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Lawyer Barred For Misconduct During SEC Investigation

Steven Altman, Esq., Exchange Act Rel. 63306, November 10, 2010

Time since appeal filed – 1 year 9 months 8 days
Time since last brief filed – 9 months 22 days

Altman represented a prospective witness in a SEC investigation and disciplinary proceeding. The ALJ found that he offered to have his client evade service of a subpoena or testify falsely in exchange for financial compensation. The ALJ ordered that Altman be suspended from SEC practice for nine months. The SEC's general counsel appealed that decision and the Commission permanently barred Altman.

In 2003 the SEC began administrative proceedings against former employers of Bonnie Rosen. SEC staff sought to interview Rosen but Altman was unresponsive to repeated SEC staff requests that an interview with her be scheduled. While the SEC staff was attempting to arrange an interview with Rosen Altman contacted a California attorney who represented Rosen's former employers in the SEC proceeding. That attorney tape recorded several of his telephone calls with Altman. In calls with the defense counsel Altman asked that Rosen be given severance pay and other financial benefits. Altman suggested that in exchange Rosen would evade service of any SEC trial subpoenas or, if served, testify falsely that she could recall no damaging facts.

The ALJ found defense counsel's testimony about the calls credible. She found Altman's testimony and explanations not to be credible. Her initial decision can be found here. This finding doomed Altman's appeal as the Commission defers to ALJ credibility findings absent substantial evidence to the contrary.

Commission Rule 102(e) permits it to bring disciplinary proceedings against, inter alia, lawyers who engage in unethical or improper professional conduct. The Commission found that Altman did in fact engage in unethical or improper conduct. The Commission determined that Altman, a member of the New York bar and had violated New York's ethics rules. It further found that he acted with scienter.

The Commission rejected Altman's claim that the Commission lacked jurisdiction over him because he had committed no direct violations of the securities laws. It also found that Altman's conduct occurred while he was appearing or practicing before the Commission as he was representing a witness in a Commission proceeding. It noted however, that Rule 102(e) proceedings are not limited to people who appear or practices before it.

One has to wonder why it took almost a year for the parties to file the briefs in this case. Altman's conduct occurred in 2004 and the initial hearing before the ALJ was in mid 2008. The ALJ's initial decision was in early 2009.

Altman was definitely unlucky. Some states prohibit the tape recording of telephone calls unless all parties consent. Some prohibit the tape recording of attorneys. Apparently California and New York have no such restrictions.