There are a lot of things the Securities and Exchange Commission does that defense lawyers do not like. There’s the prissy insistence on admitting wrongdoing. There’s its irritating belief that it does not require evidence of that wrongdoing, or the times when that evidence amounts to an emoji. There’s it’s insistence on gag orders before it agrees to go away. Soon, unless their clients get their way, there will be nitpicking over climate disclosures. And, of course, there’s the whole in-house kangaroo court thing.
Well, defense lawyers, there are thing you do that really chafe the SEC’s ass, too. And now, you’re gonna hear about it.
“Too often, we see defense counsel—sometimes even including [SEC enforcement division] alums—engage in conduct that seems to have little purpose other than to delay our investigations,” [SEC Enforcement Director Gurbir] Grewal said Thursday at the Securities Enforcement Forum West 2022, which was held in East Palo Alto, Calif….
One of Mr. Grewal’s top complaints concerns document requests that the SEC imposes on public companies under its supervision. Mr. Grewal said he had recently learned about an entity with billions of dollars in assets that produced a mere 200 documents in a six-month period, after being served with a request for customer account and trading data.
The SEC also is seeing instances where lawyers repeatedly interrupt witness testimony to lodge frivolous objections, and overtly coach witnesses on how to answer certain questions. In some instances, lawyers are representing companies and individuals in cases where they have a conflict of interest, Mr. Grewal said.
And some lawyers are asserting legal privilege to shield documents from the eyes of SEC staff in cases where that privilege doesn’t apply, he added.
None of which, to Grewal’s eyes, anyway, looks like the sort of cooperation that gets good little boys and girls friendly consideration from his people.
Lawyers who do cooperate in a genuine way with the SEC are better positioned to win credit for their clients in the form of a more lenient resolution of the agency’s investigation, Mr. Grewal said.
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