can avoid liability by disclosing” to her source “ the fact that she
will be trading on confidential information . . . ; by doing so, the misappropriator is no longer
deceiving her source, and thus she is not violating § 10(b).”  Id. (emphasis added).  Pursuant to
the misappropriation theory, to prove liability, a plaintiff must “establish (1) that the defendant

17
possessed material, nonpublic information; (2) which he had a duty to keep confidential; and
(3) that the defendant breached his duty by acting on or revealing the information in question.”
Veleron Holding, B.V. v. Morgan Stanley, 117 F. Supp. 3d 404, 430 (S.D.N.Y. 2015) (quoting
S.E.C. v. Lyon, 605 F. Supp. 2d 531, 541 (S.D.N.Y. 2009)).
Under both theories of liability, scienter is required.  See Obus, 693 F.3d at 286 (“We
read the scienter requirement . . . to apply broadly to civil securities fraud liability, including
insider trading (under either the classical or misappropriation theory)[.]”); see also United States
v. Newman, No. 12 Cr. 121 (RJS), 2013 WL 1943342, at *2 (S.D.N.Y. May 7, 2013) (“Obus
strongly suggests that . . . the difference between misappropriation and classical insider trading
cases is immaterial.”).  Scienter is “a mental state embracing intent to deceive, manipulate, or
defraud.”  Obus, 693 F.3d at 286 (quoting Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 &
n.12 (1976)).  “In every insider trading case, at the moment of tipping or trading, just as in
securities fraud cases across the board, the unlawful actor must know or be reckless in not
knowing that [his] conduct [is] deceptive.”  Id.
1. Brewer Possessed Material, Non-Public Information
A Section 10(b) violator must possess information that is both material and non-public.
See Obus, 693 F.3d at 284.  The information that was known to Brewer satisfies both criteria.
i. The Information Brewer Obtained Was Material
“Information is material if ‘there is a substantial likelihood that a reasonable [investor]
would consider it important in deciding how to [invest].’”  Rajaratnam, 802 F. Supp. 2d at 498
(S.D.N.Y. 2011) (alterations in original) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 231
(1988)); see also S.E.C. v. Mayhew, 121 F.3d 44, 51 (2d Cir. 1997); S.E.C. v. Suman, 684 F.
Supp. 2d 378, 388 (S.D.N.Y. 2010), aff’d, 421 F. App’x 86 (2d Cir. 2011) (same, granting SEC’s
motion for summary judgment on Section 10(b) claim).  Material information includes “any fact

18
which in reasonable and objective contemplation might affect the value of the corporation’s
stock or securities”; any fact “which [might] affect the probable future of the company and those
which may affect the desire of investors to buy, sell, or hold the company’s securities.”  Mayhew,
121 F.3d at 52 (quoting S.E.C. v. Texas Gulf Sulphur Co., 401 F.2d 833, 849 (2d Cir. 1968) (en
banc)); see also Rajaratnam, 802 F. Supp. 2d at 498 (“It is well settled that in order for
information to be material[] for purposes of § 10(b) and Rule 10b-5, there must be a substantial
likelihood that a reasonable investor would view it as significantly altering the ‘total mix’ of
information available.” (quoting Cusimano, 123 F.3d at 88)).
It is undisputed that Brewer possessed material information—specifically, the low yield
that Copsync expected from the Offering—that “would have been viewed by the reasonable
investor as having significantly altered the ‘total mix’ of information made available.”  See Basic
Inc., 485 U.S. at 231-32 (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)).
“On May 27, 2016, . . . Woessner emailed Brewer that . . . the company needed to raise” $3
million “to meet the NASDAQ continuing listing requirement.”  Pl.’s 56.1 ¶ 104.  “The
[December 12, 2016] investor presentation stated that the Offering presented was for the sale of
up to 2 million units, which included common stock and warrants.”  Id. ¶  123; see also id. ¶ 127
(proposed Offering terms summary) (stating “ that Copsync was offering up to 2 million shares of
its common stock” and that it would issue “two warrants representing the right to purchase one
additional share of common stock” with each share, and explaining its formula for calculating
the purchase price).  As proposed in the Offering documents, however, “the maximum amount of
money that could be raised in the Offering was $1.8 million before fees and expenses.”  Id.
¶ 132.  Moreover, Brewer was informed by Chief Compliance Officer and Chief Operating
Officer Meehan on December 22, 2016 that “the amount of proceeds that Copsync was going to
raise in the offering was $1.08 million.”  Id. ¶  141.  That amount apparently fell short of the $3

19
million needed as of June 30, 2016 in order to satisfy NASDAQ’s continuing listing requirement.
See id. ¶ 104.  The anticipated $1.08 million also fell short of the $2.5 million needed to satisfy
NASDAQ’s stockholder’s equity requirement.  See id. ¶ 120.  Collectively, this information in
the Offering documents possessed by Brewer indicated that Copsync was unlikely to raise the
necessary amount from the Offering to maintain its NASDAQ listing.  Additionally, “Copsync
publicly disclosed in its Form 10-Qs” for the second and third quarters of 2016 that a “delisting
of [its] common stock could have an adverse effect on the market price of .   . . [its] common
stock.”   Pl.’s 56.1 ¶ 101.  A “ reasonable investor” would consider the fact that Copsync was
likely unable to meet NASDAQ’s requirements, and therefore would probably be delisted, as
important in the “total mix” of information available.  See Basic Inc., 485 U.S. at 231-32.
Brewer also received material information about the discounted price of each unit in the
Offering compared to the market rate at the time of the Offering.  He forwarded the Offering
documents to Womack, the Chief Investment Officer of the Brewer Group, who told him that the
Offering would be a “death-spiral deal,” which, according to Womack’s testimony, meant that he
thought “the stock price would go down.”  Pl.’s 56.1 ¶¶ 134-35.  After Copsync announced the
Offering on January 6, 2017, its stock price dropped 32.5%.  Id. ¶  173.  The significant decrease
in Copsync’s stock price shows that this information “mattered to investors.”
6
  See United States
v. Mylett, 97 F.3d 663, 667 (2d Cir. 1996) (“sharp” movement in stock price following
announcement “suffice[d] to support a finding that the event in this case was one of major
magnitude”); S.E.C.  v. Am. Growth Funding II, LLC, No. 16 Civ. 828 (KMW), 2018 WL

6
 The SEC’s expert, Dr. Erin E. Smith—the Assistant Director of the Office of Corporate
Finance in the Division of Economic and Risk Analysis of the SEC—conducted an
“uncontroverted” event study, Br. at 11, and concluded that the decrease in Copsync’s stock
price “could only have related to Copsync’s disclosures on that date about the offering.”  Pls’
56.1 ¶ 173; ECF No. 76-6 (Smith Report).

20
6322145, at *3 (S.D.N.Y. Dec. 4, 2018) (“A decline in stock price soon after the disclosure of a
misrepresentation suggests the misrepresentation mattered to investors.”); cf. Rajaratnam, 802 F.
Supp. 2d at 516  (“Given the precipitous fall in the stock price and its recovery the following
day, the market clearly was hoping to hear that information.”).
ii. The Information Brewer Obtained Was Non-Public
Second, the SEC argues, and Brewer does not dispute, that the information Brewer knew
from Copsync was non-public.
7
  “To constitute non-public information under the act,
information must be specific and more private than general rumor.”  U.S. Commodity Futures
Trading Comm’n v. Byrnes, No. 13 Civ. 1174 (VSB), 2019 WL 4515209, at *7 (S.D.N.Y. Sept.
19, 2019)); see also Mylett, 97 F.3d at 666 (similar).  “Information becomes public when it
achieves ‘a broad dissemination to the investing public generally and without favoring any
special person or group.’”  Suman, 684 F. Supp. 2d at 388 (quoting Lyon, 605 F. Supp. 2d at
541).
Brewer gained non-public information when he attended a Copsync Board of Directors
Meeting in Dallas in August 2016.  See Pl.’s 56.1 ¶ 64.  Moreover, Copsync provided Brewer
with confidential, non-public information concerning the Offering when, on December 12, 2016,
the company’s CEO emailed him an investor presentation, a summary of the proposed offering
terms, and a contact sheet.  See Pl.’s 56.1 ¶ 122.  Brewer does not directly contest that these
materials were non-public.  See Opp.  Indeed, both the investor presentation and the proposed
offering terms were expressly designated “strictly confidential.”  See Pl.’s 56.1 ¶¶ 124-26; ECF
No. 77-5 at 5 (also noting on their face that “[f]ailure to comply with” the confidentiality

7
 Brewer does “dispute[] that he ever received material information” or “that there was a
manipulative strategic effort to use private information to realize a gain.”  Opp. at 4; see also id.
at 9 (questioning whether Brewer held “private” information).  But he carefully chooses his
words in order to sidestep the “non-public” legal standard.

21
“restriction may constitute a violation of applicable securities laws”).  Thus, Brewer has not
raised a genuine issue of material fact as to whether he possessed material, non-public
information from Copsync.
2. Brewer Owed a Duty of Confidentiality Under Both the Classical and the
Misappropriation Theories of Insider Trading
An insider’s duty of confidentiality “exists when ‘there is explicit acceptance of a duty of
confidentiality or where such acceptance may be implied from a similar relationship of trust and
confidence between the parties.’”  Suman, 684 F. Supp. 2d at 389 (quoting United States v.
Falcone, 257 F.3d 226, 234 (2d Cir. 2001)).  “To establish acceptance” of the duty of
confidentiality, “the plaintiff must show [that] defendant was on notice of his duty not to use or
disclose the material non-public information.”  Id. at 389.  “This element is satisfied . . . when,
without disclosure to his principal, [the fiduciary] uses the information to purchase or sell
securities.”  O’Hagan, 521 U.S. at 656.  It is undisputed that Brewer had a duty of confidentiality
under both theories of insider trading—first, under the “classical theory,” because he was a
“temporary insider,” United States v. Kosinski, 976 F.3d 135, 143 (2d Cir. 2020), and, second,
under the “misappropriation theory,” in light of the confidentiality provisions in the agreements
he signed, because he made “undisclosed, self-serving use of a principal’s information to
purchase or sell securities.”  Id. at 144.
i. Brewer Owed a Duty of Confidentiality to Copsync as a Temporary
Insider of the Company

The Supreme Court has explained that “[t]he classical theory applies not only to officers,
directors, and other permanent insiders of a corporation, but also to attorneys, accountants,
consultants, and others who temporarily become fiduciaries of a corporation.”  Chow, 993 F.3d
at 137 (quoting Dirks, 463 U.S. at 655 n.14); see also United States v. Chestman, 947 F.2d 551,
566 (2d Cir. 1991) (en banc) (noting that “an outsider could obtain temporary insider status by

22
gaining access to confidential information through certain relationships with a corporation—as,
for example, an underwriter, lawyer or consultant.”).  Courts in this District have referred to such
fiduciaries as “temporary insiders.”  Kosinski, 976 F.3d at 144.
A connection between parties that falls short of a fiduciary relationship nevertheless can
support an insider trading claim as long as it “share[s] the essential characteristics of a fiduciary
association” such that it is “the functional equivalent of a fiduciary relationship.”  Chestman, 947
F.2d at 568.  “Qualifying relationships are marked by the fact that the party in whom confidence
is reposed has entered into a relationship in which he or she acts to serve the interests of the party
entrusting him or her with such information.”  Falcone, 257 F.3d at 234-35; see also Simon
DeBartolo Grp., L.P. v. Richard E. Jacobs Grp., Inc., 186 F.3d 157, 169 (2d Cir. 1999) (insider
trading doctrine “clothes an outsider with temporary insider status when the outsider obtains
access to confidential information solely for corporate purposes in the context of ‘a special
confidential relationship’” (quoting Chestman, 947 F.2d at 565)); Veleron Holding, B.V., 117 F.
Supp. 3d at 430 (same).
It is undisputed that, by serving as a consultant, Brewer was “clothe[d]” in such a
“temporary insider status.”  Cf. Simon DeBartolo Grp., L.P., 186 F.3d at 169 (quoting Chestman,
947 F.2d at 565)).  Brewer “oversaw” Brewer & Associates as its CEO and the Brewer Group as
its portfolio manager.  Pl.’s 56.1 ¶¶ 14, 55.  Brewer & Associates contractually agreed to serve as
a consultant to Copsync by “provid[ing] high-level, overall global business development strategy
and support” to the company.  Id. ¶ 50 (quoting Ex. 15).  Those contracts bound Brewer &
Associates and, by extension, Brewer personally, to act as a business adviser and a “‘public
facing figure’ for Copsync.”  Id. ¶¶ 50-51, 60.  Brewer was contractually obligated to
“‘[p]articipate in Company conference calls and meetings as requested’” by Copsync.  Id. ¶ 51
(quoting Ex. 15).  In short, the nature of Brewer’s relationship with Copsync rendered him a

23
temporary insider.  See Suman, 684 F. Supp. 2d at 389 (finding duty of confidentiality where
contractor defendant exposed to confidential information signed a “Personal Pledge and
covenanted not to use information about planned business acquisitions to trade in securities in
companies ‘seeking to do business with’” a company); Chow, 993 F.3d at 138 (an “individual[]
who enter[ed] into . . . confidentiality agreements, pursuant to which [he] [was] given access to
company information that [he] agree[d] not to disclose [accorded him] ‘temporary insider[]’”
status).
As a temporary insider, Brewer attended at least one board meeting where he was
exposed to confidential corporate information, Pl.’s 56.1 ¶ 64; was invited to a “Trusted
Advisors Meeting,” id. ¶ 65; and received confidential information about the Offering by email,
id. ¶ 122.  Moreover, as set forth below, Brewer entered into agreements that contained
confidentiality provisions.  See Pl.’s 56.1 ¶¶ 55, 59, 61, 142.  In sum, Brewer was provided with
“legitimate access to corporate secrets and thus owed a fiduciary duty to shareholders.”  S.E.C. v.
Softpoint, 958 F. Supp. 846, 863-64 (S.D.N.Y. 1997) (granting summary judgment on insider
trading claim against consultant who was a “corporate insider”), aff’d, 159 F.3d 1348 (2d Cir.
1998).
As further confirmation of his temporary insider status, Brewer “was entrusted with
[Copsync’s] information solely because” of his contractual relationship, and he “would not have
been provided this information absent his ‘explicit acceptance of a duty of confidentiality.’” See
Kosinski, 976 F.3d at 145 (deeming drug trial investigator temporary insider).  This means that
Brewer “play[ed] [a] fiduciary-like role[]” at Copsync.  Id. at 145; see also Falcone, 257 F.3d at
229 (“[A] relationship of trust and confidence [exists] between the shareholders of a corporation
and those insiders who have obtained confidential information by reason of their position with

24
that corporation[.]”).  Brewer owed a duty of confidentiality to Copsync as a result of his
temporary insider status.
ii. Under a Misappropriation Theory, Brewer Assumed a Duty of
Confidentiality with Respect to Copsync

Even if Brewer were not a temporary insider, it is undisputed, as explained above, that he
assumed a contractual duty of confidentiality.  Exchange Act Rule 10b5-2 provides that a “duty
of trust or confidence” exists for purposes of the misappropriation theory of insider trading
“[w]henever a person agrees to maintain information in confidence.”  17 CFR § 240.10b5-2; see
United States v. Corbin, 729 F. Supp. 2d 607, 615 (S.D.N.Y. 2010) (“express confidentiality
agreement” creates “duty of trust or confidence”).
Here, there is no genuine dispute of material fact that Brewer entered into “express
confidentiality agreement[s]” with Copsync that “g[a]ve[] rise to a duty” of “trust or
confidence.”  See Corbin, 729 F. Supp. 2d at 615; see also United States v. Kosinski, No. 3:16
Cr. 00148 (VLB), 2017 WL 3527694, at *5 (D. Conn. Aug. 16, 2017) (holding that “a
confidentiality agreement creates a duty of trust and confidence”).  Brewer signed the Advisory
Agreement and the Expansion Agreement on behalf of Brewer & Associates, Pl.’s 56.1 ¶¶ 55,
59, and he signed the Endorsement Agreement in his personal capacity, id. ¶ 61.  In addition,
Brewer instructed Meehan to “[s]ign and send” the Securities Purchase Agreement on Brewer’s
behalf.  Id. ¶ 142.  The Advisory Agreement stated “that Brewer & Associates ‘w[ould] maintain
in confidence all proprietary, non-published information obtained by [Brewer & Associates] with
respect to the Company during the course of the performance of [Brewer & Associates] services
hereunder, and [Brewer & Associates] sh[ould] not use any of the same for its own benefit.’”  Id.
¶ 52 (quoting Ex. 15).  The Expansion Agreement, which “ratified and confirmed” “all of the
terms and provisions in the Advisory Agreement,” incorporated the confidentiality provisions of

25
the Advisory Agreement.  Id. ¶¶ 57, 59.  The Securities Purchase Agreement in turn provided
that Brewer & Associates “covenant[ed] that . . . [it] [would] maintain the confidentiality of the
existence and terms of this transaction,” id. ¶ 139 (quoting Ex. 54), and that neither it “nor any
Affiliate acting on its behalf” would “execute any purchases or sales” prior to announcement of
the transaction, id. ¶ 140 (quoting Ex. 54).  Each of these “express confidentiality
agreement[s]”—in the Advisory Agreement, the Expansion Agreement, the Endorsement
Agreement, and the Securities Purchase Agreement—created a duty of trust or confidence to
Copsync in Brewer.  See 17 CFR § 240.10b5-2; Chow, 993 F.3d at 138 (affirming conviction on
misappropriation theory in which defendant had a “duty of trust or confidence” based on non-
disclosure agreement even though “the company and the individual ha[d] an arm’s-length
relationship”).
3. Brewer Breached his Duty of Confidentiality

Brewer received material non-public information from Copsync.  “To demonstrate that
[Brewer] misappropriated this information, the SEC must show that the information was
acquired through a breach of a relationship of trust and confidence.”  See S.E.C.v. Falbo, 14 F.
Supp. 2d 508, 522 (S.D.N.Y. 1998); see also United States v. Walters, 910 F.3d 11, 30 (2d Cir.
2018) (“[A] person violates [the securities laws] when he misappropriates material nonpublic
information in breach of a fiduciary duty or similar relationship of trust and confidence and uses
that information in a securities transaction.” (quoting United States v. Falcone, 257 F.3d 226,
230 (2d Cir. 2001)).  “[F]or purposes of both civil and criminal enforcement actions under §
10(b) . . . and Rule 10b-5[,]” the act of “‘misappropriat[ing] confidential information for
securities trading purposes, in breach of a duty owed to the source of the information,’” results in
liability for the misappropriator.  United States v. Gansman, 657 F.3d 85, 90-91 (2d Cir. 2011)
(quoting O’Hagan, 521 U.S. at 652).

26
Here, as previously explained, there is no genuine dispute of material fact that Brewer
had a duty of confidentiality with respect to information that he had obtained from Copsync.
“[Copsync] placed [Brewer] in a position of trust and confidence[,] and he used for personal
benefit information obtained during the course of this association.”  Falbo, 14 F. Supp. 2d at 523
(granting SEC summary judgment on insider trading claim against contractor who “was
entrusted with . . . access to all of the offices in [a company’s] building” and obtained and
“used . . . confidential information which rightfully belonged exclusively to [the company’s]
shareholders for his own gain”).  Nor is there a genuine dispute of material fact that Brewer
obtained a benefit.  On January 4 and 5, 2017, Brewer traded 100,000 shares of Copsync stock
while in possession of confidential information.  See Pl.’s 56.1 ¶¶ 145-160.  Specifically, on
January 4, 2017, Brewer directed Meehan to facilitate the trade of 5,000 of his Copsync shares.
Id. ¶  145.  That day, “Meehan texted Brewer’s broker and, pursuant to Brewer’s instructions,
placed an order to sell 5,000 shares,” id. ¶ 146, which were sold at “approximately $1.01 per
share,” yielding $5,063.88.  Id. ¶¶ 148-49.  Shortly thereafter, “Brewer gave his broker the sale
order for execution” to “sell all 95,000 remaining shares of Copsync,” id. ¶¶ 154-55, which were
sold on January 5, 2017, id. ¶ 156.  “The average price at which Brewer sold the shares was
$1.04 per share,” totaling $99,114.29.  Id. ¶¶ 157-58.  Brewer breached his duty of
confidentiality by making these trades while in possession of the Offering information.  See
Falbo, 14 F. Supp. 2d at 523; S.E.C. v. Svoboda, 409 F. Supp. 2d 331, 340-41 (S.D.N.Y. 2006)
(“The undisputed facts set forth by the SEC demonstrate that Svoboda breached fiduciary duties
owed to NationsBank and its clients by passing along confidential information . . . and by
personally trading on such information despite his knowledge that doing so violated
NationsBank’s insider trading policies[.]”); cf. Suman, 684 F. Supp. 2d at 389 (“Because he was

27
in knowing possession of information regarding the deal, Suman breached his fiduciary duty the
moment he began acquiring options and purchasing shares in Molecular Devices.”).
4. There is No Genuine Dispute of Material Fact that Brewer Acted with
Scienter when He Traded While in Possession of Material, Non-Public
Information

In order to prevail on an insider trading claim, “the SEC must establish that [a defendant]
traded while in knowing possession of material non-public information.”  Obus, 693 F.3d at 293.
Although “[i]ssues of motive and intent are usually inappropriate for disposition on summary
judgment,” Wechsler v. Steinberg, 733 F.2d 1054, 1058 (2d Cir. 1984), “district courts should
not hesitate to grant a plaintiff’s request for summary judgment when the defendant has failed to
meet the requirements prescribed by Rule 56[].”  S.E.C. v. Rsch. Automation Corp., 585 F.2d 31,
33-34 (2d Cir. 1978).  In the Second Circuit, “recklessness is sufficient” to establish scienter.
One or More Unknown Traders in Sec. of Onyx Pharms., Inc., 2014 WL 5026153, at *6; Breard
v. Sachnoff & Weaver, Ltd., 941 F.2d 142, 144 (2d Cir. 1991) (“scienter includes recklessness”
for purposes of Rule 10b-5 insider trading claims); S.E.C. v. Solucorp Inds., Ltd., 274 F. Supp.
2d 379, 419 (S.D.N.Y. 2003) (scienter under Section 10(b) “may be satisfied by proof of reckless
conduct”).
Here, there is no genuine dispute that Brewer acted with scienter in trading while
knowingly possessing material information that was obtained in violation of a duty of trust and
confidence.  As previously explained, in his personal capacity and on behalf of Brewer &
Associates, Brewer signed several agreements with Copsync that contained confidentiality
provisions.  See Pl.’s 56.1 ¶¶ 52-53 (Advisory Agreement), 56-59 (Expansion Agreement), 61
(Endorsement Agreement); 142-43 (Securities Purchase Agreement).  Those agreements
expressly notified Brewer of his own, and his portfolio companies’, specific obligations with
respect to the confidential, inside information he would subsequently gain.  See id.  Accordingly,

28
Brewer was aware when he traded his Copsync stock that he was subject to a duty of
confidentiality.  See Falbo, 14 F. Supp. 2d at 524 (“In disclosing material information to Falbo,
Billings explicitly warned him that he could not trade on the information because of her status at
[the company].”).
At the very least, as a sophisticated, licensed financial services professional, Brewer
acted recklessly.  See Pl.’s 56.1 ¶¶ 3-11, 13, 18, 20-21 (describing Brewer’s educational and
professional background); cf. S.E.C. v. Sanchez, No. 21 Civ. 8085 (PKC), 2022 WL 1036792, at
*2 (S.D.N.Y. Apr. 6, 2022) (holding SEC enforcement action “adequately allege[d] . . . scienter
because [defendant] knew, due to his role as a compliance analyst, that the information obtained
from the investment bank’s confidential database was material and nonpublic”); Kosinski, 976
F.3d at 155 (finding significant that the defendant was a “sophisticated investor”); S.E.C. v.
Alexander, No. 00 Civ. 7290 (LTS) (HBP), 2004 WL 1468528, at *10 (S.D.N.Y. June 28, 2004)
(noting a “record show[ed] a high degree of scienter” where defendant was “a sophisticated
businessman”).  More specifically, Brewer testified that he was aware of what constituted
material information.  ECF No. 74-13 at 235 (explaining that his “understanding of material
[was] any event that require[d] a public filing or press release to be sent”); Pl.’s 56.1 St. ¶¶ 43-
44.  Similarly, Brewer stated that he understood that “nonpublic information include[d] materials
discussed at a board meeting.”  ECF No. 74-13 at 236.
In addition, in his capacity as CEO, Brewer was provided with compliance training by
Brewer Capital in the form of the WSPs.  See Pl.’s 56.1 ¶¶ 26-27, 39.  The WSPs specifically
described how to discern if he was in possession of material, non-public information and
explained that “all persons associated with [Brewer Capital] are prohibited from engaging in any
securities transaction . . . while in possession of” such information.  See id. ¶ 33.  The WSPs also
stated that Brewer could become a temporary insider as a result of a “special confidential

29
relationship,” id. ¶ 34, evidencing that Brewer was aware of circumstances that would render
him a temporary insider.  See S.E.C. v. Materia, No. 82 Civ. 6225, 1983 WL 1396, at *2
(S.D.N.Y. Dec. 5, 1983), aff’d, 745 F.2d 197 (2d Cir. 1984) (finding defendant “acted with
scienter” where confidentiality “policy was prominently posted”).
The record is replete with undisputed facts showing that Brewer acted with the necessary
scienter to establish violations of Section 10(b) and Rule 10b-5.  As the SEC argues, and Brewer
does not contest, “[t]he Offering was a private placement of securities that also required the
issuance of a press release, as described in the Securities Purchase Agreement.”  Br. at 25.
Brewer knew he possessed the non-public documents relating to the Offering from Copsync
because he “forwarded the email from Copsync’s CEO containing the investor presentation,
summary of proposed offering terms, and the contact sheet to Womack” and wrote to Womack:
“Let’s discuss again if you can.”  Pl.’s 56.1 ¶ 133.  Additionally, t  he information in Brewer’s
possession indicated that the Offering was unlikely to raise sufficient capital to prevent Copsync
from being “subject to suspension and subsequent delisting” from NASDAQ.  Id. ¶¶ 120; see
also, e.g., id. ¶¶ 132-44.  Brewer knew that a delisting was “never good,” and that Copsync’s
inability to raise the required capital from the Offering was likely to “have a negative impact on
[Copsync’s] stock price.”  Id. ¶ 103.
Brewer’s only argument to the contrary is that Morgan Stanley and Copsync engaged in
the Rule “144 process”—“a gatekeeping function to ensure that the sell [sic] of securities is
proper under the rules”—which permitted him to trade the shares.  Id.  This does not raise a
genuine issue of material fact with respect to scienter.  As the SEC points out, the Rule “144
process”, id., had nothing to do with clearing Brewer to sell shares while possessing confidential,
insider information.  Reply at 9-12 (“[T]he Rule 144 process is irrelevant” because “Morgan
Stanley did not conduct a review to determine whether Brewer had non-public information”).

30
Instead, the Rule 144 process is intended to ensure that a securities sale complies with a
different, unrelated provision of the securities laws.  Reply at 9.  In any event, as Brewer should
have known, he obtained the confidential inside information after completing the Rule 144
process.  Reply at 8 (“Morgan Stanley’s Rule 144 process was completed before Brewer
received material, nonpublic information from Copsync.”).  Specifically, “Morgan Stanley’s
Rule 144 process had been completed” by November 30, 2016, Reply at 11 (citing Pl.’s 56.1
¶ 87), and it is undisputed that Brewer did not receive the information at issue until either
December 9, 2016 when, at a board meeting, Copsync’s Board of Directors authorized
conducting a securities offering, or at a later time.  See id. (citing Pl.’s 56.1 ¶¶ 121-122) (noting
the possibility that Brewer received the information on December 12, 2016).  Thus, even if
Brewer believed that the Rule 144 process cleansed any transactions that took place through
November 30, 2016,
8
 he could not have believed that it would do so prospectively.
In brief, it is undisputed that Brewer possessed material, non-public information directly
from Copsync; that he acquired a duty of trust and confidence to Copsync a result of his
temporary insider status and the confidentiality provisions in the agreements he signed; that he
breached that duty by trading his shares for personal gain without disclosing that he possessed
material, non-public information; and that he possessed the requisite scienter to violate Section
10(b) and Rule 10b-5.  Accordingly, based on the undisputed facts, the SEC is entitled to
judgment as a matter of law that Brewer violated Section 10(b) and SEC Rule 10b-5.  Fed. R.
Civ. P. 56(a).

8
 Notably, in Brewer’s submission to comply with the Rule 144 process, he never made any
statement that he was in possession of material, non-public information.  See Pl.’s 56.1 ¶¶ 75-81.

31
IV. CONCLUSION
For the foregoing reasons, this Court GRANTED the SEC’s motion for partial summary
judgment on its claim pursuant to Section 10(b) of the Exchange Act and Rule 10b-5.
By June 9, 2025, the parties shall file a joint letter proposing next steps.
SO ORDERED.
Dated:  May 30, 2025
New York, New York

JENNIFER H. REARDEN
United States District Judge

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

-v.-

JACK BREWER, 
Defendant. 

20 Civ. 06175 (JHR) 

OPINION & ORDER 

JENNIFER H. REARDEN, District Judge: 

Plaintiff, the U.S. Securities and Exchange Commission (the “SEC”), brought this 

enforcement action against Defendant Jack Brewer, a professional football player turned 

investment advisor, alleging violations of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a 

et seq., the Investment Advisers Act of 1940, 15 U.S.C. §§ 80b et seq., and the regulations 

promulgated under those statutes.  See ECF No. 1 (Compl.).1  The SEC asserted claims 

for violations of (1) Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 

thereunder, 17 C.F.R. § 240.10b-5; and (2) Section 15(a) of the Exchange Act, 15 U.S.C. 

§ 78o(a); as well as for aiding and abetting violations of (3) Section 204A of the Advisers Act,

15 U.S.C. § 80b-4a, and Rule 204A-1 thereunder, 17 C.F.R. § 275.204A-1. 

Following discovery, the SEC moved for partial summary judgment on its claim for 

violations of Section 10(b) and Rule 10b-5.  ECF No. 74 (Mot.).2  The Court granted the SEC’s 

motion.  ECF No. 87.  This Opinion sets forth the context and bases for that ruling. 

1 The case was originally assigned to the Honorable Paul G. Gardephe and reassigned to this 
Court in 2023. 
2 The SEC did not seek summary judgment on its claims for aiding and abetting violations of 
Section 204A of the Advisers Act and Rule 204A-1 thereunder, see Compl. ¶¶ 148-52, or for 
violations of Section 15(a) of the Exchange Act, see id. ¶¶ 153-55. 

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2 

I. BACKGROUND 

A. Factual Background3 

i. Brewer’s Experience as a Securities Professional 

Brewer was a professional football player in the National Football League from 

approximately 2002 to 2007.  ECF No. 74-1 (Pl.’s 56.1 ¶ 2).  After retiring, he accepted a 

position as a Wealth Manager with Merrill Lynch, Pierce, Fenner & Smith Inc. (“Merrill 

Lynch”).  Id. ¶ 3.  In late 2007, Brewer took and passed his Series 7 securities examination—an 

exam that “measures the degree to which each candidate possesses the knowledge needed to 

perform the critical functions of a general securities representative,” id. ¶ 5—and received his 

Series 7 securities license, id. ¶ 4.  The Series 7 exam includes a section concerning the 

prohibition against trading while in possession of material non-public information.  Id. ¶ 7.4   

Brewer possessed extensive knowledge regarding securities practice.  See generally id. ¶¶ 

1-10.  After obtaining his Series 7 license, Brewer had a successful career with Merrill Lynch, 

 
3 The facts herein are drawn from the SEC’s Local Civil Rule 56.1 Statement of Material Facts 
Not in Dispute in Support of its Motion for Summary Judgment Against Defendant Jack Brewer 
pursuant to Local Civil Rule 56.1(a) (“Pl.’s 56.1”).  Brewer failed to file a document containing 
“a correspondingly numbered paragraph responding to each numbered paragraph” in the SEC’s 
56.1 Statement, as required by Local Civil Rule 56.1(b).  Because the SEC’s Rule 56.1 Statement 
was not “specifically controverted,” each numbered paragraph therein is “deemed to be admitted 
for purposes of the motion.”  See Local Civ. R. 56.1(c).  The “Court accepts the facts put forward 
in [the SEC’s] 56.1, noting any disagreement where appropriate.”  See S.E.C. v. Afriyie, No. 16 
Civ. 2777 (JSR), 2018 WL 6991097, at *1 n.1 (S.D.N.Y. Nov. 26, 2018), aff’d, 788 F. App’x 59 
(2d Cir. 2019) (granting SEC’s motion for summary judgment on insider trading claim); see also 
Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004) (“[T]he failure to 
respond [to a Local Rule 56.1 statement] may allow the district court to accept the movant’s 
factual assertions as true.”).  Although Brewer’s Memorandum of Law refers to an “Affidavit of 
Jack Brewer” (Opp. at 5), “Brewer’s counsel did not serve any such affidavit on the SEC and did 
not respond to the SEC’s email to him confirming the documents the SEC had received in 
support of Brewer’s Opposition.”  Reply at 12 n.6.  Brewer’s counsel did file an affidavit 
attaching selected deposition exhibits.  See ECF No. 82 (Affidavit of Lee A. Hutton, III).  For 
consistency, the Court cites to the numbers that were assigned to those exhibits in the SEC’s 
submission.  See ECF No. 86. 
4 In 2008, Defendant also obtained a Series 66 securities license, id. ¶ 8. 

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ranking in the top one percent in his class across the firm.  Id. ¶ 9.  From 2007 through 2017, 

Brewer was associated with six SEC-registered broker dealers.  Id. ¶ 10.  Brewer also completed 

Executive Business Programs at the Harvard School of Business in 2005 and the Wharton School 

of Business in 2006.  Id. ¶ 20.  He pursued an M.B.A. degree at the University of Miami, id. 

¶ 20, and attended a masters’ program at Columbia University, id. ¶ 21.  

ii. The Brewer Group and Affiliated Entities 

While still playing for the New York Giants, Brewer founded The Brewer Group, Inc. 

(the “Brewer Group”), which described itself as a “private investment fund.”  Id. ¶ 11.  Brewer 

owned 100% of the Brewer Group and was its chief executive officer.  Id. ¶ 13.  This holding 

company, see id. ¶ 12, contained several portfolio companies, including BSI Wealth 

Management LLC d/b/a Brewer Capital Management (“Brewer Capital”), an SEC-registered 

investment adviser, id. ¶ 15, and Brewer & Associates Consulting, LLC (“Brewer & 

Associates”), id. ¶ 22.  Brewer was the portfolio manager for the Brewer Group, meaning that he 

oversaw all of the companies under the Brewer Group umbrella.  Id. ¶ 14.   

iii. Brewer Capital’s Insider Trading Policies and Brewer’s Awareness Thereof  

Brewer Capital policy prohibited trading while in possession of insider knowledge, as 

Brewer was aware.  See generally id. ¶¶ 26-45.  Brewer Capital had a Compliance Manual and 

Written Supervisory Procedures (“WSPs”).  Id. ¶ 26.  On October 25, 2016, Brewer received the 

WSPs by email from Jesse Meehan (“Meehan”), the Chief Compliance Officer of Brewer 

Capital, id. ¶ 27, and Chief Operating Officer of the Brewer Group, id ¶ 28.  The WSPs stated 

that, “as you are responsible for ensuring your familiarity with statutes and rules governing your 

actions, we expect you to be thoroughly familiar with our procedures and policies set forth in this 

manual.”  Id. ¶ 30.  Pursuant to the WSPs, all persons associated with Brewer Capital were 

“prohibited from engaging in any securities transaction . . . while in possession of [a.] Material, 

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4 

non-public information concerning such securities which is known to [] any person by virtue of 

his position as an insider with respect to the issuer of such securities . . . [b.] Material, nonpublic 

information concerning such securities where the information has been obtained by []any person 

either through theft or misappropriation[.]”  Id. ¶ 33.  The WSPs defined the term “insider” to 

“include officers, directors, or supervised persons of a company as well as ‘temporary insiders,’ 

which the WSPs explained are persons who ‘enter[] into a special confidential relationship in the 

conduct of a company’s affairs and as a result [are] given access to information solely for the 

company’s purposes.’”  Id. ¶ 34.  According to the WSPs, “‘temporary insiders’ can include ‘a 

company’s attorneys, accountants, consultants, advisers, bank lending officers, and the Access 

Persons of such organizations.’”  Id. ¶ 35 (emphasis added).  Further, “material information” was 

defined as “information which a reasonable investor would consider important in making his or 

her investment decisions, or information which is reasonably certain to have a substantial effect 

on the price of a company’s securities.”  Id. ¶ 36.  The WSPs also provided that, “if Brewer was 

unsure whether acting on the information would be in violation of the law, he was required to 

refrain from trading and have ‘immediate’ conversations with Meehan.”  Id. ¶ 38.   

Brewer understood that information concerning private placements of securities was 

material information.  Id. ¶ 42.  The WSPs required that each person acknowledge his or her 

receipt thereof.  Id. ¶ 29.  In addition, Brewer reviewed and discussed the insider trading policies 

with Meehan and with Brewer Capital’s compliance attorneys.  Id. ¶ 39.5  Accordingly, Brewer 

understood “what it meant to be an insider.”  Id. ¶ 45.   

 
5 The SEC suggests that, “[a]s a person in the securities industry[,] Brewer thought about the 
issue of whether information that he possessed was material non-public information.”  Id. ¶ 44.  
The Court “declines to credit [this] conclusory statement[].”  Cf. Nguedi v. City of New York, No. 
16 Civ. 4430 (RA), 2018 WL 4636837, at *2 (S.D.N.Y. Sept. 27, 2018), aff’d sub nom. Nguedi 
v. Caulfield, 813 F. App’x 1 (2d Cir. 2020) (disregarding “conclusory allegations”). 

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5 

iv. Brewer’s Relationship with Copsync Inc. 

In August 2015, Brewer & Associates entered into a business development and marketing 

services agreement (the “Advisory Agreement”) with Copsync Inc. (“Copsync”), id. ¶ 50—a 

public company whose core business was selling “a real-time, in-car information sharing, 

communication and data interoperability network for law enforcement agencies,” id. ¶ 47.  

Copsync was a Delaware corporation with its principal place of business in Addison, Texas.  Id. 

¶ 46.  Copsync’s common stock was listed on the NASDAQ Capital Market Exchange 

(“NASDAQ”) under the symbol “COYN.”  Id. ¶ 48.  Brewer signed the Advisory Agreement in 

his capacity as CEO of Brewer & Associates.  Id. ¶ 55.  The Advisory Agreement provided that 

Brewer & Associates would participate in Company conference calls and meetings as requested.  

Id. ¶ 51 (citing Ex. 15).  It contained a confidentiality provision stating that Brewer & Associates 

would “maintain in confidence all proprietary, non-published information obtained by [Brewer & 

Associates] with respect to the Company during the course of the performance of [Brewer & 

Associates’s] services hereunder, and [Brewer & Associates] shall not use any of the same for its 

own benefit.”  Id. ¶ 52 (citing Ex. 15).  In exchange for its services under the Advisory 

Agreement, Brewer & Associates was to receive both cash and restricted stock.  Id. ¶ 54.   

On December 1, 2015, Brewer & Associates and Copsync entered into an agreement 

expanding Brewer & Associates’s services (the “Expansion Agreement”).  Id. ¶ 56.  Pursuant to 

the Expansion Agreement, all of the terms and provisions in the Advisory Agreement were 

ratified and confirmed in all respects except to the extent that the Expansion Agreement 

expressly amended the Advisory Agreement.  Id. ¶ 57.  Brewer signed the Expansion Agreement 

as CEO of Brewer & Associates.  Id. ¶ 59.   

A month later, on January 1, 2016, Brewer entered into a personal endorsement 

agreement with Copsync, (the “Endorsement Agreement”).  Id. ¶ 60.  Pursuant to the 

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Endorsement Agreement, Brewer agreed, in his individual capacity, “to ‘[e]ndorse and serve as a 

public facing figure for’ Copsync.”  Id. (quoting Ex. 20).  The Endorsement Agreement was also 

signed by Brewer.  Id. ¶ 61.  It contained a confidentiality provision, which provided that Brewer 

would have access to Copsync’s confidential and proprietary information.  Id.  Brewer “agree[d] 

to hold in trust and confidence all Confidential Information disclosed to [him] and further 

agree[d] not to exploit or disclose the Confidential Information to any other person or entity or 

use the Confidential Information directly or indirectly for any purpose other than for [Brewer’s] 

work with the Company.”  Id. (quoting Ex. 20).   

Because of his role as a consultant to Copsync—and as a key public face for the 

company—Brewer was granted access to high-level, sensitive meetings, which provided him 

with at least some information regarding internal deliberations.  See generally, e.g., id. at ¶¶ 51, 

64, 65.  Brewer attended a Copsync Board of Directors Meeting in Dallas in August 2016, for 

instance.  Id. ¶ 64.  He was also invited to Copsync’s “Trusted Advisors Meeting” in New York 

on December 9, 2016, although he testified that “when he arrived at the meeting location, the 

meeting was over.”  Id. ¶ 65.   

In exchange for his services, Brewer was to receive both cash and restricted stock.  Id. 

¶ 62.  Pursuant to the Endorsement Agreement, Copsync irrevocably agreed to issue and deliver 

200,000 shares of Copsync restricted common stock to Brewer.  Id. ¶ 66.  In its Q1 2016 Form 

10-Q, Copsync disclosed that the shares issued to Brewer were valued at $2.06, id. ¶ 68, which 

was “[t]he closing price for Copsync stock on December 31, 2015,” id. ¶ 67.  Copsync actually 

issued the first 100,000 shares of its restricted stock to Brewer pursuant to the Endorsement 

Agreement on approximately February 12, 2016.  Id. ¶ 69.  Brewer deposited those shares in his 

account at Alpine Securities.  Id. ¶ 71.  Then, in August 2016, Brewer transferred the 100,000 

restricted Copsync shares to his personal account at Morgan Stanley Smith Barney LLC.  Id. 

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¶ 72.  On September 14, 2016, Brewer instructed Chief Compliance Officer and Chief Operating 

Officer Meehan, by text message, to “get the restricted legend removed from the 100,000 shares 

of Copsync that Brewer [had] received pursuant to the Endorsement Agreement.”  Id. ¶ 74.  A 

week later, on September 21, 2016, Meehan sent Brewer’s broker at Morgan Stanley the 

documentation necessary for Morgan Stanley to facilitate removal of the restricted legend from 

those shares.  Id. ¶ 75.  In the “Rule 144 Non-Affiliate Seller’s Representation Letter,” Brewer 

represented that he “was not and had not been an ‘affiliate’ of Copsync, a term which the form 

defined as ‘a person that directly or indirectly, through one of more intermediaries, controls, or is 

controlled by or is in common control with’ Copsync,” id. ¶ 78 (quoting Ex. 29), and “that the 

100,000 shares of Copsync [had been] beneficially owned by him for a period of at least six 

months,” id. ¶ 79.   

Brewer’s broker received written approval from Copsync for Brewer to sell his restricted 

shares on November 28, 2016.  Id. ¶ 85.  By November 30, 2016, Brewer was free to sell or trade 

the 100,000 shares of Copsync that he had received pursuant to the Endorsement Agreement.  Id. 

¶ 88.  Brewer exchanged the 100,000 restricted shares for freely trading Copsync shares on 

approximately November 30, 2016.  Id. ¶ 87.  Brewer sold those securities prior to March 29, 

2017, which was the expiration date for Morgan Stanley’s permission to sell the securities.  Id. 

¶ 86.   

v. Copsync’s Need to Raise Money to Fund Operations and to Meet NASDAQ’s 
Requirements 

Although Copsync had incurred some losses since its founding, id. ¶ 89, its performance 

began to decline appreciably in 2016.  The company sustained losses from operations in each of 

the first three quarters of 2016.  Id. ¶¶ 90-92.  In May 2016, Brewer was informed (and 

“responded that he was aware”) that Copsync’s “burn rate” (i.e., the company’s cash spending 

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rate) was $1 million/month and that, given this rate of spending, Copsync would run out of cash 

by August 2016.  Id. ¶ 94.  Copsync’s financial condition continued to deteriorate, id. ¶¶ 95-98, 

and “Brewer was aware of Copsync’s financial condition ‘as much as [he] could have been.’”  

Id. ¶ 99 (quoting Ex. 2 (Brewer Dep. Tr.) at 79:13-15).   

On May 20, 2017, Copsync filed a Form 8-K disclosing that it had received notice from 

NASDAQ that it no longer met NASDAQ’s continuing listing requirements.  Id. ¶ 100.  Brewer 

“knew that ‘a delisting [wa]s never good’ and c[ould] have a negative impact on a company’s 

stock price and c[ould] also have a negative impact on a company’s ability to raise capital in the 

future.”  Id. ¶ 103 (quoting Brewer Dep. Tr. 95:23-96:14).  But “[t]he only realistic way for 

Copsync to meet NASDAQ’s continuing listing requirement at th[at] time was to increase its 

stockholder equity by selling stock.”  Id. ¶ 102.  On May 27, 2016, Copsync’s CEO Ronald 

Woessner emailed Brewer that “the amount that the company needed to raise to meet the 

NASDAQ continuing listing requirement (as of June 30, 2016) was $3 million.”  Id. ¶ 104.   

Copsync filed a Form S-3 registration statement with the SEC on July 1, 2016, id. ¶ 107, 

which was declared effective on July 13, 2016.  Id. ¶ 108.  The Form S-3 did not disclose any 

information regarding specific amounts, prices, or terms of securities to be offered pursuant to 

the registration statement.  Id. ¶ 110.  At some point between July and September 2016, 

Woessner told Brewer that the S-3 Offering, when it happened, would be for $4 million.  Id. 

¶ 111.   

On October 26, 2016, Woessner emailed Brewer a copy of an October 16, 2016 research 

report on Copsync prepared by equity research company Sidoti & Company, LLC (“Sidoti”).  Id. 

¶¶ 112, 114.  Sidoti’s October 16 research report estimated that Copsync would suffer net losses 

through 2018, and the model included in the report did not reflect any profitable years.  Id. ¶ 116.  

The report noted that “Copsync [wa]s not yet profitable and require[d] external funding to build 

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out its business, which could dilute current shareholders.”  Id. ¶ 117 (quoting Ex. 45).  The report 

also stated that Copsync was “not compliant with NASDAQ listing requirements and could face 

de-listing if it d[id] not raise” a sum of “$4-$5 million in equity.”  Id. ¶¶ 117-18.  Brewer 

forwarded the Sidoti report to Meehan and to Chase Womack, the Chief Investment Officer of 

the Brewer Group.  Id. ¶ 115.   

vi. Copsync’s December 2016 Offering of Securities 

On November 18, 2016, Copsync filed a Form 8-K disclosing that, “unless the company 

timely requested a hearing with NASDAQ, its securities were subject to suspension and 

subsequent delisting from the exchange and that the company planned to present a plan to the 

NASDAQ to satisfy the $2.5 million stockholder’s equity requirement.”  Id. ¶ 120.  The 

Company then considered possible ways to raise the required capital to meet the NASDAQ 

listing obligations.  At a December 9, 2016 board meeting, Copsync’s Board of Directors 

authorized conducting a securities offering of up to 2 million shares of the company’s common 

stock, along with up to 200% warrant coverage to purchase additional Copsync shares (the 

“Offering”).  Id. ¶ 121.  On December 12, 2016, Woessner sent Brewer an email attaching three 

documents relating to the Offering: (a) an investor presentation; (b) a summary of proposed 

offering terms; and (c) a contact sheet.  Id. ¶ 122.   

The investor presentation stated that the Offering was for the sale of up to 2 million units, 

which included common stock and warrants.  Id. ¶ 123.  The summary of proposed offering 

terms also included that each share of common stock would be accompanied by two warrants 

representing the right to purchase one additional share of common stock (the “Unit”); and that 

the purchase price for each Unit would be “the lesser of (a) the 10-day volume weighted average 

price of the common stock measured as of the close of market on the date of the offering, or 

(b) $0.90.”  Id. ¶ 127.  The $0.90 maximum price of the offering for each Unit was below the 

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market price for Copsync common stock on the date when Copsync emailed the investor 

presentation and summary of proposed offering terms to Brewer.  Id. ¶ 130.  Moreover, when 

including the value of the warrants, “the maximum offering price of $0.90 per unit represent[ed] 

a discount of at least 25% relative to contemporaneous market prices for COPsync’s stock and 

warrants.”  Id. ¶ 130.  Brewer was aware that, “[u]sually in a secondary offering . . . the price of 

the stock goes down after the offering is announced.”  Id. ¶ 131.   

Brewer was informed that the information he had received was confidential.  “On each 

page, the investor presentation stated that it was ‘strictly confidential, not for distribution to the 

public.’”  Id. ¶ 124 (quoting Ex. 49).  The investor presentation contained a confidentiality 

provision which further provided that “this presentation is strictly confidential and may not be 

distributed to any other person, and may not be reproduced or published, in whole or in part, in 

any form.  Failure to comply with this restriction may constitute a violation of applicable 

securities laws.”  Id. ¶ 125 (quoting Ex. 49).   

The price for a share of Copsync common stock was $0.95 at the market’s close on 

Friday, December 9, 2016.  Id. ¶ 128.  On Monday, December 12, 2016, Brewer forwarded the 

email from Copsync’s CEO containing the investor presentation, summary of proposed offering 

terms, and contact sheet to the Brewer Group’s Chief Investment Officer Womack, and to 

another individual stating:  “Let’s discuss again if you can.” Id. ¶ 133 (quoting Ex. 52).  That 

day, the price of a share of Copsync common stock was $0.96 at the market’s close.  Id. ¶ 129.  

The same day, Womack responded to Brewer by email: “Terms will end up being expensive 

money—this will be death spiral deal if he can even raise the capital.  For it not to be—it would 

have to be raised from complete new-to-the-game investors.  Warrants will act as the asset and 

call option to upside for investors, as the common gets flushed into the market on close of 

transaction.”  Id. ¶ 134 (quoting Ex. 52).   

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On or about December 16, 2016, Brewer signed a waiver that Copsync had provided, 

which reiterated that Copsync was “proposing to sell 2 million shares of its common stock along 

with warrants to purchase up to an amount of 200% of the number of shares sold, but stated that 

the number of securities sold as well as their price was subject to change.”  Id. ¶ 137.  On 

December 21, 2016, Copsync’s investment banker sent Brewer by email a copy of the Securities 

Purchase Agreement for the Offering.  Id. ¶ 138.  Section 4.14 of the Securities Purchase 

Agreement provided that “[e]ach Purchaser . . . covenants that until such time as the transactions 

contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial 

press release . . . such Purchaser will maintain the confidentiality of the existence and terms of 

this transaction.”  Id. ¶ 139 (quoting Ex. 54).  That section also provided that “[e]ach 

Purchaser . . . covenants that neither it nor any Affiliate acting on its behalf . . . will execute any 

purchases or sales, including Short Sales or any of the Company’s securities during the period 

commencing with the execution of this Agreement and ending at such time that the transactions 

contemplated by this Agreement are first publicly announced pursuant to the initial press 

release.”  Id. ¶ 140 (quoting Ex. 54).   

On December 22, 2016, Chief Compliance Officer and Chief Operating Officer Meehan 

texted Brewer that “the amount of proceeds that Copsync was going to raise in the Offering was 

$1.08 million.”  Id. ¶ 141.  In other words, according to Meehan, the Offering was likely to raise 

less than the $2.5 million necessary to meet the NASDAQ stockholder’s equity requirement.  See 

id. ¶ 120.   

Brewer instructed Meehan by text on December 27, 2016 to “[s]ign and send the 

[Securities Purchase Agreement] tomorrow am.”  Id. ¶ 142 (quoting Ex. 56).  Meehan emailed 

the signed Securities Purchase Agreement to Copsync’s investment bankers on December 28, 

2016.  Id. ¶ 143.  The email was also sent to Brewer and to Copsync senior management.  Id. 

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¶ 143.  That same day, Woessner conveyed to Brewer by email that Copsync did not have 

sufficient funds to cover payroll and other expenses.  Id. ¶ 144.   

vii. Brewer’s Sale of His Copsync Stock 

In light of that news, on January 4, 2017, Brewer instructed Meehan by text message to 

facilitate the sale of his shares of Copsync.  Id. ¶ 145.  Specifically, Brewer and Meehan had the 

following exchange: 

Meehan:  You see COYN [Copsync] 
Brewer:  Clear that [expletive]!! 
Meehan:  … [Broker] has 100k in your account ready. What do 
you want to trade it at? 
Brewer:  $1.00 
Meehan:  All 100k? 
Brewer:  5k a day. 
Meehan:  On it. 
 

Id. ¶ 145 (quoting Ex. 59) (modifications in original).  Meehan texted Brewer’s broker and, 

pursuant to Brewer’s instructions, placed an order to sell 5,000 shares per day of Copsync stock 

at $1.00.  Id. ¶ 146.  That day, Brewer sold 5,000 shares of Copsync.  Id. ¶ 147.  The price at 

which Brewer sold the stock was approximately $1.01 per share.  Id. ¶ 148.  The proceeds to 

Brewer from the sale of the 5,000 shares were $5,063.88.  Id. ¶ 149.  In addition, in response to 

an inquiry from Brewer, Meehan sent Brewer “a list of all of his positions . . . that could be sold, 

including Brewer’s personal position in Copsync.”  Id. ¶ 153.  After communicating with his 

broker, Brewer changed the order from 5,000 shares to “sell all 95,000 remaining shares.”  Id. 

¶ 154.  Brewer gave his broker the sale order for execution, id. ¶ 155, and on January 5, 2017, 

Brewer sold 95,000 shares of Copsync, id. ¶ 156.  The average price at which Brewer sold the 

shares was $1.04 per share.  Id. ¶ 157.  The sale of the 95,000 shares yielded $99,114.29.  Id. 

¶ 158.   

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The next day, January 6, 2017, prior to the market opening, Copsync issued a press 

release entitled “Copsync Announces $1.15 Million Registered Direct Offering.”  Id. ¶ 166 

(quoting Ex. 63).  This press release stated that the combined purchase price for each unit 

consisting of one share of common stock and two warrants was $0.65.  Id. ¶ 167.  The market 

price for a share of Copsync common stock at the close of the market on January 5, 2017 was 

$1.03.  Id. ¶ 171.  But on January 6, 2017, the market price at the close of the market fell to 

$0.69, id. ¶ 172, which represented a decrease of 32.5% from the prior day’s closing price.  Id. 

¶ 173.  “Had Brewer sold his 100,000 shares of Copsync at the closing stock price after the 

offering announcement on January 6, 2017, he would have received proceeds of $69,000 instead 

of $104,178, a difference of $35,178.”  Id. ¶ 175.   

Brewer never revealed to the others involved in the trades that he had insider information 

related to the transactions.  Id. ¶ 161-63.  He “never told his broker that he was in possession of 

material non-public information concerning Copsync or any company,” id. ¶ 161, nor did he 

“discuss the Offering with his broker before the Offering was publicly announced on January 6, 

2017,” id. ¶ 163.  Moreover, “Brewer never told Meehan that he might be in possession of 

material non-public information regarding the Offering[,] and the only time Brewer ever told 

Meehan that he was in possession of material non-public information was in connection with an 

unrelated Copsync press release.”  Id. ¶ 162.   

B. Procedural History 

On August 6, 2020, the SEC filed a Complaint against Brewer alleging violations of the 

Exchange Act and the Advisers Act.  ECF No. 1.  Brewer answered the Complaint on May 14, 

2021.  ECF No. 33.  Thereafter, the SEC moved for partial summary judgment on Count I of the 

Complaint, ECF No. 74 (Notice of Mot.), and submitted a Local Civil Rule 56.1 Statement of 

Material Facts Not in Dispute, ECF No. 74-1 (Pl.’s 56.1).  The SEC also filed a Memorandum of 

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Law in Support of its Motion for Partial Summary Judgment.  ECF No. 79 (Br.).  Following 

reassignment to this Court, Brewer opposed the Motion.  ECF No. 81 (Opp.).  The SEC replied 

in further support of its Motion (Reply), and in response to an Order from this Court, see ECF 

No. 85, the SEC filed a supplemental declaration that attached the exhibits cited in the SEC’s 

Rule 56.1 Statement.  ECF No. 86. 

II. LEGAL STANDARDS 

To prevail on a motion for summary judgment, the movant must “show[] that there is no 

genuine dispute as to any material fact and the movant is entitled to judgment as a matter of 

law.”  Fed. R. Civ. P. 56(a).  “The moving party bears the burden to demonstrate the absence of 

any genuine disputes of material fact[.]”  Silipigno v. United States, 749 F. App’x 59, 60 (2d Cir. 

2019).  Facts are “material” if they “might affect the outcome of the suit under the governing 

law.”  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).  Disputes are “genuine” if “a 

reasonable jury could return a verdict for the nonmoving party.”  Id.; Aetna Life Ins. Co. v. Big Y 

Foods, Inc., 52 F.4th 66, 72 (2d Cir. 2022) (similar). 

“In determining whether there are genuine disputes of material fact, [the Court is] 

‘required to resolve all ambiguities and draw all permissible factual inferences in favor of the 

party against whom summary judgment is sought.’”  Union Mut. Fire Ins. Co. v. Ace Caribbean 

Mkt., 64 F.4th 441, 445 (2d Cir. 2023) (quoting Estate of Gustafson ex rel. Reginella v. Target 

Corp., 819 F.3d 673, 675 (2d Cir. 2016)).  But “a party may not rely on mere speculation or 

conjecture as to the true nature of the facts to overcome a motion for summary judgment.”  Fed. 

Trade Comm’n v. Moses, 913 F.3d 297, 305 (2d Cir. 2019).  Instead, the party opposing 

summary judgment must establish a genuine issue of fact by “citing to particular parts of 

materials in the record.”  Fed. R. Civ. P. 56(c)(1)(A).  Summary judgment is appropriate 

“[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-

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moving party.”  Michel v. Yale Univ., 110 F.4th 551, 560 (2d Cir. 2024) (quoting Matsushita 

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).   

III. DISCUSSION 

A. Insider Trading in Violation of Section 10(b) and Rule 10b-5 

Section 10(b) of the Exchange Act makes it “unlawful for any person . . . [t]o use or 

employ, in connection with the purchase or sale of any security[,] . . . any manipulative or 

deceptive device or contrivance in contravention of such rules and regulations as the 

Commission may prescribe.”  15 U.S.C. § 78j.  Rule 10b-5, which implements Section 10(b), 

prohibits the use of “any device, scheme, or artifice to defraud” or “any act, practice, or course of 

business which operates or would operate as a fraud or deceit upon any person . . . in connection 

with the purchase or sale of any security.”  17 C.F.R. § 240.10b-5.  “Insider trading—unlawful 

trading in securities based on material non-public information—is well established as a violation 

of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.”  S.E.C. v. Obus, 693 

F.3d 276, 284 (2d Cir. 2012); In re Nat’l Instruments Corp. Sec. Litig., No. 23 Civ. 10488 

(DLC), 2024 WL 4108011, at *5 (S.D.N.Y. Sept. 6, 2024) (“Section 10(b) and Rule 10b-5 ‘are 

violated when a corporate insider trades in the securities of his corporation on the basis of 

material, nonpublic information.’”) (quoting United States v. Chow, 993 F.3d 125, 136 (2d Cir. 

2021)); United States v. Cusimano, 123 F.3d 83, 87 (2d Cir. 1997) (citing United States v. 

O’Hagan, 521 U.S. 642, 650-52 (1997)) (similar).  

“There are two theories of insider trading[.]”  United States v. Rajaratnam, 719 F.3d 139, 

158 (2d Cir. 2013); see also S.E.C. v. Watson, 659 F. Supp. 3d 409, 415 (S.D.N.Y. 2023) 

(describing both theories).  First, “[u]nder the classical theory of insider trading, a corporate 

insider is prohibited from trading shares of that corporation based on material non-public 

information in violation of the duty of trust and confidence insiders owe to shareholders.”  Obus, 

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693 F.3d at 284.  “A second theory, grounded in misappropriation, targets persons who are not 

corporate insiders but to whom material non-public information has been entrusted in confidence 

and who breach a fiduciary duty to the source of the information to gain personal profit in the 

securities market.”  Id.  “The core difference between the two theories is the source of the duty.  

Under the classical theory, the duty is owed to the corporation; under the misappropriation 

theory, the duty is owed to the source of the information.”  Watson, 659 F. Supp. 3d at 415.  

Here, under the classical theory, the duty was owed to the shareholders, and under the 

misappropriation theory, the duty was owed to Copsync.  See Br. at 6.  The SEC contends that 

“Brewer is liable under both theories as a matter of law based on the undisputed facts.”  Br. at 

19. 

“Under both theories, the fiduciary duty of trust and confidence requires the person who 

knows material nonpublic information either to abstain from trading on the information or to 

make a disclosure before trading.”  S.E.C. v. One or More Unknown Traders in Sec. of Onyx 

Pharms., Inc., No. 13 Civ. 4645 (JPO), 2014 WL 5026153, at *5 (S.D.N.Y. Sept. 29, 2014) 

(citing Dirks v. SEC, 463 U.S. 646, 654 (1983) (classical theory); O’Hagan, 521 U.S. at 655 

(misappropriation theory)); see also Chow, 993 F.3d at 137 (explaining the two options).  With 

respect to the classical theory, “[a]n insider can avoid liability by disclosing the relevant 

information publicly so that she is not at a trading advantage over the corporation’s 

shareholders.”  One or More Unknown Traders in Sec. of Onyx Pharms., Inc., 2014 WL 

5026153, at *5 (emphasis added) (citing Dirks, 463 U.S. at 654).  As for the misappropriation 

theory, “[a] misappropriator can avoid liability by disclosing” to her source “the fact that she 

will be trading on confidential information . . . ; by doing so, the misappropriator is no longer 

deceiving her source, and thus she is not violating § 10(b).”  Id. (emphasis added).  Pursuant to 

the misappropriation theory, to prove liability, a plaintiff must “establish (1) that the defendant 

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possessed material, nonpublic information; (2) which he had a duty to keep confidential; and 

(3) that the defendant breached his duty by acting on or revealing the information in question.”  

Veleron Holding, B.V. v. Morgan Stanley, 117 F. Supp. 3d 404, 430 (S.D.N.Y. 2015) (quoting 

S.E.C. v. Lyon, 605 F. Supp. 2d 531, 541 (S.D.N.Y. 2009)).   

Under both theories of liability, scienter is required.  See Obus, 693 F.3d at 286 (“We 

read the scienter requirement . . . to apply broadly to civil securities fraud liability, including 

insider trading (under either the classical or misappropriation theory)[.]”); see also United States 

v. Newman, No. 12 Cr. 121 (RJS), 2013 WL 1943342, at *2 (S.D.N.Y. May 7, 2013) (“Obus 

strongly suggests that . . . the difference between misappropriation and classical insider trading 

cases is immaterial.”).  Scienter is “a mental state embracing intent to deceive, manipulate, or 

defraud.”  Obus, 693 F.3d at 286 (quoting Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 & 

n.12 (1976)).  “In every insider trading case, at the moment of tipping or trading, just as in 

securities fraud cases across the board, the unlawful actor must know or be reckless in not 

knowing that [his] conduct [is] deceptive.”  Id.   

1. Brewer Possessed Material, Non-Public Information 

A Section 10(b) violator must possess information that is both material and non-public.  

See Obus, 693 F.3d at 284.  The information that was known to Brewer satisfies both criteria. 

i. The Information Brewer Obtained Was Material 

“Information is material if ‘there is a substantial likelihood that a reasonable [investor] 

would consider it important in deciding how to [invest].’”  Rajaratnam, 802 F. Supp. 2d at 498 

(S.D.N.Y. 2011) (alterations in original) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 231 

(1988)); see also S.E.C. v. Mayhew, 121 F.3d 44, 51 (2d Cir. 1997); S.E.C. v. Suman, 684 F. 

Supp. 2d 378, 388 (S.D.N.Y. 2010), aff’d, 421 F. App’x 86 (2d Cir. 2011) (same, granting SEC’s 

motion for summary judgment on Section 10(b) claim).  Material information includes “any fact 

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which in reasonable and objective contemplation might affect the value of the corporation’s 

stock or securities”; any fact “which [might] affect the probable future of the company and those 

which may affect the desire of investors to buy, sell, or hold the company’s securities.”  Mayhew, 

121 F.3d at 52 (quoting S.E.C. v. Texas Gulf Sulphur Co., 401 F.2d 833, 849 (2d Cir. 1968) (en 

banc)); see also Rajaratnam, 802 F. Supp. 2d at 498 (“It is well settled that in order for 

information to be material[] for purposes of § 10(b) and Rule 10b-5, there must be a substantial 

likelihood that a reasonable investor would view it as significantly altering the ‘total mix’ of 

information available.” (quoting Cusimano, 123 F.3d at 88)).   

It is undisputed that Brewer possessed material information—specifically, the low yield 

that Copsync expected from the Offering—that “would have been viewed by the reasonable 

investor as having significantly altered the ‘total mix’ of information made available.”  See Basic 

Inc., 485 U.S. at 231-32 (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)).  

“On May 27, 2016, . . . Woessner emailed Brewer that . . . the company needed to raise” $3 

million “to meet the NASDAQ continuing listing requirement.”  Pl.’s 56.1 ¶ 104.  “The 

[December 12, 2016] investor presentation stated that the Offering presented was for the sale of 

up to 2 million units, which included common stock and warrants.”  Id. ¶ 123; see also id. ¶ 127 

(proposed Offering terms summary) (stating “that Copsync was offering up to 2 million shares of 

its common stock” and that it would issue “two warrants representing the right to purchase one 

additional share of common stock” with each share, and explaining its formula for calculating 

the purchase price).  As proposed in the Offering documents, however, “the maximum amount of 

money that could be raised in the Offering was $1.8 million before fees and expenses.”  Id. 

¶ 132.  Moreover, Brewer was informed by Chief Compliance Officer and Chief Operating 

Officer Meehan on December 22, 2016 that “the amount of proceeds that Copsync was going to 

raise in the offering was $1.08 million.”  Id. ¶ 141.  That amount apparently fell short of the $3 

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million needed as of June 30, 2016 in order to satisfy NASDAQ’s continuing listing requirement.  

See id. ¶ 104.  The anticipated $1.08 million also fell short of the $2.5 million needed to satisfy 

NASDAQ’s stockholder’s equity requirement.  See id. ¶ 120.  Collectively, this information in 

the Offering documents possessed by Brewer indicated that Copsync was unlikely to raise the 

necessary amount from the Offering to maintain its NASDAQ listing.  Additionally, “Copsync 

publicly disclosed in its Form 10-Qs” for the second and third quarters of 2016 that a “delisting 

of [its] common stock could have an adverse effect on the market price of . . . [its] common 

stock.”  Pl.’s 56.1 ¶ 101.  A “reasonable investor” would consider the fact that Copsync was 

likely unable to meet NASDAQ’s requirements, and therefore would probably be delisted, as 

important in the “total mix” of information available.  See Basic Inc., 485 U.S. at 231-32.   

Brewer also received material information about the discounted price of each unit in the 

Offering compared to the market rate at the time of the Offering.  He forwarded the Offering 

documents to Womack, the Chief Investment Officer of the Brewer Group, who told him that the 

Offering would be a “death-spiral deal,” which, according to Womack’s testimony, meant that he 

thought “the stock price would go down.”  Pl.’s 56.1 ¶¶ 134-35.  After Copsync announced the 

Offering on January 6, 2017, its stock price dropped 32.5%.  Id. ¶ 173.  The significant decrease 

in Copsync’s stock price shows that this information “mattered to investors.”6  See United States 

v. Mylett, 97 F.3d 663, 667 (2d Cir. 1996) (“sharp” movement in stock price following 

announcement “suffice[d] to support a finding that the event in this case was one of major 

magnitude”); S.E.C.  v. Am. Growth Funding II, LLC, No. 16 Civ. 828 (KMW), 2018 WL 

 
6 The SEC’s expert, Dr. Erin E. Smith—the Assistant Director of the Office of Corporate 
Finance in the Division of Economic and Risk Analysis of the SEC—conducted an 
“uncontroverted” event study, Br. at 11, and concluded that the decrease in Copsync’s stock 
price “could only have related to Copsync’s disclosures on that date about the offering.”  Pls’ 
56.1 ¶ 173; ECF No. 76-6 (Smith Report).   

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6322145, at *3 (S.D.N.Y. Dec. 4, 2018) (“A decline in stock price soon after the disclosure of a 

misrepresentation suggests the misrepresentation mattered to investors.”); cf. Rajaratnam, 802 F. 

Supp. 2d at 516  (“Given the precipitous fall in the stock price and its recovery the following 

day, the market clearly was hoping to hear that information.”). 

ii. The Information Brewer Obtained Was Non-Public 

Second, the SEC argues, and Brewer does not dispute, that the information Brewer knew 

from Copsync was non-public.7  “To constitute non-public information under the act, 

information must be specific and more private than general rumor.”  U.S. Commodity Futures 

Trading Comm’n v. Byrnes, No. 13 Civ. 1174 (VSB), 2019 WL 4515209, at *7 (S.D.N.Y. Sept. 

19, 2019)); see also Mylett, 97 F.3d at 666 (similar).  “Information becomes public when it 

achieves ‘a broad dissemination to the investing public generally and without favoring any 

special person or group.’”  Suman, 684 F. Supp. 2d at 388 (quoting Lyon, 605 F. Supp. 2d at 

541). 

Brewer gained non-public information when he attended a Copsync Board of Directors 

Meeting in Dallas in August 2016.  See Pl.’s 56.1 ¶ 64.  Moreover, Copsync provided Brewer 

with confidential, non-public information concerning the Offering when, on December 12, 2016, 

the company’s CEO emailed him an investor presentation, a summary of the proposed offering 

terms, and a contact sheet.  See Pl.’s 56.1 ¶ 122.  Brewer does not directly contest that these 

materials were non-public.  See Opp.  Indeed, both the investor presentation and the proposed 

offering terms were expressly designated “strictly confidential.”  See Pl.’s 56.1 ¶¶ 124-26; ECF 

No. 77-5 at 5 (also noting on their face that “[f]ailure to comply with” the confidentiality 

 
7 Brewer does “dispute[] that he ever received material information” or “that there was a 
manipulative strategic effort to use private information to realize a gain.”  Opp. at 4; see also id. 
at 9 (questioning whether Brewer held “private” information).  But he carefully chooses his 
words in order to sidestep the “non-public” legal standard. 

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“restriction may constitute a violation of applicable securities laws”).  Thus, Brewer has not 

raised a genuine issue of material fact as to whether he possessed material, non-public 

information from Copsync.   

2. Brewer Owed a Duty of Confidentiality Under Both the Classical and the 
Misappropriation Theories of Insider Trading 

An insider’s duty of confidentiality “exists when ‘there is explicit acceptance of a duty of 

confidentiality or where such acceptance may be implied from a similar relationship of trust and 

confidence between the parties.’”  Suman, 684 F. Supp. 2d at 389 (quoting United States v. 

Falcone, 257 F.3d 226, 234 (2d Cir. 2001)).  “To establish acceptance” of the duty of 

confidentiality, “the plaintiff must show [that] defendant was on notice of his duty not to use or 

disclose the material non-public information.”  Id. at 389.  “This element is satisfied . . . when, 

without disclosure to his principal, [the fiduciary] uses the information to purchase or sell 

securities.”  O’Hagan, 521 U.S. at 656.  It is undisputed that Brewer had a duty of confidentiality 

under both theories of insider trading—first, under the “classical theory,” because he was a 

“temporary insider,” United States v. Kosinski, 976 F.3d 135, 143 (2d Cir. 2020), and, second, 

under the “misappropriation theory,” in light of the confidentiality provisions in the agreements 

he signed, because he made “undisclosed, self-serving use of a principal’s information to 

purchase or sell securities.”  Id. at 144.   

i. Brewer Owed a Duty of Confidentiality to Copsync as a Temporary 
Insider of the Company 
 

The Supreme Court has explained that “[t]he classical theory applies not only to officers, 

directors, and other permanent insiders of a corporation, but also to attorneys, accountants, 

consultants, and others who temporarily become fiduciaries of a corporation.”  Chow, 993 F.3d 

at 137 (quoting Dirks, 463 U.S. at 655 n.14); see also United States v. Chestman, 947 F.2d 551, 

566 (2d Cir. 1991) (en banc) (noting that “an outsider could obtain temporary insider status by 

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gaining access to confidential information through certain relationships with a corporation—as, 

for example, an underwriter, lawyer or consultant.”).  Courts in this District have referred to such 

fiduciaries as “temporary insiders.”  Kosinski, 976 F.3d at 144.   

A connection between parties that falls short of a fiduciary relationship nevertheless can 

support an insider trading claim as long as it “share[s] the essential characteristics of a fiduciary 

association” such that it is “the functional equivalent of a fiduciary relationship.”  Chestman, 947 

F.2d at 568.  “Qualifying relationships are marked by the fact that the party in whom confidence 

is reposed has entered into a relationship in which he or she acts to serve the interests of the party 

entrusting him or her with such information.”  Falcone, 257 F.3d at 234-35; see also Simon 

DeBartolo Grp., L.P. v. Richard E. Jacobs Grp., Inc., 186 F.3d 157, 169 (2d Cir. 1999) (insider 

trading doctrine “clothes an outsider with temporary insider status when the outsider obtains 

access to confidential information solely for corporate purposes in the context of ‘a special 

confidential relationship’” (quoting Chestman, 947 F.2d at 565)); Veleron Holding, B.V., 117 F. 

Supp. 3d at 430 (same). 

It is undisputed that, by serving as a consultant, Brewer was “clothe[d]” in such a 

“temporary insider status.”  Cf. Simon DeBartolo Grp., L.P., 186 F.3d at 169 (quoting Chestman, 

947 F.2d at 565)).  Brewer “oversaw” Brewer & Associates as its CEO and the Brewer Group as 

its portfolio manager.  Pl.’s 56.1 ¶¶ 14, 55.  Brewer & Associates contractually agreed to serve as 

a consultant to Copsync by “provid[ing] high-level, overall global business development strategy 

and support” to the company.  Id. ¶ 50 (quoting Ex. 15).  Those contracts bound Brewer & 

Associates and, by extension, Brewer personally, to act as a business adviser and a “‘public 

facing figure’ for Copsync.”  Id. ¶¶ 50-51, 60.  Brewer was contractually obligated to 

“‘[p]articipate in Company conference calls and meetings as requested’” by Copsync.  Id. ¶ 51 

(quoting Ex. 15).  In short, the nature of Brewer’s relationship with Copsync rendered him a 

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temporary insider.  See Suman, 684 F. Supp. 2d at 389 (finding duty of confidentiality where 

contractor defendant exposed to confidential information signed a “Personal Pledge and 

covenanted not to use information about planned business acquisitions to trade in securities in 

companies ‘seeking to do business with’” a company); Chow, 993 F.3d at 138 (an “individual[] 

who enter[ed] into . . . confidentiality agreements, pursuant to which [he] [was] given access to 

company information that [he] agree[d] not to disclose [accorded him] ‘temporary insider[]’” 

status).     

As a temporary insider, Brewer attended at least one board meeting where he was 

exposed to confidential corporate information, Pl.’s 56.1 ¶ 64; was invited to a “Trusted 

Advisors Meeting,” id. ¶ 65; and received confidential information about the Offering by email, 

id. ¶ 122.  Moreover, as set forth below, Brewer entered into agreements that contained 

confidentiality provisions.  See Pl.’s 56.1 ¶¶ 55, 59, 61, 142.  In sum, Brewer was provided with 

“legitimate access to corporate secrets and thus owed a fiduciary duty to shareholders.”  S.E.C. v. 

Softpoint, 958 F. Supp. 846, 863-64 (S.D.N.Y. 1997) (granting summary judgment on insider 

trading claim against consultant who was a “corporate insider”), aff’d, 159 F.3d 1348 (2d Cir. 

1998).   

As further confirmation of his temporary insider status, Brewer “was entrusted with 

[Copsync’s] information solely because” of his contractual relationship, and he “would not have 

been provided this information absent his ‘explicit acceptance of a duty of confidentiality.’” See 

Kosinski, 976 F.3d at 145 (deeming drug trial investigator temporary insider).  This means that 

Brewer “play[ed] [a] fiduciary-like role[]” at Copsync.  Id. at 145; see also Falcone, 257 F.3d at 

229 (“[A] relationship of trust and confidence [exists] between the shareholders of a corporation 

and those insiders who have obtained confidential information by reason of their position with 

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that corporation[.]”).  Brewer owed a duty of confidentiality to Copsync as a result of his 

temporary insider status.   

ii. Under a Misappropriation Theory, Brewer Assumed a Duty of 
Confidentiality with Respect to Copsync 
 

Even if Brewer were not a temporary insider, it is undisputed, as explained above, that he 

assumed a contractual duty of confidentiality.  Exchange Act Rule 10b5-2 provides that a “duty 

of trust or confidence” exists for purposes of the misappropriation theory of insider trading 

“[w]henever a person agrees to maintain information in confidence.”  17 CFR § 240.10b5-2; see 

United States v. Corbin, 729 F. Supp. 2d 607, 615 (S.D.N.Y. 2010) (“express confidentiality 

agreement” creates “duty of trust or confidence”).  

Here, there is no genuine dispute of material fact that Brewer entered into “express 

confidentiality agreement[s]” with Copsync that “g[a]ve[] rise to a duty” of “trust or 

confidence.”  See Corbin, 729 F. Supp. 2d at 615; see also United States v. Kosinski, No. 3:16 

Cr. 00148 (VLB), 2017 WL 3527694, at *5 (D. Conn. Aug. 16, 2017) (holding that “a 

confidentiality agreement creates a duty of trust and confidence”).  Brewer signed the Advisory 

Agreement and the Expansion Agreement on behalf of Brewer & Associates, Pl.’s 56.1 ¶¶ 55, 

59, and he signed the Endorsement Agreement in his personal capacity, id. ¶ 61.  In addition, 

Brewer instructed Meehan to “[s]ign and send” the Securities Purchase Agreement on Brewer’s 

behalf.  Id. ¶ 142.  The Advisory Agreement stated “that Brewer & Associates ‘w[ould] maintain 

in confidence all proprietary, non-published information obtained by [Brewer & Associates] with 

respect to the Company during the course of the performance of [Brewer & Associates] services 

hereunder, and [Brewer & Associates] sh[ould] not use any of the same for its own benefit.’”  Id. 

¶ 52 (quoting Ex. 15).  The Expansion Agreement, which “ratified and confirmed” “all of the 

terms and provisions in the Advisory Agreement,” incorporated the confidentiality provisions of 

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the Advisory Agreement.  Id. ¶¶ 57, 59.  The Securities Purchase Agreement in turn provided 

that Brewer & Associates “covenant[ed] that . . . [it] [would] maintain the confidentiality of the 

existence and terms of this transaction,” id. ¶ 139 (quoting Ex. 54), and that neither it “nor any 

Affiliate acting on its behalf” would “execute any purchases or sales” prior to announcement of 

the transaction, id. ¶ 140 (quoting Ex. 54).  Each of these “express confidentiality 

agreement[s]”—in the Advisory Agreement, the Expansion Agreement, the Endorsement 

Agreement, and the Securities Purchase Agreement—created a duty of trust or confidence to 

Copsync in Brewer.  See 17 CFR § 240.10b5-2; Chow, 993 F.3d at 138 (affirming conviction on 

misappropriation theory in which defendant had a “duty of trust or confidence” based on non-

disclosure agreement even though “the company and the individual ha[d] an arm’s-length 

relationship”).   

3. Brewer Breached his Duty of Confidentiality 
 

Brewer received material non-public information from Copsync.  “To demonstrate that 

[Brewer] misappropriated this information, the SEC must show that the information was 

acquired through a breach of a relationship of trust and confidence.”  See S.E.C.v. Falbo, 14 F. 

Supp. 2d 508, 522 (S.D.N.Y. 1998); see also United States v. Walters, 910 F.3d 11, 30 (2d Cir. 

2018) (“[A] person violates [the securities laws] when he misappropriates material nonpublic 

information in breach of a fiduciary duty or similar relationship of trust and confidence and uses 

that information in a securities transaction.” (quoting United States v. Falcone, 257 F.3d 226, 

230 (2d Cir. 2001)).  “[F]or purposes of both civil and criminal enforcement actions under § 

10(b) . . . and Rule 10b-5[,]” the act of “‘misappropriat[ing] confidential information for 

securities trading purposes, in breach of a duty owed to the source of the information,’” results in 

liability for the misappropriator.  United States v. Gansman, 657 F.3d 85, 90-91 (2d Cir. 2011) 

(quoting O’Hagan, 521 U.S. at 652).   

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Here, as previously explained, there is no genuine dispute of material fact that Brewer 

had a duty of confidentiality with respect to information that he had obtained from Copsync.  

“[Copsync] placed [Brewer] in a position of trust and confidence[,] and he used for personal 

benefit information obtained during the course of this association.”  Falbo, 14 F. Supp. 2d at 523 

(granting SEC summary judgment on insider trading claim against contractor who “was 

entrusted with . . . access to all of the offices in [a company’s] building” and obtained and 

“used . . . confidential information which rightfully belonged exclusively to [the company’s] 

shareholders for his own gain”).  Nor is there a genuine dispute of material fact that Brewer 

obtained a benefit.  On January 4 and 5, 2017, Brewer traded 100,000 shares of Copsync stock 

while in possession of confidential information.  See Pl.’s 56.1 ¶¶ 145-160.  Specifically, on 

January 4, 2017, Brewer directed Meehan to facilitate the trade of 5,000 of his Copsync shares.  

Id. ¶ 145.  That day, “Meehan texted Brewer’s broker and, pursuant to Brewer’s instructions, 

placed an order to sell 5,000 shares,” id. ¶ 146, which were sold at “approximately $1.01 per 

share,” yielding $5,063.88.  Id. ¶¶ 148-49.  Shortly thereafter, “Brewer gave his broker the sale 

order for execution” to “sell all 95,000 remaining shares of Copsync,” id. ¶¶ 154-55, which were 

sold on January 5, 2017, id. ¶ 156.  “The average price at which Brewer sold the shares was 

$1.04 per share,” totaling $99,114.29.  Id. ¶¶ 157-58.  Brewer breached his duty of 

confidentiality by making these trades while in possession of the Offering information.  See 

Falbo, 14 F. Supp. 2d at 523; S.E.C. v. Svoboda, 409 F. Supp. 2d 331, 340-41 (S.D.N.Y. 2006) 

(“The undisputed facts set forth by the SEC demonstrate that Svoboda breached fiduciary duties 

owed to NationsBank and its clients by passing along confidential information . . . and by 

personally trading on such information despite his knowledge that doing so violated 

NationsBank’s insider trading policies[.]”); cf. Suman, 684 F. Supp. 2d at 389 (“Because he was 

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in knowing possession of information regarding the deal, Suman breached his fiduciary duty the 

moment he began acquiring options and purchasing shares in Molecular Devices.”).   

4. There is No Genuine Dispute of Material Fact that Brewer Acted with 
Scienter when He Traded While in Possession of Material, Non-Public 
Information 
 

In order to prevail on an insider trading claim, “the SEC must establish that [a defendant] 

traded while in knowing possession of material non-public information.”  Obus, 693 F.3d at 293.  

Although “[i]ssues of motive and intent are usually inappropriate for disposition on summary 

judgment,” Wechsler v. Steinberg, 733 F.2d 1054, 1058 (2d Cir. 1984), “district courts should 

not hesitate to grant a plaintiff’s request for summary judgment when the defendant has failed to 

meet the requirements prescribed by Rule 56[].”  S.E.C. v. Rsch. Automation Corp., 585 F.2d 31, 

33-34 (2d Cir. 1978).  In the Second Circuit, “recklessness is sufficient” to establish scienter.  

One or More Unknown Traders in Sec. of Onyx Pharms., Inc., 2014 WL 5026153, at *6; Breard 

v. Sachnoff & Weaver, Ltd., 941 F.2d 142, 144 (2d Cir. 1991) (“scienter includes recklessness” 

for purposes of Rule 10b-5 insider trading claims); S.E.C. v. Solucorp Inds., Ltd., 274 F. Supp. 

2d 379, 419 (S.D.N.Y. 2003) (scienter under Section 10(b) “may be satisfied by proof of reckless 

conduct”). 

Here, there is no genuine dispute that Brewer acted with scienter in trading while 

knowingly possessing material information that was obtained in violation of a duty of trust and 

confidence.  As previously explained, in his personal capacity and on behalf of Brewer & 

Associates, Brewer signed several agreements with Copsync that contained confidentiality 

provisions.  See Pl.’s 56.1 ¶¶ 52-53 (Advisory Agreement), 56-59 (Expansion Agreement), 61 

(Endorsement Agreement); 142-43 (Securities Purchase Agreement).  Those agreements 

expressly notified Brewer of his own, and his portfolio companies’, specific obligations with 

respect to the confidential, inside information he would subsequently gain.  See id.  Accordingly, 

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Brewer was aware when he traded his Copsync stock that he was subject to a duty of 

confidentiality.  See Falbo, 14 F. Supp. 2d at 524 (“In disclosing material information to Falbo, 

Billings explicitly warned him that he could not trade on the information because of her status at 

[the company].”). 

At the very least, as a sophisticated, licensed financial services professional, Brewer 

acted recklessly.  See Pl.’s 56.1 ¶¶ 3-11, 13, 18, 20-21 (describing Brewer’s educational and 

professional background); cf. S.E.C. v. Sanchez, No. 21 Civ. 8085 (PKC), 2022 WL 1036792, at 

*2 (S.D.N.Y. Apr. 6, 2022) (holding SEC enforcement action “adequately allege[d] . . . scienter 

because [defendant] knew, due to his role as a compliance analyst, that the information obtained 

from the investment bank’s confidential database was material and nonpublic”); Kosinski, 976 

F.3d at 155 (finding significant that the defendant was a “sophisticated investor”); S.E.C. v. 

Alexander, No. 00 Civ. 7290 (LTS) (HBP), 2004 WL 1468528, at *10 (S.D.N.Y. June 28, 2004) 

(noting a “record show[ed] a high degree of scienter” where defendant was “a sophisticated 

businessman”).  More specifically, Brewer testified that he was aware of what constituted 

material information.  ECF No. 74-13 at 235 (explaining that his “understanding of material 

[was] any event that require[d] a public filing or press release to be sent”); Pl.’s 56.1 St. ¶¶ 43-

44.  Similarly, Brewer stated that he understood that “nonpublic information include[d] materials 

discussed at a board meeting.”  ECF No. 74-13 at 236.   

In addition, in his capacity as CEO, Brewer was provided with compliance training by 

Brewer Capital in the form of the WSPs.  See Pl.’s 56.1 ¶¶ 26-27, 39.  The WSPs specifically 

described how to discern if he was in possession of material, non-public information and 

explained that “all persons associated with [Brewer Capital] are prohibited from engaging in any 

securities transaction . . . while in possession of” such information.  See id. ¶ 33.  The WSPs also 

stated that Brewer could become a temporary insider as a result of a “special confidential 

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relationship,” id. ¶ 34, evidencing that Brewer was aware of circumstances that would render 

him a temporary insider.  See S.E.C. v. Materia, No. 82 Civ. 6225, 1983 WL 1396, at *2 

(S.D.N.Y. Dec. 5, 1983), aff’d, 745 F.2d 197 (2d Cir. 1984) (finding defendant “acted with 

scienter” where confidentiality “policy was prominently posted”).   

The record is replete with undisputed facts showing that Brewer acted with the necessary 

scienter to establish violations of Section 10(b) and Rule 10b-5.  As the SEC argues, and Brewer 

does not contest, “[t]he Offering was a private placement of securities that also required the 

issuance of a press release, as described in the Securities Purchase Agreement.”  Br. at 25.  

Brewer knew he possessed the non-public documents relating to the Offering from Copsync 

because he “forwarded the email from Copsync’s CEO containing the investor presentation, 

summary of proposed offering terms, and the contact sheet to Womack” and wrote to Womack:  

“Let’s discuss again if you can.”  Pl.’s 56.1 ¶ 133.  Additionally, the information in Brewer’s 

possession indicated that the Offering was unlikely to raise sufficient capital to prevent Copsync 

from being “subject to suspension and subsequent delisting” from NASDAQ.  Id. ¶¶ 120; see 

also, e.g., id. ¶¶ 132-44.  Brewer knew that a delisting was “never good,” and that Copsync’s 

inability to raise the required capital from the Offering was likely to “have a negative impact on 

[Copsync’s] stock price.”  Id. ¶ 103.   

Brewer’s only argument to the contrary is that Morgan Stanley and Copsync engaged in 

the Rule “144 process”—“a gatekeeping function to ensure that the sell [sic] of securities is 

proper under the rules”—which permitted him to trade the shares.  Id.  This does not raise a 

genuine issue of material fact with respect to scienter.  As the SEC points out, the Rule “144 

process”, id., had nothing to do with clearing Brewer to sell shares while possessing confidential, 

insider information.  Reply at 9-12 (“[T]he Rule 144 process is irrelevant” because “Morgan 

Stanley did not conduct a review to determine whether Brewer had non-public information”).  

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Instead, the Rule 144 process is intended to ensure that a securities sale complies with a 

different, unrelated provision of the securities laws.  Reply at 9.  In any event, as Brewer should 

have known, he obtained the confidential inside information after completing the Rule 144 

process.  Reply at 8 (“Morgan Stanley’s Rule 144 process was completed before Brewer 

received material, nonpublic information from Copsync.”).  Specifically, “Morgan Stanley’s 

Rule 144 process had been completed” by November 30, 2016, Reply at 11 (citing Pl.’s 56.1 

¶ 87), and it is undisputed that Brewer did not receive the information at issue until either 

December 9, 2016 when, at a board meeting, Copsync’s Board of Directors authorized 

conducting a securities offering, or at a later time.  See id. (citing Pl.’s 56.1 ¶¶ 121-122) (noting 

the possibility that Brewer received the information on December 12, 2016).  Thus, even if 

Brewer believed that the Rule 144 process cleansed any transactions that took place through 

November 30, 2016,8 he could not have believed that it would do so prospectively.    

In brief, it is undisputed that Brewer possessed material, non-public information directly 

from Copsync; that he acquired a duty of trust and confidence to Copsync a result of his 

temporary insider status and the confidentiality provisions in the agreements he signed; that he 

breached that duty by trading his shares for personal gain without disclosing that he possessed 

material, non-public information; and that he possessed the requisite scienter to violate Section 

10(b) and Rule 10b-5.  Accordingly, based on the undisputed facts, the SEC is entitled to 

judgment as a matter of law that Brewer violated Section 10(b) and SEC Rule 10b-5.  Fed. R. 

Civ. P. 56(a). 

 
8 Notably, in Brewer’s submission to comply with the Rule 144 process, he never made any 
statement that he was in possession of material, non-public information.  See Pl.’s 56.1 ¶¶ 75-81.  

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IV. CONCLUSION 

For the foregoing reasons, this Court GRANTED the SEC’s motion for partial summary 

judgment on its claim pursuant to Section 10(b) of the Exchange Act and Rule 10b-5.   

By June 9, 2025, the parties shall file a joint letter proposing next steps.   

SO ORDERED. 

Dated: May 30, 2025 
New York, New York    

    
 

JENNIFER H. REARDEN 
United States District Judge 

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