## Facts

- Securities Investor Protection Corporation (SIPC) held an outstanding money judgment against Abraham B. Goldberg, a director of First Entertainment Holding Corp. (FEHC).
- FEHC had granted Goldberg multiple options in 1999 to purchase FEHC common stock, including options at $0.21, $0.53, and $1.34 per share, reflected in corporate minutes and disclosed in an SEC filing.
- Goldberg exercised a portion of a $0.21 option, purchasing 100,000 shares.
- FEHC’s board later voted to cancel certain options; Goldberg disputed FEHC’s authority to cancel already-issued options and stated he would not relinquish them.
- At least one option interest was not disputed: Goldberg’s option to purchase 400,000 shares at $0.21 per share.
- SIPC initiated a Colorado Rule of Civil Procedure 69(g) proceeding seeking turnover of Goldberg’s option interests held on FEHC’s books.
- The trial court entered a turnover order directing FEHC to turn over evidence of Goldberg’s right to exercise stock options; FEHC responded that no judgment-debtor property was subject to the order.
- Evidence showed the options functioned as uncertificated securities and could be transferred by appropriate book entries and issuer acknowledgment under UCC Article 8.
- After FEHC did not comply with further directives to acknowledge and effect the transfer, the trial court held FEHC in civil contempt under C.R.C.P. 107 and ordered specific steps to place the option interests under the clerk’s control.

## Issues

1. Whether a court may, in a C.R.C.P. 69(g) proceeding, compel an issuer to acknowledge and turn over a judgment debtor’s stock options that exist as uncertificated securities on the issuer’s books.
2. Whether civil contempt under C.R.C.P. 107 was proper where the issuer asserted disputed ownership and the lack of physical certificates as reasons it could not comply with the turnover order.

## Decision

- The Colorado Court of Appeals affirmed the contempt order.
- The court held that C.R.C.P. 69(g) permitted reaching Goldberg’s property interest in the undisputed option (400,000 shares at $0.21), despite the absence of a physical certificate.
- The court concluded FEHC had the ability to comply by recording the transfer on its corporate records and providing documentation acknowledging the transfer.
- The court held FEHC’s noncompliance with a clear order justified civil contempt and remedial directives.

## Legal Principles

- A judgment creditor may use C.R.C.P. 69(g) to reach a judgment debtor’s property held by a third party, including securities interests recorded on the issuer’s books.
- An ownership dispute may limit turnover relief, but undisputed portions of a debtor’s interest may be compelled for turnover.
- Uncertificated securities are transferable through issuer book-entry and acknowledgment; the lack of a tangible certificate does not bar effective turnover.
- Civil contempt under C.R.C.P. 107 is appropriate when an entity is subject to a clear and specific court order, has the present ability to comply, and fails to do so without adequate justification.

## Conclusion

The court upheld civil contempt against a corporate issuer that refused to acknowledge and effect transfer of a judgment debtor’s undisputed uncertificated stock-option interest, confirming that such book-entry interests are reachable in judgment enforcement and that noncompliance with a clear turnover order supports contempt.


Securities Inv. Prot. Corp. v. First Ent. Holding Corp., 36 P.3d 175 (Colo. App. 2001)