A Response to SEC Enforcement Director Robert Khuzami’s June 1, 2011 Speech Barry J. Mandel Foley...
-
Upload
geraldine-gilbert -
Category
Documents
-
view
216 -
download
0
Transcript of A Response to SEC Enforcement Director Robert Khuzami’s June 1, 2011 Speech Barry J. Mandel Foley...
A Response to SEC Enforcement Director Robert Khuzami’s
June 1, 2011 Speech
Barry J. MandelFoley & Lardner LLP
November 2, 2011
Chair of Foley & Lardner’s Securities Enforcement & Litigation Group
©2011 Foley & Lardner LLP
Khuzami Speech: 4 Concerns
1. Multiple Representations
2. Excessive Lack of Recollection by Witnesses
3. Counsel Signaling Witnesses During Testimony
4. Excessive Delays in the Production of Documents and
Privilege Logs ©2011 Foley & Lardner LLP
Concern #1: Multiple Representations
Concedes there is no problem when lawyer represents employees who are purely witnesses with no conflicting interests or no material risk of legal exposure Problematic Scenario: Representing company and multiple employees when there is real potential for material legal exposure Problematic Scenario: Representing various entities with seemingly divergent interests SEC’s New Cooperation Program raises the stakes in these cases©2011 Foley & Lardner LLP
Concern #1: Multiple RepresentationsNew York Professional Conduct Rule 1.7 - Conflict Of Interest: Current Clients
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if a reasonable lawyer would conclude that either:
(1) the representation will involve the lawyer representing differing interests; or(2) there is a significant risk that the lawyer’s professional judgment on behalf of the
client will be adversely affected by the lawyer’s own financial, business, property or other personal interests.
(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;(3) the representation does not involve the assertion of a claim by one client against
another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
©2011 Foley & Lardner LLP
Concern #1: Multiple Representations
Khuzami
Concedes no problem when situation involves only witnesses with no conflict and no material risk of legal exposure
Counterpoint
Counsel want to have a grasp on the entire matter
©2011 Foley & Lardner LLP
Concern #1: Multiple Representations
Khuzami
Representing company and multiple employees
Multiple witnesses with seemingly divergent interests
Counterpoint
Counsel, not SEC, must evaluate each situation for conflicts
At least certain conflicts may be waived
©2011 Foley & Lardner LLP
Concern #1: Multiple Representations
Khuzami
SEC New Cooperation Program raises the stakes
Counterpoint
The New Program can be used to divide interests and insist on separate counsel
©2011 Foley & Lardner LLP
Concern #2: Lack of RecollectionNew York Professional Conduct Rule 3.3: Conduct Before a Tribunal
(a) A lawyer shall not knowingly: …(3) offer or use evidence that the lawyer knows to be false. If a lawyer, the
lawyer’s client, or a witness called by the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the testimony of a defendant, in a criminal matter, that the lawyer reasonably believes is false.
New York Professional Conduct Rule 3.4: Fairness to Opposing Party & Counsel
A lawyer shall not: …(a)(4) knowingly use perjured testimony or false evidence(a)(5) participate in the creation or preservation of evidence when the lawyer
knows or it is obvious that the evidence is false
©2011 Foley & Lardner LLP
Concern #2: Lack of Recollection
Khuzami
Witness testifying only to things he or she recalls with certainty
Counterpoint
Risk of Perjury “Don’t Recall” may be
accurate even if SEC does not like it
Things now important to SEC might not have been so to witness
©2011 Foley & Lardner LLP
Concern #3: Signaling During Testimony
Khuzami
Change of testimony after attorney’s long speaking objection
Counterpoint
Speaking Objections Attorney not bump on log Clarifying for witness
©2011 Foley & Lardner LLP
Concern #3: Signaling During Testimony
Khuzami
Change of testimony after consultation with attorney
Counterpoint
SEC may not be hearing what witness thinks he or she is trying to say, so the attorney must counsel clarification of testimony
©2011 Foley & Lardner LLP
Concern #4: Late Production of Documents
New York Professional Conduct Rule 3.2 Delay of Litigation
In representing a client, a lawyer shall not use means that have no substantial purpose other than to delay or prolong the proceeding or to cause needless expense.
©2011 Foley & Lardner LLP
Concern #4: Late Production of Documents
Khuzami
Eve of witness testimony
Over-inclusive privilege material and double reviews
Counterpoint
Sometimes result of Overbroad requests Refusing to reschedule
testimony Cautious non waiver
Overbroad requests Time consuming
©2011 Foley & Lardner LLP