A federal appeals court in Washington today unanimously upheld the U.S. Securities and Exchange Commission's lifetime ban imposed against a commercial litigator whom the agency accused of violating attorney ethics rules.
The commission said the lawyer, Steven Altman, can never again appear before the agency for violating the disciplinary rules of the New York Bar Association lawyer’s code of professional responsibility.
The commission accused Altman of trying to squeeze money from another lawyer in exchange for favorable testimony at an administrative hearing. The other attorney, Irving Einhorn, said Altman’s behavior amounted to extortion. Einhorn recorded several calls with Altman.
Altman denied violating the rules, and he urged the U.S. Court of Appeals for the D.C. Circuit to strike down the lifetime ban. Altman called the punishment excessive and said it was outside the scope of the agency’s authority. A three-judge panel unanimously rejected the challenge.
The circuit said in its ruling that the commission has the power to permanently deny a lawyer the ability to appear or practice before the agency if the SEC determines the lawyer “to be lacking in character or integrity, or to have engaged in unethical or improper professional conduct.”
The commission has historically refrained from disciplining attorneys for ethics violations that are not tethered to violations of securities law. The ethics case lodged against Altman in 2008 was the first in many years.
The SEC’s Christopher Bruckmann said in court papers that just because the agency has not routinely pursued ethics violations in the past doesn’t bar the commission from bringing cases against attorneys. Bruckmann argued for the commission at a hearing in November,
Federal prosecutors did not charge Altman with a crime. And Altman said no ethics charges were filed against him in New York state professional conduct proceedings.
“Contrary to Altman’s position, the commission did not lack authority to act because of previous pronouncements that it would generally not do so without prior judicial or administrative findings of misconduct,” D.C. Circuit Judge Judith Rogers wrote for the appeals court.
Altman argued the SEC did not have the power to act on disciplining him without a New York state judicial finding that he violated professional conduct rules there. The D.C. Circuit dismissed the argument.
The appeals court said the lifetime ban “is limited to appearances before the commission and has no effect either on his ability to practice law in New York State and to appear before any court, or on New York State’s authority to discipline him.”
The circuit judge said Altman was on notice of his duty to comply with New York Bar disciplinary rules “and when appearing before the commission, he could be held to that duty.”
Altman said the D.C. Circuit’s ruling was a disappointment and that he is planning to ask the full appeals court to rehear the dispute.
The SEC’s disciplinary case, he said, marked “a major expansion of the authority to discipline lawyers in an area where the commission does not have experience. The commission’s own precedent has identified its complete lack of expertise in the area.”
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