A commercial litigator who was barred last year from ever again appearing before the U.S. Securities and Exchange Commission told a federal appeals court in Washington that the punishment was too harsh.
The attorney, Steven Altman, banned for life from appearing before the SEC for alleged unethical conduct, asked the U.S. Court of Appeals for the D.C. Circuit to vacate the commission’s Nov. 2010 reprimand order.
Altman, arguing for himself in the appeals court, told the three-judge panel that the commission does not have the authority to unilaterally sanction a lawyer for ethical or professional misconduct that is not tethered to violations of securities law.
The SEC banned Altman for life for alleged misconduct in 2004 rooted in his representation of a woman who would become a witness in a securities enforcement proceeding. The commission in 2008 accused Altman of seeking money in exchange for favorable testimony from the client. The SEC said Altman violated New York state ethics rules.
Altman denies the allegations, which stem from a series of secretly recorded phone calls between Altman and another attorney, Irving Einhorn, a securities practitioner in Manhattan Beach, Calif. Einhorn clandestinely taped the calls, saying he wanted to protect the interest of his client. Einhorn would later use the calls to question the integrity of Altman’s client.
In court today, Altman told the panel judges—Chief Judge David Sentelle and judges Judith Rogers and Karen LeCraft Henderson—that the commission overstepped its authority. Altman argued the commission has failed to provide precise standards against which to measure lawyer conduct.
The commission has long refrained from sanctioning attorneys for professional misconduct. It’s been more than twenty years since the SEC has alleged ethics charges not tied to securities law violations. An administrative law judge ordered a nine-month suspension against Altman for misconduct; the SEC overruled the judge and imposed the lifetime prohibition.
Christopher Bruckmann from the commission’s Office of General Counsel said it doesn’t matter that the SEC doesn’t regularly bring ethics charges against lawyers. The commission, he argued, has never said it will not or cannot bring such charges.
Bruckmann called Altman’s statements on the recorded calls “egregious” and said the punishment is fitting to safeguard the integrity of the commission’s proceedings.
Henderson questioned Bruckmann about why it took the commission more than three years to bring ethics charges against Altman. Bruckmann said he could not discuss the scope of the investigation of Altman’s conduct, saying that the discussion between the SEC and other federal agencies is confidential.
Federal prosecutors did not charge Altman. He remains a member in good standing with the New York state bar. Altman said in court papers that he has never received an inquiry about any state-led investigation of possible violations of New York’s professional rules of conduct.
Altman told the court that the SEC’s punishment has harmed his reputation. In court papers, he said he has lost clients and new business opportunities. No matter how the appeals court rules, Sentelle said, “we can’t undo that.”
The appeals court did not immediately rule today.
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