SEC may discipline US lawyers

The Securities and Exchange Commission can permanently bar an attorney from practicing before the Commission based on the SEC’s own findings that the lawyer violated State ethics rules in his practice before the Commission.  Altman v. S.E.C., No. 11-1067, 2011 WL 6266482 (D.C. Cir. Dec. 16, 2011).  The SEC previously has stated that it generally would not take action against a lawyer without prior judicial or administrative findings of misconduct.  The court concluded, however, that nothing in those statements suggested that the SEC would not and could not take action under appropriate circumstances absent such findings.  The SEC had permanently barred Altman from practicing before the Commission based on its own finding that Altman violated New York rules by offering to have his client give untruthful testimony in an SEC matter.  Altman sued the SEC, claiming that the SEC’s ban violated separation of powers and federalism by exercising its authority prior to the completion of state disciplinary proceedings.  Altman also claimed that the SEC did not provide sufficient notice that it might commence proceedings against Altman for a violation of state disciplinary rules.  The court rejected Altman’s arguments.  The court held that the SEC’s discipline did not violate separation of powers and federalism because the SEC’s ban was limited to appearances before the SEC and, therefore, had no effect either on Altman’s ability to practice law in New York or the New York Bar’s ability to discipline Altman.  Moreover, there could be no serious argument that Altman did not have notice of his duty to comply with New York disciplinary rules when appearing before the SEC.