Altman v. Securities & Exchange Commission
666 F.3d 1322
D.C. Cir.2011Background
- Altman, a New York attorney, appeared before the SEC in a proceeding alleging unethical professional conduct under Rule 102(e)(1)(ii) and §4C of the Act.
- The SEC found Altman violated three New York Bar disciplinary rules by engaging in improper conduct during interviews with opposing counsel, including encouraging deceit to obtain severance for his client.
- Five of six conversations were tape-recorded by opposing counsel; the transcripts supported the finding of intentional misconduct.
- Administrative proceedings led to a nine-month bar from appearing before the SEC, which the Commission later converted to a permanent ban to protect the integrity of its processes.
- Altman challenged the SEC’s authority, the notice/standards of conduct, the sufficiency of substantial evidence, and the severity of the sanction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to sanction under Rule 102(e)(1)(ii) and §4C | Altman argues lack of authority to sanction for NY bar violations. | SEC contends authority exists under §4C to discipline for unethical conduct. | SEC authority affirmed; permissible to rely on state ethics norms. |
| Notice and standards of conduct | Altman contends insufficient notice of possible proceedings and standards. | SEC maintained notice and applicable standards were reasonably understood. | Notice and standards were adequate; Altman on notice of serious conduct. |
| Substantial evidence supporting findings | Altman claims the taped evidence is insufficient or flawed. | Transcripted tapes and records provide substantial evidence of intentional misconduct. | Record contains substantial evidence supporting findings. |
| Sanction duration and proportionality | Altman argues the sanction is excessive given his record and mitigation. | Commission selected sanction under 4C consistent with public interest and Steadman standard. | Sanction is warranted and within the Commission’s discretion. |
Key Cases Cited
- Marrie v. SEC, 374 F.3d 1196 (D.C. Cir. 2004) (notice that professionals must adhere to recognized standards; extreme departures fall within Rule 102(e))
- Checkosky v. SEC, 139 F.3d 221 (D.C. Cir. 1998) (notice and standards concerns in Rule 102(e) proceedings)
- In re Snyder, 472 U.S. 634 (S. Ct. 1985) (attorney duty to conform to state professional conduct rules)
- Carter and Johnson, 47 S.E.C. 471 (Sec. & 1981) (external norms of professional conduct can ground discipline before the SEC)
- Horning v. SEC, 570 F.3d 337 (D.C. Cir. 2009) (substantial evidence and standard of review for SEC sanctions)
- Steadman v. SEC, 603 F.2d 1126 (5th Cir. 1979) (public interest standards for sanctions in securities regulation)
- Kornman v. SEC, 592 F.3d 173 (D.C. Cir. 2010) (mitigation and sanctions in SEC disciplinary context)
- United States v. Morton Salt Co., 338 U.S. 632 (S. Ct. 1950) (powers not lost when agency discretion lies dormant)