Full opinion text
MEMORANDUM OF DECISION FEUERSTEIN, District Judge. I. Procedural History On June 3, 2004, the Securities and Exchange Commission (“SEC”) commenced this action against defendant Tomo Razmilovic (“Razmilovic”), and others \ alleging claims, inter alia, for violations of Section 17(a) of the Securities Act of 1933 (“the Securities Act”), 15 U.S.C. § 77q(a); Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934 (“the Exchange Act”), 15 U.S.C. §§ 78j(b), 78m(a), 78m(b)(2) and 78m(b)(5), and Rules 10b-5, 12b-20, 13a-l, 13a-13, 13b2-l and 13b2-2 thereunder, 17 C.F.R. §§ 240.10b-5, 240.12b-20, 240.13a-l, 240.13a-13, 240.13b2-l and 240.13b2-2. The SEC seeks, inter alia: (1) to permanently enjoin Razmilovic from future violations of the securities laws, from controlling any person who violates the securities laws and from acting as an officer or director of a public company; (2) disgorgement of all profits realized by Razmilovic as a result of his violations of the securities laws, including prejudgment interest thereon; and (3) civil monetary penalties pursuant to Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), and Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d). (Compl., ¶ 14, pp. 78-82). On July 21, 2009, the SEC served Razmilovic’s counsel with a notice to take Razmilovic’s deposition at the SEC’s offices in New York on Monday, September 28, 2009. (See Motion to Compel, Doc. No. 100, Ex. B). Razmilovic’s counsel informed the SEC that Razmilovic refused to appear for a deposition in the United States and alternatively proposed conducting an in-person deposition of Razmilovic in Sweden or a deposition via video-conference. {Id., Ex. F). By order dated October 9, 2009, I, inter alia, granted the SEC’s subsequent motion to compel the deposition of Razmilovic in person on or before October 22, 2009, as provided in the SEC’s notice of deposition; denied Razmilovic’s motion to conduct his deposition via videoconference; and advised that Razmilovic’s failure to appear in person for the deposition as noticed could result in sanctions being imposed against him and/or his attorneys pursuant to Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure, including the entry of a default judgment against him. (Doc. No. 109). Razmilovic failed to appear for the deposition as directed by the October 9, 2009 order. On December 21, 2009, the SEC moved, pursuant to Rule 37 of the Federal Rules of Civil Procedure, for a default judgment against Razmilovic based upon his failure to comply with this Court’s October 9, 2009 order. (Doc. No. 137). On December 22, 2009, I granted the SEC’s motion for a default judgment against Razmilovic pursuant to Rule 37 of the Federal Rules of Civil Procedure based upon his failure to comply with this Court’s October 9, 2009 order. By order dated February 25, 2010, 2010 WL 744359, I denied Razmilovic’s motion for reconsideration of the December 22, 2009 order. On March 15, 2010, a bench trial commenced to determine the appropriate remedies for Razmilovic’s violations of the securities laws established by the entry of a default judgment against him. The SEC rested its case-in-chief on that date. The following day, the trial was continued to May 10, 2010. On March 17, 2010, at my request, counsel for Razmilovic filed a joint proposed scheduling order which directed, inter alia: (1) the SEC to (a) notify Razmilovic’s counsel by March 19, 2010 if it intended to call an expert witness, (b) provide Razmilovic’s counsel with the name and curriculum vitae of any such expert witness immediately upon the selection of that expert and (c) serve upon Razmilovic’s counsel an expert witness report on or before April 9, 2010; (2) Razmilovic to serve on the SEC’s counsel any revised or updated expert report by his previously-identified expert witness on or before April 9, 2010; and (3) both parties to submit to the Court no later than April 30, 2010 a revised joint pretrial order, reflecting any additional exhibits and/or witnesses either party proposed to offer or call during the continued trial. That proposed order was approved and signed by me on March 18, 2010 and entered as an order of the Court on March 19, 2010. On April 5, 2010, Razmilovic filed a motion for judgment on partial findings pursuant to Rule 52(c) of the Federal Rules of Civil Procedure. On April 12, 2010, I granted, over Razmilovic’s objection, the SEC’s motion to reopen its case-in-chief to call Edward S. O’Neal as an expert witness and to admit into evidence O’Neal’s report and two (2) additional exhibits. By order entered June 15, 2010, I, inter alia, denied Razmilovic’s motion for judgment on partial findings. During the proceedings on June 21, 2010, I, inter alia, denied the parties’ respective motions to exclude the testimony of each other’s expert witness at trial and, over the SEC’s objection, granted Razmilovic’s request to determine the remaining issues upon submission of experts’ reports, deposition transcripts and post-hearing briefs. Aecordingly, the trial was adjourned sine die and a briefing schedule was set. The following constitutes my findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure. II. Findings of Fact A. Employment Agreements 1. Razmilovic was the president and chief operating officer of Symbol from 1995 through June 2000. (Complaint [Compl.], ¶ 18; Trial Exhibits [TE.], 4 (Employment Agreement between Symbol and Razmilovic dated October 16, 1995 [“1995 Employment Agreement”])). 2. In consideration of the services rendered by Razmilovic under the 1995 Employment Agreement, Symbol agreed, inter alia, to compensate him with a base salary and an annual bonus to be determined pursuant to Symbol’s Executive Bonus Plan. (TE 4, ¶¶ 4(a) and (b)). 3. As set forth in its 2000, 2001 and 2002 Proxy Statements, Symbol’s “executive compensation program” (“ECP”): “Relate[s] compensation to performance. Overall compensation paid to senior executives should be tied to how well [Symbol] performs financially- * * * It is [Symbol’s] policy to pay its senior executives at levels that reflect [Symbol’s] financial performance relative to comparable organizations. * * * The three elements of [Symbol’s] [ECP] are: Base salary[,] Executive Bonus Plan[,] [and] Stock option awards. * * * Adjustments in base salary are generally not based upon the financial performance of [Symbol]. * * * [Symbol] promotes a pay-for-performance philosophy. A significant element of annual compensation is linked to the financial performance of [Symbol]. * * * The purpose of the [Executive Bonus Plan] is to tie the level of annual executive incentive compensation to the financial performance of [Symbol]. * * * Under the Executive Bonus Plan, each year [Symbol] establishes] corporate financial performance objectives * * *, based on earnings per share. [Symbol] ha[s] identified three levels of performance: threshold performance, at which the minimum award (one-half a participant’s target bonus) will be earned and below which no award will be earned[;] target performance, at which the target award will be earned; and maximum performance, at which the maximum award (twice a participant’s target bonus) will be earned and above which no additional award will be earned. * * * Stock options provide employees with the opportunity to become shareholders of [Symbol], and to participate in the creation of shareholder value as reflected in growth in the price of [Symbol’s] common stock. Option exercise prices are equal to 100% of the fair market value of [Symbol’s] common stock on the date of option grant. This ensures that participants will derive benefit only as shareholders realize corresponding gains. * * * * * * We believe that granting stock options reinforces [Symbol’s] objective of insuring a strong link between employee rewards and shareholder interests. * * * * * * We firmly believe that the long term interests of [Symbol’s] shareholders are best served when management maintains a significant, equity-based interest in [Symbol]. We consider both vested, unexercised options and shares owned as meaningful expressions of such interest. We developed a [stock ownership and option retention] program with target levels of equity interest for each executive officer. Under the program, * * *, if an executive has not attained the minimum requirements described [therein], his ability to exercise options or sell shares is limited. * * * The program limits the exercise of vested options * * * unless the executive meets and will continue to meet the equity interest requirement * * *. The equity interest requirement provides that the combined value of [Symbol’s] common stock and vested options held by the executive, each valued at the then market price of [Symbol’s] common stock, must be equal to or greater than a designated multiple of the executive’s annual base salary plus target bonus. If the equity interest requirement is satisfied, the program allows for the exercise of vested options within strict limits. * * (TE 11 (Symbol’s Proxy Statement dated March 15, 2000 [“2000 Proxy Statement”]), at 10-13; TE 12 (Symbol’s Proxy Statement dated April 2, 2001 [“2001 Proxy Statement”]), at 10-13; TE 13 (Symbol’s Proxy Statement dated March 12, 2002 [“2002 Proxy Statement”] ), at 7-10; see also TE 45, at 82; TE 46). 4. Pursuant to the minutes of meetings of the Compensation/Stock Option Committee of Symbol’s Board of Directors (“Symbol’s Compensation Committee”) held on December 14, 1998, December 13, 1999 and December 11, 2000, the Committee adopted performance criteria for its Executive Bonus Plan for the years 1999, 2000 and 2001, respectively, pursuant to which, inter alia, Razmilovic’s bonus “would be based entirely on corporate financial performance * * (TE 38, 40 and 43; see also TE 11, at 12; TE 12, at 12). 5. Pursuant to the minutes of a meeting of Symbol’s Compensation Committee held on February 26, 2001, “biennial performance [stock] options” awarded to Symbol’s executive officers were: “split between ‘performance’ grants which [would] vest on July 1, 2006, subject to earlier vesting and ‘normal’ grants which [would] vest according to [Symbol’s] normal Executive option vesting schedule. * * * [T]he performance portion of each award would initially vest on January 1, 2006, subject to accelerated vesting if certain levels of earnings growth were attained in 2001 and 2002. * * * The EPS [earnings per shares] calculation in 2001 and 2002 would use the same criteria as used * * * in calculating EPS for purposes of [Symbol’s] Executive Bonus Plan.” (TE 19, at 1-2). 6. In 1999, Razmilovic was paid a base salary in the amount of six hundred thirty-five thousand seven hundred forty-nine dollars ($635,749.00) and a bonus in the amount of seven hundred forty-two thousand dollars ($742,000.00). (TE 11, at 14; TE 12, at 14; TE 13, at 12; TE 20; TE 37[]). 7. The “performance” stock options awarded in 1999 met the criteria for accelerated vesting. (TE 19, at 4). 8. On February 15, 2000, Symbol reported its results for the fourth quarter and full year ended December 31, 1999 indicating: (l)(a) a more than sixteen percent (16.2%) increase in revenue, (b) a more than thirty-four percent (34.7%) increase in operating earnings, (c) a more than thirty-five percent (35.3%) increase in net earnings and (d) a more than thirty-four percent (34.6%) increase in diluted earnings per share, for the 1999 fourth quarter; and (2)(a) a sixteen and one-half percent (16.5%) increase in revenue, (b) an almost twenty-five percent (24.9%) increase in operating earnings, (c) a more than twenty-five percent (25.2%) increase in net earnings and (d) a more than twenty-four percent (24.2%) increase in diluted earnings per share, for the 1999 full year. (TE 42). 9. In February 2000, “in connection with [him] being promoted to Chief Executive Officer,” Razmilovic was awarded stock options to purchase three hundred seventy-five thousand (375,000) shares of Symbol’s common stock at an exercise price of fifty-three dollars and seventy-five cents ($53.75). (TE 12, at 12). 10. One hundred fifty thousand (150,000) of those options were to vest on February 14, 2002, one hundred twelve thousand five hundred (112,500) of those options were to vest on February 14, 2003 and one hundred twelve thousand five hundred (112,-500) of those options were to vest on February 14, 2004. (Id.) 11. In July 2000, “in connection with [him] entering into a new five-year employment agreement with [Symbol],” Razmilovic was awarded additional stock options to purchase two hundred fifty thousand (250,000) shares of Symbol’s common stock at an exercise price of thirty-nine dollars and eighty seven and a half cents ($39,875) per share. (Id.) 12. Razmilovic’s right to purchase twenty-five thousand (25,000) shares under those options vested on July 31, 2001; his right to purchase an additional thirty-seven thousand five hundred (37,500) shares vested six (6) months thereafter, i.e., on January 31, 2002; and the remaining options were to vest on each of the next five (5) consecutive six (6) month anniversary dates, beginning on July 31, 2002. (Id.) 13. From July 2000 until February 2002, Razmilovic was the president and chief executive officer (“CEO”) of Symbol. (Compl., ¶ 18; TE 5) (Employment Agreement between Symbol and Razmilovic dated July 1, 2000 [“2000 Employment Agreement”] ). 14. In consideration of the services rendered by Razmilovic under the 2000 Employment Agreement, Symbol agreed, inter alia, to compensate him: (a) with a base salary starting at the rate of one million dollars ($1,000,000.00) per annum for the period ending June 80, 2002, and increasing every two (2) years thereafter to a mutually agreeable amount; and (b) with an annual bonus to be determined pursuant to Symbol’s Executive Bonus Plan, in a targeted amount of one hundred percent (100%) of his base salary actually earned. (TE 5, ¶¶ 4(a) and (b); see TE 12, at 10-12,15). 15. On November 30, 2000, a wholly-owned subsidiary of Symbol was merged with Telxon Corporation (“the Telxon acquisition”) in a stock-for-stock merger. (TE 45, at 10, 46). 16. “The [Telxon] acquisition was accounted for as a purchase and the excess of the purchase price over the fair value of the assets acquired and liabilities assumed was recorded as goodwill.” (TE 45, at 46). 17. In its restatement, Symbol subsequently “adjusted goodwill for revisions to the fair values of the assets and liabilities acquired.” (Id.) 18. In 2000, Razmilovic was paid a base salary in the amount of eight hundred thirty-two thousand seven hundred seventy dollars ($832,770.00), a bonus in the amount of nine hundred forty-nine thousand four hundred dollars ($949,400.00), and a special bonus in the amount of two hundred sixty thousand dollars ($260,-000.00), related to Symbol’s acquisition of Telxon Corporation. (TE 10; TE 12, at 12, 14; TE 13, at 12; TE 45 (Symbol’s Annual Report on Form 10-K/A for the year ended December 31, 2002 [“2002 Annual Report”]), at 78; TE 19, at 3-4; TE 20; TE 37). 19. Symbol’s 2001 Proxy Statement provides, in relevant part, that “special bonuses were paid to certain participants in the Executive Bonus Plan in recognition of the additional duties and responsibilities relating to the acquisition of Telxon Corporation.” (TE 12, at 10-12,15). 20. On February 27, 2001, Symbol reported its results for the fourth quarter and full year ended December 31, 2000, indicating: (1) a more than thirty-two percent (32.7%) increase in revenue for the fourth quarter of 2000; (2) a more than twenty-seven percent (27.3%) increase in revenue for the full year; but (3) a net loss in income and diluted earnings per share for both the fourth quarter and full year ended December 31, 2000. (TE 44). 21. In May 2001, Symbol initiated an internal review of certain financial matters in response to an inquiry from the SEC. (TE 45, at 2,16, 42, 71). 22. In 2001, Razmilovic received a base salary of one million two dollars ($1,000,-002.00) and no performance bonus. (TE 13, at 9, 12; TE 45, at 78; TE 37[]). 23. Symbol’s 2002 Proxy Statement indicates, in relevant part, that in February 2001 “in connection with a periodic performance review,” Razmilovic was granted stock options to purchase three hundred seventy-five thousand (375,000) shares of Symbol’s common stock at an exercise price of twenty-seven dollars and ninety-seven cents ($27.97). 24. Twelve thousand seven hundred fifty (12,750) of those options vested on January 1, 2002 and the remaining options would have vested on or after July 1, 2002 but were canceled in February 2002 “in connection with arrangements entered into between Symbol and Mr. Razmilovic.” (TE 13, at 9-10). 25. On February 14, 2002, Razmilovic “resigned” as president and CEO of Symbol, but entered into two (2) new agreements with Symbol that superceded and replaced the 2000 Employment Agreement. (TE 6) (Employment Agreement between Symbol and Razmilovic dated February 14, 2002 [“2002 Employment Agreement”], ¶¶ 3, 4(a), 14; TE 7 (Separation, Release and Non-Disclosure Agreement [“Separation Agreement”], ¶¶ 1, 2(B)); see TE 13, at 13). 26. Pursuant to those two (2) agreements, Razmilovic was to remain a full-time employee of Symbol until May 6, 2002 and thereafter he would be a part-time employee of Symbol in a “consultative capacity” for a five (5)-year term. (TE 6, ¶¶ 3, 4(a), 14; TE 7, ¶¶ 1, 2(B); see also TE 45, at 82). 27. In consideration of the services rendered by Razmilovic under the 2002 Employment Agreement, Symbol agreed, inter alia, to compensate him: (a) with a salary at the rate of thirty-eight thousand four hundred sixty-one dollars and fifty-three cents ($38,461.53) per bi-weekly pay period (one million dollars ($1,000,000.00) on an annualized basis) through and including May 6, 2002; and (b) with a salary at the rate of two hundred thousand dollars ($200,000.00) per annum for the period from May 7, 2002 through May 6, 2007, (TE 6, ¶ 5(a); see TE 13, at 13). 28. The Severance Agreement provides, in relevant part: “In consideration for executing this Agreement and in full and complete satisfaction of [Symbol’s] contractual obligation to Razmilovic under the [2000] Employment Agreement, Symbol will provide Razmilovic the following: (A) * * * Razmilovic will receive a lump sum payment of $5 million dollars. Razmilovic relinquishes his right to all outstanding stock options whether vested or unvested as of [February 14, 2002], with the exception of 236,250 shares granted to Razmilovic on October 19, 1998, under [Symbol’s] 1997 Stock Option Plan. * * * ” 29. In accordance with that provision of the Separation Agreement, Razmilovic relinquished one million eight hundred eighteen thousand seven hundred fifty (1,818,-750) stock options. (Brody Deck, Ex. 1; TE 7, ¶ 2(A); see TE 13, at 13). 30. Symbol’s 2002 Proxy Statement indicates that those stock options had been granted to Razmilovic in February 2001 “in connection with a periodic performance review,” but had been canceled in February 2002 “in connection with arrangements entered into between Symbol and Mr. Razmilovic.” (TE 13, at 9-10). 31. In 2002, Razmilovic received a base salary of four hundred seventy-six thousand nine hundred thirty-two dollars ($476,932.00), the five million dollar ($5,000,000.00) severance payment and no performance bonus. (TE 45, at 78; TE 37). 32. The 1995, 2000 and 2002 Employment Agreements: (1) required Razmilovic, inter alia, to “use his best efforts to promote [Symbol’s] * * * best interests * * (TE 4 and 5), ¶¶ 3(a); TE 6, ¶ 4(a), and (2) could be terminated, inter alia, (a) voluntarily by Razmilovic, (TE 4 and 5, ¶¶ 12(a)(iii)); TE 6, ¶¶ 13(a)(iii), or (b) for “cause” upon written notice to Razmilovic of election of Symbol’s Board of Directors to terminate his employment. (TE 4 and 5, ¶¶ 12(a)(iv); TE 6, ¶ 13(a)(iv)). 33. “Cause” is defined in the 1995, 2000 and 2002 Employment Agreements as “a determination made in good faith by vote of a majority of the members of the Board of Directors of [Symbol] * * * that one of the following conditions exists or one of the following events has occurred: * * * (ii) * * * willful misconduct or gross negligence on [Razmilovic’s] part in connection with the performance of [his] duties.” (TE 4 and 5, ¶¶ 12(b)(1)(h); TE 6, ¶ 13(b)(iii)). 34. The 1995 and 2000 Employment Agreements further provide that Razmilovic would be entitled to a severance payment “[i]n the event of the termination of [his] employment * * * for any reason * * * other than due to * * * (ii) his voluntary termination of his employment with [Symbol] pursuant to subsection 12(a)(iii); or (iii) his termination for cause as provided in subsection 12(a)(iv) * * *.” (TE 4 and 5, ¶¶ 12(c)) (emphasis added). 35. The 2000 Employment Agreement also provided for an additional severance payment “[i]n the event of the termination of [Razmilovic’s] employment prior to July 1, 2003 for any reason other than due to * * * (ii) his voluntary termination of his employment with [Symbol] pursuant to subsection 12(a)(iii); or (iii) his termination for cause as provided in subsection 12(a)(iv) * * (TE 5, ¶ 12(d)) (emphasis added). 36. The Separation Agreement indicates, inter alia, that Razmilovie resigned his position with Symbol as president and CEO pursuant to paragraph 12(a)(iii) of the 2000 Employment Agreement. (TE 7, ¶1). B. Symbol’s Restatement 37. Although Symbol’s internal investigation was “hindered by certain of [its] former employees,” (TE, at 16, 42, 43), it eventually “identified accounting errors and irregularities relating to [its] previously issued financial statements,” requiring it to restate its “selected financial data for 1998, 1999, 2000 and 2001, financial statements for the years ended December 31, 2000 and 2001, and unaudited selected quarterly information for each of the four quarters of 2001 and first three quarters of 2002.” (TE 45, at 1). 38. On February 25, 2004, Symbol filed an amendment to its Form 10-K (Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934) for the fiscal year ended December 31, 2002 (“the Restatement”), that had originally been filed on December 30, 2003 (“the original 10-K”), “to reflect the restatement of [its] 2002 and 2001 financial statements * * *.” (TE 45). 39. Pursuant to the Restatement, Symbol “reversed cumulative net revenue of $234,220,000 and cumulative net earnings of $325,536,000 that had previously been recognized through the period ended September 30, 2002.” (TE 45, at 3). 40. As of September 30, 2002, [Symbol’s] restated Stockholders’ Equity was $946,261,000 as compared with $1,171,393,000 as originally reflected in [Symbol’s] Form 10-Q for the quarter then ended.” (TE 45, at 3; see also TE 45, at 43). 41. As noted in Symbol’s Restatement: “The adjustments necessary to restate [Symbol’s] financial statements in accordance with accounting principles generally accepted in the United States of America (‘U.S. GAAP’) relate to widespread errors and irregularities primarily involving the timing and amount of product and service revenues recognized and the timing and amounts recognized with respect to certain reserves, restructurings, certain option programs and several categories of cost of revenue and operating expenses. [Symbol] reversed cumulative net revenue of $234,220,000 and cumulative net earnings of $325,536,000 that had previously been recognized through the period ended September 30, 2002. As of September 30, 2002, [Symbol’s] restated Stockholders’ Equity was $946,261,000 as compared with $1,171,393,000 as originally reflected in [Symbol’s] Form 10-Q for the quarter then ended.” (TE 45, at 2-3; see also TE 45, at 18, 28, 42, 43, 71). 42. Symbol’s Restatement further indicates that: “In particular, the [internal] investigation found that revenue was accelerated from the appropriate quarters to earlier quarters through a variety of improper means and, on a more limited basis, revenue was improperly created and inflated on a net basis. Additionally, there were errors and irregularities associated with the establishment and utilization of certain reserves and restructurings, including certain end-of-quarter adjustments that were apparently made in order to achieve previously forecasted financial results. There were also errors and/or irregularities associated with the administration of certain options programs, as well as several categories of cost of revenue and operating expenses, including efforts to artificially reduce reported inventory.” (TE 45, at 42-43). 43. Examples of the fraud included in Symbol’s Restatement are: (1) the improper recognition of revenue from non-binding sales agreements, (TE 45, at 44); (2) the improper amount and timing of (a) the restructuring, impairment and merger integration charges associated with the Telxon acquisition recorded in December 2000 and (b) the restructuring charge associated with the reorganization of Symbol’s manufacturing facility recorded in September 2001, as well as the subsequent utilization of the established reserves relating to both transactions, (TE 45, at 44-45); (3) the improper nature, timing and amount of inventory charges recorded in June 2001, (TE 45, at 45); (4) the incorrect capitalization of certain computer hardware development costs, (id.); (5) the misapplication of accounting principles relating to computer software design and development costs, (id.)] (6) the incorrect amortization of certain patent-related costs beyond the life of the related patent, (id.)] (7) the inability to associate various legal costs incurred with a specific patent, (id.)] (8) improper adjustments to goodwill relating to the Telxon acquisition and the incorrect recording of adjustments properly made in accounts other than goodwill, (TE 45, at 46); (9) the erroneous establishment or release of reserves relating to accruals for costs incurred that had not been paid and prepayments for goods or services to be received that had been paid in advance, (id.)] (10) the improper classification of certain categories of expenses in the statements of operations, (id.)] (11) irregularities and improper administration of option exercises relating to Symbol’s stock option plans, (TE 45, at 47); (12) the improper acceleration of cash receipts into earlier accounting periods and incorrect reclassifications to certain balance sheet accounts, such as accounts receivable and other assets, (TE 45, at 48); (13) the carrying of marketable securities, property, plant, equipment and other long-lived assets at amounts exceeding their net realizable values, (id.); and (14) the improper timing of an “other-than-temporary impairment” in Symbol’s investment in the common stock for Cisco Systems, Inc. in the second quarter of 2002, when it should have been recognized in September 2001, (id.). C. Fraud Scheme 44. Razmilovic and his co-defendants, “engaged in a fraudulent scheme to inflate revenue, earnings and other measures of financial performance in order to create the false appearance that Symbol had met or exceeded its financial projections,” (Compl., ¶ 34), resulting in “material misstatements of revenue, earnings and other financial information reported by Symbol for annual and quarterly reporting periods from at least 1998 through the fourth quarter of 2002.” (Id.) 45. The fraudulent accounting practices include: “patently improper topside adjustments, a multitude of revenue recognition schemes, the manipulation of non-recurring charges and ‘cookie jar’ reserves to manage earnings * * (Id.; see also ¶ 158). 46. Due to the fraudulent practices of Razmilovic and his co-defendants, documents filed by Symbol with the SEC “contained financial statements that materially overstated Symbol’s revenue and net income for the subject reporting periods and other material misstatements concerning Symbol’s financial performance.” (Compl., ¶ 166). 47. Razmilovic and four (4) of his co-defendants directed the fraud, which was implemented by the other five (5) co-defendants. (Compl., ¶ 34). 48. Specifically, inter alia: (1) Razmilovic authorized adjustments made, and directed additional adjustments to be made, on Symbol’s “Tango” sheets in order to understate Symbol’s expenses and overstate its revenue and earnings, (Compl., ¶¶ 35-41); (2) Razmilovic, and others, “negotiated large quarter-end transactions designed to pump additional revenue into [Symbol’s] financial statements” and otherwise “engaged in multiple fraudulent schemes to inflate Symbol’s reported sales revenue and income * * (Compl., ¶¶ 42-43); (3) “[a]t the end of the second quarter of 2001, Razmilovic negotiated an artificial ‘swap’ transaction with a software company on which Symbol improperly recognized $4.25 million in revenue that quarter,” (Compl., ¶ 44); and (4) Razmilovic signed (a) Form 10-K and/or Form 10-Q reports filed with the SEC which contained materially false and misleading information inflating Symbol’s financial results, (Compl., ¶¶ 142-146), and (b) registration statements filed with the SEC which incorporated one or more of those false and misleading reports, (Compl., ¶¶ 147-148). 49. Razmilovic benefitted from his fraud by receiving “performance bonuses and other incentive compensation, severance payments and the proceeds of multiple transactions in Symbol securities,” including “European ‘zero cost collar’ transactions with a brokerage firm” and the exercise of stock options priced below the inflated market price. (Compl., ¶ 155(a)). 50. On May 28, 2004, Razmilovic was indicted in the United States District Court for the Eastern District of New York for his participation in the fraudulent scheme and accounting practices at Symbol. 51. At the time of his indictment, Razmilovic was living in the United Kingdom, but he subsequently moved to Croatia, then Sweden, where he currently resides. III. Expert Reports A. SEC’s Expert The SEC retained Edward S. O’Neal, Ph.D. (“O’Neal”) to evaluate the inflation in the common stock price of Symbol due to the financial misrepresentations that occurred between 1998 and 2002. (Expert Report of Edward S. O’Neal, Ph.D. dated April 9, 2010 [O’Neal Rpt], Brody Deck, Ex. 4). O’Neal assessed the impact of the financial misrepresentations on Symbol common stock prices utilizing an “event study methodology,” which looks at the expected return on the security; the unexpected return on the security due to the event, i.e., the difference between the observed return or actual stock price and the expected return; and the statistical likelihood of an unexpected return as large as the one observed, i.e., how closely a stock tends to adhere to its average relationship with the market. (O’Neal Rpt., at 6-8). O’Neal identified three (3) statistically significant announcements: (1) Symbol’s announcement following the close of trading on July 16, 2001 (“the July 16, 2001 announcement”) that its 2001 second quarter revenue and earnings were expected to be “significantly below analyst estimates,” (Brody Deck, Ex. 6), which O’Neal attributed, in part, “to some reversal of Symbol’s prior accounting fraud concerning fraudulent sales into the distribution channel,” (O’Neal Rpt., at 11), and which resulted in a thirty percent (30%) decline in Symbol’s stock price the next trading day, i.e., on July 17, 2001, Symbol’s stock price declined to five dollars and seventy-eight cents ($5.78), (id); (2) an article in Newsday on February 13, 2002 (“the February 13, 2002 article”) (a) revealing the SEC’s inquiry into Symbol and the commission of an independent review by Symbol of its sales practices, and (b) questioning Symbol’s accounting and sales practices and whether the retirement of its CEO, Razmilovic, was imminent, (Brody Deck, Ex. 10), which resulted in a seventeen percent (17%) decline in Symbol’s stock price, i.e., to two dollars and sixty-six cents ($2.66), (O’Neal Rpt., at 11); and (3) Symbol’s announcements after the close of trading on February 14, 2002 (“the February 14, 2002 announcements”) (a) of its 2001 fourth quarter and full-year results and its expected 2002 first quarter revenue earnings, (b) that it lowered earnings guidance for subsequent quarters and (c) that its CEO, Razmilovic, had abruptly retired, (Brody Deck, Ex. 11), which resulted in an almost twenty-nine percent (29%) decline in Symbol’s stock price, i.e., to three dollars and ten cents ($3.10). (O’Neal Rpt., at 11-12). According to O’Neal, those three (3) announcements “caused a total abnormal return to Symbol stock of -$11.54.” (O’Neal Rpt., at 12). Thus, O’Neal applied that amount, adjusted accordingly to account for the three-to-two (3-2) stock splits of Symbol stock on two (2) separate occasions and/or for the correction of some financial results following the July 16, 2001 announcement, as the inflation present in Symbol’s stock price during the fraud period. (Id. at 12-13). B. Razmilovic’s Expert Razmilovic retained Denise Neumann Martin, Ph.D. (“Martin”) to calculate his disgorgement liability. (Expert Report of Denise Neumann Martin, Ph.D. [Martin Rpt.] dated April 9, 2010, Brody Deck, Ex. 5). Martin also utilized an “event study” methodology and identified eleven (11) statistically significant announcements: the February 13, 2002 article and ten (10) dates subsequent to Razmilovic’s resignation and stock transactions. (Id. at 7 and Ex. 6A). According to Martin, “much of the movement in Symbol’s stock price was attributable to industry trends, and should not be included in any measure of disgorgement.” (Id. at 5). Martin estimated the inflation price of Symbol stock as three dollars and forty-two cents ($3.42) and eventually concluded that Razmilovic is only liable to disgorge the amount of four million eight hundred seventy thousand dollars ($4,870,000.00). (Martin Rpt., at 3, 11). IV. Conclusions of Law A. Disgorgement The SEC contends that it is not required to prove the disgorgeable amount with certainty. Rather, according to the SEC, the amount of disgorgement need only be a reasonable approximation of profits connected to the violation, with any risk of uncertainty falling upon Razmilovic, the wrongdoer. The SEC contends that since its calculation of the disgorgement amount is reasonable, the burden shifted to Razmilovic to show that its calculation is not a reasonable approximation and to rebut the presumption that all profits earned during the fraud period are disgorgeable. Razmilovic contends that the SEC has the burden of proving a causal connection between his compensation and the alleged fraud. 1. Standard Disgorgement is a form of equitable relief, see SEC v. Wang, 944 F.2d 80, 85 (2d Cir.1991); see also SEC v. First Jersey Securities, Inc., 101 F.3d 1450, 1474 (2d Cir.1996), and is “a method of forcing a defendant to give up the amount by which he was unjustly enriched.” Federal Trade Commission v. Bronson Partners, LLC, 654 F.3d 359, 372 (2d Cir.2011) (quoting SEC v. Commonwealth Chem. Sec., Inc., 574 F.2d 90, 102 (2d Cir.1978)). “[T]he primary purpose of disgorgement orders is to deter violations of the [ ] laws by depriving violators of their ill-gotten gains.” Id., at 373 (quoting SEC v. Fischbach Corp., 133 F.3d 170, 175 (2d Cir.1997)); see also SEC v. DiBella, 587 F.3d 553, 572 (2d Cir.2009); First Jersey Securities, 101 F.3d at 1474, 1475; Wang, 944 F.2d at 85, 88. The relevant inquiry is, thus, whether the defendant was unjustly enriched by his illegal conduct. See DiBella, 587 F.3d at 572. The remedy of disgorgement “consists of factfinding by a district court to determine the amount of money acquired through wrongdoing * * * and an order compelling the wrongdoer to pay that amount plus interest to the court.” SEC v. Cavanagh, 445 F.3d 105, 116 (2d Cir.2006). Since the purpose of disgorgement is remedial, not punitive, disgorgement may not be awarded above that amount. Id. at 116, n. 25. “A district court order of disgorgement forces a defendant to account for all profits reaped through his securities law violations and to transfer all such money to the court * * *.” Id. at 117. The SEC must first demonstrate that its calculation of disgorgement reasonably approximates the amount of the defendant’s unjust enrichment, after which the burden shifts to the defendant to show that the SEC’s calculation was unreasonable, i.e., that he received less than the full amount sought to be disgorged. See SEC v. Colonal Investment Management LLC, 659 F.Supp.2d 467, 501 (S.D.N.Y.2009), aff'd, 381 Fed. Appx. 27 (2d Cir.2010); U.S. SEC v. Universal Exp., Inc., 646 F.Supp.2d 552, 563 (S.D.N.Y.2009); SEC v. Aimsi Technologies, Inc., 650 F.Supp.2d 296, 304 (S.D.N.Y.2009); SEC v. Opulentica, LLC, 479 F.Supp.2d 319, 330 (S.D.N.Y.2007). “Disgorgement need only be a reasonable approximation of profits causally connected to the violation.” SEC v. Patel, 61 F.3d 137, 139 (2d Cir.1995) (quotations, alterations and citations omitted); see also U.S. SEC v. Universal Exp., Inc., 438 Fed.Appx. 23, 25-26, 2011 WL 4337125, at *1 (2d Cir.2011) (summary order); SEC v. Warde, 151 F.3d 42, 50 (2d Cir.1998). “Any risk of uncertainty in calculating disgorgement should fall on the wrongdoer whose illegal conduct created the uncertainty.” Patel, 61 F.3d at 140 (quotation, alterations and citation omitted); see also Warde, 151 F.3d at 50. Where, as here, a fraud is pervasive, it is appropriate to order the defendant to disgorge all ill-gotten gains realized during the course of the fraud scheme. See, e.g. Commodity Futures Trading Commission v. British American Commodity Options Corp., 788 F.2d 92, 93-94 (2d Cir.1986) (holding that although generally, the party seeking disgorgement must distinguish between legally and illegally derived profits where benefits result from both lawful and unlawful conduct, cases involving systematic and pervasive fraud, as opposed to isolated instances of fraud, are different); SEC v. Hasho, 784 F.Supp. 1059, 1111-12 (S.D.N.Y.1992) (“When a defendant engages in a pervasive pattern of fraudulent conduct as opposed to isolated instances, it is unnecessary to prove a direct nexus between each instance of unlawful conduct and the disgorgement amount due.”); see also SEC v. Huff, 758 F.Supp.2d 1288, 1359-60 (S.D.Fla.2010). “The district court has broad discretion not only in determining whether or not to order disgorgement but also in calculating the amount to be disgorged.” First Jersey Securities, 101 F.3d at 1474-75; see also SEC v. Lorin, 76 F.3d 458, 462 (2d Cir.1996) (“The decision to order disgorgement of ill-gotten gains, and the calculation of those gains, lie within the discretion of the trial court, which must be given wide latitude in these matters.” (Internal quotations and citation omitted)). Notwithstanding language in certain cases suggesting otherwise, the Second Circuit has recently stated that the appropriate measure of disgorgement is not necessarily the calculation of the defendant’s net profits from his illegal acts, since the defendant is “not entitled to deduct costs associated with committing [his] illegal acts.” See Bronson Partners, 654 F.3d at 375 (quoting SEC v. Cavanagh, No. 98-Civ-1818-DLC, 2004 WL 1594818, at *30 (S.D.N.Y. July 16, 2004), aff'd, 445 F.3d 105 (2d Cir.2006)). As the Second Circuit held, “where the profits from fraud and the defendant’s ill-gotten gains diverge, the district court may award the larger sum.” Id. 2. Compensation The SEC seeks disgorgement of the entire amount of compensation Razmilovie received during the fraud period, i.e., from 1998 through 2002, including his base salary, bonus and lump sum severance payment, on the basis: (1) that Razmilovic’s employment at Symbol should have (and would have) been terminated based upon his participation in the fraud scheme and, therefore, he should not have received any compensation during the period that he participated in the fraud scheme prior to its discovery; (2) that Razmilovic’s base salary and bonus were contractually premised upon either Razmilovic’s promise to act in Symbol’s best interests or upon Symbol’s financial performance, but neither requirement was met; (3) that Razmilovic’s severance payment was a performance bonus, but his “performance” was fraudulent; and (4) that Razmilovie should not be entitled to retain the special bonus related to the Telxon acquisition because that transaction was improperly used by him and his co-defendants to “prop up” Symbol’s financial performance. The SEC seeks disgorgement liability from compensation, including prejudgment interest from April 5, 2002, the date on which Razmilovie received the severance payment, to September 10, 2010, in the total amount of fifteen million eight hundred twenty-two thousand six hundred three dollars and eighteen cents ($15,822,603.18). According to Razmilovic, the SEC has failed to satisfy its burden of establishing a causal connection between the base salary, bonus payments and severance payment he received during the fraud period. In her report, Martin, Razmilovic’s expert, concluded that neither Razmilovic’s base salary nor his severance payment should be included in the disgorgement amount because neither component of compensation was contingent upon Symbol’s financial performance and it was her understanding that Razmilovic should only be required to disgorge the portion of his compensation and profits that were causally connected to Symbol’s restated earnings. (Martin Rpt., at 1-2). According to Martin, she only considered “what compensation or profits would [Razmilovic] not have earned in the absence of fraud,” and concluded that “absent the fraud, [Razmilovic] would have continued getting his salary” under the Employment Agreements. (Brody Decl., Ex. 2, at 117-118). Several courts have found that “[disgorgement of salaries and other forms of compensation may be an appropriate remedy” in SEC enforcement cases. SEC v. Black, No. 04 C 7377, 2009 WL 1181480, at *2 (N.D.Ill. Apr. 30, 2009) (citing cases). a. Base Salary Razmilovic contends that the SEC has not established that his base salary was tied to Symbol’s financial performance. Razmilovic does not, however, dispute that all of his Employment Agreements with Symbol required him, inter alia, to “use his best efforts to promote [Symbol’s] * * * best interests * * *.” (TE 4 and 5, ¶¶ 3(a); TE 6, 14(a)). By participating in the pervasive fraud scheme alleged in the complaint, Razmilovic clearly did not act to promote Symbol’s best interests during the fraud period, i.e., during the years 1999 through 2002. Nonetheless, the SEC has not established that the entire base salary Razmilovic received during the fraud period was causally linked to his unlawful conduct. See, e.g. SEC v. Kelly, 765 F.Supp.2d 301, 325-26 (S.D.N.Y.2011) (declining to order disgorgement of the defendants’ entire yearly compensation and bonuses absent any evidence that they were linked to the company’s financial performance or were otherwise causally connected to the alleged wrongdoing); SEC v. Resnick, 604 F.Supp.2d 773, 783 (D.Md.2009) (declining to order disgorgement of the defendant’s salary where there was no evidence that the defendant’s salary was causally linked to his unlawful conduct). Indeed, although the Employment Agreements tied the overall compensation of its senior executives, including base salary, bonuses and stock options, to Symbol’s financial performance, they expressly indicate that adjustments in base salary were not based upon Symbol’s financial performance and it is reasonable to infer since, inter alia, Symbol remained a viable company notwithstanding the pervasive fraud scheme, that Razmilovic performed some functions and services of value to Symbol during the fraud period other than those activities which inflated its earnings. See Resnick, 604 F.Supp.2d at 783. All but two (2) of the cases requiring a defendant to disgorge his or her salary, and upon which the SEC relies, are distinguishable because the fraud committed by those defendants extended the life of the employer-company and, therefore, the defendants would not have received any compensation from a company that would not have existed but for their fraud. See, e.g. SEC v. First Pac. Bancorp., 142 F.3d 1186, 1192 (9th Cir.1998) (the defendant’s fraud extended the bank’s life, thereby allowing him to continue drawing, inter alia, a salary); SEC v. Conaway, No. 2:05-CV-40263, 2009 WL 902063, at *20 (E.D.Mich. Mar. 31, 2009) (finding a question of fact regarding whether the defendant should be required to disgorge his salary since the company might have been forced into bankruptcy earlier absent the defendant’s illegal conduct, thereby shortening his tenure there); U.S. SEC v. Church Extension of the Church of God, Inc., 429 F.Supp.2d 1045, 1050 (S.D.Ind.2005) (the defendants’ fraud delayed the collapse of the church, thereby enabling them to continue their employment and receive compensation therefor). Thus, the salaries of the defendants in those cases were clearly connected to the defendants’ wrongdoing and, therefore, constituted ill-gotten gains. To the contrary, Symbol remained a viable company notwithstanding Razmilovic’s fraud. The Posner case is also distinguishable because the district court expressly found that any contention that the defendants’ services “were of real value to the company [was] belied by the results reported in [the company’s] public filings.” SEC v. Drexel Burnham Lambert, Inc., 837 F.Supp. 587, 612 (S.D.N.Y.1993), aff'd sub nom., SEC v. Posner, 16 F.3d 520 (2d Cir.1994). In this case, such evidence is lacking. Indeed, it is reasonable to infer that since Symbol remained a viable company notwithstanding the pervasive fraud scheme, some of the services performed by Razmilovic for Symbol were of real value to the company. In addition, the Black case is distinguishable because the district court in that case found that it was reasonable to infer from the company’s termination of its relationship with the defendant only two (2) months after learning of his illegal conduct that it would have promptly terminated its relationship with the defendant earlier had it known of the defendant’s unlawful conduct earlier. Black, 2009 WL 1181480, at *10-11. Since Razmilovic resigned from his position as CEO, any causal connection between his fraud and his continued employment at Symbol is not patently evident. Nevertheless, it is reasonable to infer a causal connection between Razmilovic’s fraud and his promotion to CEO of Symbol, effective July 2000 , insofar as he was promoted shortly after Symbol’s February 2000 announcement of increased revenue and diluted earnings per share for the year ended December 31, 1999, which indisputably resulted from the fraud. Accordingly, Razmilovic is liable to disgorge the difference between his salary as COO of Symbol and his salary as CEO of Symbol, i.e., he is not liable to disgorge any amount of the base salary he received as COO of Symbol in 1999, but he is liable to disgorge the amount of one hundred ninety-seven thousand twenty-one dollars ($197,021.00) from the 2000 base salary he received; the amount of three hundred sixty-four thousand two hundred fifty-three dollars ($364,253.00) from the 2001 base salary he received; and the amount of three hundred seventy thousand nine hundred seventy-three dollars and eighty-four cents ($370,973.84) from the 2002 base salary he received . In sum, Razmilovic must disgorge the total amount of nine hundred thirty-two thousand two hundred forty-seven dollars and eighty-four cents ($932,247.84) from the base salary he received from Symbol during the fraud period. b. Bonuses i. Performance Bonuses Since Razmilovic’s bonuses under the Executive Bonus Plan were directly tied to the financial performance of Symbol, and the bonuses he received in 1999 and 2000 were based upon fraudulently reported financial numbers, Razmilovic is liable to disgorge the entire amount of those bonuses, i.e., one million six hundred ninety-one thousand four hundred dollars ($1,691,400.00). Razmilovic’s contention that he should not be required to disgorge his performance bonuses because certain trial exhibits should be excluded from evidence, (Razmilovic Mem., at 6), is unpersuasive since, inter alia, his own expert admitted in her report that Symbol’s restated earnings would not have met the target earnings amounts for performance-related bonuses in either year that he received those bonuses and, therefore, that Razmilovic is liable to disgorge the amount of those performance bonuses. (Martin Rpt., at 11; Brody Decl., Ex. 2, at 119-122). I reject Razmilovic’s contention that that portion of Martin’s expert report should be ignored because the report had been submitted after he had moved for partial judgment pursuant to Rule 52(c) of the Federal Rules of Civil Procedure at the close of the SEC’s case. See, e.g. Gaffney v. Riverboat Services of Indiana, Inc., 451 F.3d 424, 451 n. 29 (7th Cir.2006) (rejecting the defendant’s contention that the record should be evaluated when the Rule 52(c) was made at the close of the plaintiffs case, rather than as a whole, as unsupported by case law and Rule 52(c)). The court’s task on a Rule 52(c) motion is “to weigh the evidence, resolve any conflicts in it, and decide for itself where the preponderance lies____Rule 52(c) implies the same inquiry the Court makes to resolve all of the legal and factual matters under Rule 52(a).” Wechsler v. Hunt Health Systems, Ltd., 330 F.Supp.2d 383, 433 (S.D.N.Y.2004); see also EBC, Inc. v. Clark Building Systems, Inc., 618 F.3d 253, 272-73 (3d Cir.2010) (“In considering whether to grant judgment under Rule 52(c), the district court applies the same standard of proof and weighs the evidence as it would at the conclusion of the trial. * * * The district court should also make determinations of witness credibility where appropriate.”); Ackerman v. Pilipiak, 457 B.R. 191, 198 (E.D.N.Y.2011) (holding that in nonjury trials, “the court acts as both judge and jury, weighing the evidence, resolving any conflicts, and deciding where the preponderance lies.”) Unlike cases where the non-moving party submits no evidence in support of its claim and instead relies solely on the moving party’s failure to present any evidence in dispute thereof, see, e.g. Wechsler, 330 F.Supp.2d at 433, there is evidence in the record as whole, including Martin’s expert report, supporting the SEC’s claim that Razmilovic’s performance bonuses were causally connected to his fraud. Moreover, where a party introduces evidence on his own behalf after he has moved for relief under Rule 52(c), he waives his right to relief under Rule 52(c). See Federal Ins. Co. v. HPSC, Inc., 480 F.3d 26, 32 (1st Cir.2007) (holding that the plaintiff waived its right to appeal the denial of its Rule 52(c) motion by presenting evidence after the close of the defendant’s case on its counterclaim); Gaffney, 451 F.3d at 451 n. 29; TransCanada Pipe lines Ltd. v. USGen New England, Inc., 458 B.R. 195, 213-15 (D.Md.2011) (holding that the appellant’s decision to present evidence of its own after the bankruptcy court had denied its motion for judgment on partial findings pursuant to Rule 52(c) barred it from limiting the focus of the appeal solely to the evidence presented in the appellee’s ease-in-chief). Since Razmilovic presented his own evidence, including Martin’s expert report, I am not limited to considering only the evidence put forth by the SEC on its case-in-chief and may properly consider all of the evidence presented in this case. ii. Telxon Bonus Razmilovic contends that the SEC has failed to establish that the special bonus he received in connection with the Telxon acquisition (“the Telxon bonus”) was paid to him “for any reason related to [Symbol’s] financial performance or any alleged fraud.” (Razmilovic Mem., at 6). Razmilovic’s expert also opines that the Telxon bonus is not disgorgeable because, unlike the performance bonuses, it was not contingent on Symbol’s earnings. (Martin Rpt., at 11). Razmilovic ignores the allegations in the complaint, deemed true by this Court’s December 22, 2009 order granting the SEC a default judgment against Razmilovic pursuant to Rule 37 of the Federal Rules of Civil Procedure, and evidence, (see TE 45, at 44-45, 46), that the entire Telxon restructuring charge had been improperly recorded and fraudulently used to “prop up” Symbol’s earnings and that Razmilovic, at the very least, signed Symbol’s financial reports and registration statements based upon those improper charges during the fraud period. Since the accounting of the Telxon acquisition was entirely fraudulent, it is reasonable to infer that Razmilovic would not have received the Telxon bonus if the true value of that acquisition had been known. Therefore, the entire amount of the Telxon bonus constitutes ill-gotten gains. Accordingly, Razmilovic is liable to disgorge the entire amount of the Telxon bonus, i.e., two hundred sixty thousand dollars ($260,000.00). c. Severance Payment Razmilovic contends that the SEC has not demonstrated that the five million dollar ($5,000,000.00) severance payment he received upon his resignation, and after Symbol had already learned of the SEC’s investigation of it, “was caused by any fraud,” (Defendant Tomo Razmilovic’s Post-Trial Brief [Razmilovic Mem.], at 5), or was based upon Symbol’s financial performance. In the same provision of the Separation Agreement, Symbol agreed to pay the lump sum severance payment to Razmilovic and Razmilovic agreed to “relinquish! ] his right to all outstanding stock options * * (TE 7, ¶ 2(A)). Those outstanding stock options had been granted to Razmilovic in February 2001 “in connection with a periodic performance review.” (TE 13, at 9-10). Since Razmilovic had participated in the pervasive fraud scheme at Symbol during the review period, the stock options he received in connection with his performance during that period constitute ill-gotten gains. Moreover, since it may reasonably be inferred from the Separation Agreement that the severance payment was made in consideration for Razmilovic’s relinquishment of his right to all outstanding stock options, yet those stock options constitute ill-gotten gains to which Razmilovic had no right, Razmilovic was not entitled to the severance payment. Accordingly, Razmilovic is liable to disgorge to entire amount of the lump sum severance payment he received from Symbol, i.e., five million dollars ($5,000,-OOO.OO). 3. Stock Transactions The SEC also seeks disgorgement of all profits Razmilovic earned from Symbol stock transactions during the fraud period, including his sales of Symbol stock on the open market, his transfers of Symbol stock directly to Symbol at market value to pay options exercise prices and withholding taxes on his stock options exercises and European “zero-cost” collar transactions. Since one of the effects, if not the very purpose, of the pervasive fraud scheme at Symbol was to manipulate Symbol’s earnings and, thereby, inflate the value of its stock, it is reasonable to infer that Razmilovic profited from the scheme in all of his transactions involving Symbol securities during the fraud period. See, e.g. Lorin, 76 F.3d at 462 (holding that it was “well within the discretion of the district court * * * to reason that because the purpose and effect of the scheme was to manipulate and stabilize the prices of the [company’s] stocks, [the defendants] likely profited from the scheme in all of their trades in those securities.”) Indeed, Razmilovic’s expert concedes that the profits Razmilovic earned on the shares of Symbol stock that he “swapped” during his exercise of stock options to pay the options price and withholding taxes should be included in any disgorgement calculation “since they would not have been earned absent the alleged earnings misstatement and associated stock price inflation.” (Martin Rpt., at 8; see Martin Deck, at 8) (“Once the correct inflation is calculated, * * * it has to be applied to Mr. Razmilovic’s four exercises of employee stock options * * *.”) However, both parties have submitted expert reports utilizing similar “event study” methodologies, but containing divergent conclusions with respect to the effect the fraud scheme had on the price of Symbol stock during the fraud period. a. Calculation of Profits The SEC seeks a disgorgement award from Razmilovic’s stock transactions, including prejudgement interest thereon from February 1, 2002, the date of Razmilovic’s last options exercise, in the total amount of seventy million two hundred sixty-five thousand three hundred twenty-six dollars and eighty cents ($70,265,-326.80). The SEC calculates the amount of Razmilovic’s profits from his exercise of stock options by using the number he and Symbol reported to the IRS on his W-2s. Razmilovic contends that he is liable only for the inflation in Symbol’s stock price caused by the fraud. Martin, Razmilovic’s expert, calculates the amount of inflation to be three dollars and forty-two cents ($3.42), whereas O’Neal, the SEC’s expert, calculates the amount of inflation to be eleven dollars and fifty-four cents ($11.54). According to Martin, Razmilovic is only liable to disgorge a total amount of approximately two million six hundred eighty-one thousand seven hundred thirty-nine dollars ($2,681,739.00) as his profits from all four (4) options exercise transactions. (Martin Rpt., at 8 and Ex. 7; Martin Deck, at 17). With respect to insider trading, the Second Circuit has held that “where stock is pm-chased [or sold] on the basis of inside information, the proper measure of damages is the difference between the price paid for shares at the time of purchase [or the price at which the shares were sold] and the price of the shares shortly after the disclosure of the inside information.” Patel, 61 F.3d at 139-140; see also Warde, 151 F.3d at 50 (finding that the district court reasonably fixed disgorgement as the difference between the price of the defendant’s warrants when purchased on inside information and their price after the disclosure of the inside information); SEC v. Drucker, 528 F.Supp.2d 450, 451-52 (S.D.N.Y.2007), aff'd, 346 Fed.Appx. 663, 666 (2d Cir.2009) (calculating the amount to be disgorged as the difference between the amount realized by each defendant via his insider sales and the amount he would have realized if he had sold after the disclosure of the inside information concerning the company’s earnings). Although this is not an insider trading case, it is reasonable to similarly calculate the amount of Razmilovic’s ill-gotten gains from his exercise of stock options during the fraud period as the difference between the inflated value of the proceeds realized by him on the date of the relevant stock option exercise and the value of the proceeds he would have otherwise realized absent the fraud. See, e.g. United States v. Hatfield, 795 F.Supp.2d 219, 225-26 (E.D.N.Y.2011) (holding that only the difference between the stock’s inflated value and what it would have sold for absent the fraud was subject to criminal forfeiture). b. Weight Afforded Expert Reports Although I accept Razmilovic’s contention that the proper measure of disgorgement in this case is the amount by which the value of Symbol’s stock was inflated as a result of the fraud, I nonetheless reject his expert’s calculation of the value of that inflation. Upon presentation of expert opinion, the court must make a “preliminary assessment of whether the reasoning or methodology underlying the [opinion] is ... valid and of whether the reasoning or methodology properly can be applied to the facts in issue.” Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592-93, 113 S.Ct. 2786, 125 L.Ed.2d 46