MANHATTAN - Attorney Steven Altman sued the SEC in Federal Court, claiming the agency "has wrongfully sought to 'federalize' the subject of attorney ethics discipline" - a function of state judiciaries - by its Nov. 10 order permanently barring him from "appearing or practicing (law) before the Commission."
SEC Administrative Law Judge Brenda Murray held public hearings on four days in May 2008, to take evidence on whether Altman had "engaged in improper professional conduct" under rules of the New York Bar Association in 2003 and 2004, "while representing an individual who was a witness in a Commission administrative proceeding entitled In the Matter of Harrison Securities Inc., according to Altman's complaint.
"Never, on information and belief, in the Commission's history prior to that time had a Rule 102(e) proceeding been brought against a lawyer for his or her alleged failure to comply without a prior adjudication by a state disciplinary authority against that lawyer and its confirmation by a state or federal court," Altman claims.
According to the SEC Decision and Order of Nov. 10, 2010, attached to Altman's complaint, the SEC judge found in January 2009 "that Altman offered to have his client evade the Division's service of a subpoena and/or testify falsely in exchange for a financial package from two respondents in the proceeding. The law judge further found that Altman did so with scienter. As a result of his conduct, Altman violated Disciplinary Rules ('DR') 1-102(A)(4), 102(A)(5), and 102(A)(7) of the New York State Bar Association Lawyer's Code of Professional Responsibility. The law judge suspended Altman from appearing or practicing before the Commission for nine months," citing Rule 102(e)(1)(ii) of the SEC Rules of Practice, and Section 4C of the Securities and Exchange Act of 1934.
The Office of General Counsel appealed the 9-month suspension and asked that Altman be permanently barred from appearing or practicing before the SEC.
In the SEC Decision and Order of Nov. 10, the SEC wrote, "We conclude that Altman's conduct is fundamentally inconsistent with the effective administration of justice and warrants a permanent denial of the privilege of appearing or practicing before the commission."
But Altman claims that "there is absolutely no statutory authority granting the Commission to unilaterally apply part or even all of the New York State Disciplinary Rules to anyone."
"This action is not an appeal of the Commission's November 10, 2010 Opinion and Order," Altman's complaint states. "It is a facial attack on the Commission's jurisdiction to bring the proceeding that underlies them and to maintain and continue its prosecution. Plaintiff is not obliged to exhaust his administrative remedies before bringing this action, under the principles pronounced by the U.S. Supreme Court in Free Enterprise Fund v. Public Accounting Oversight Board, et al., 130 S.Ct. 3138, 3149 (2010). Plaintiff has nevertheless in fact objected and continues to object to the Commission's continuing prosecution of the claims in the administrative proceeding against him.
"The Commission does not have unlimited inherent power to discipline any lawyer who appears before it or participates, however indirectly plaintiff did, in any Commission proceeding, and its Constitutional and statutory authority to bring actions against and impose sanctions against lawyers is not open-ended, although the Commission apparently and suddenly believes to the contrary."
Altman adds: "Plaintiff has been vilified by the Commission and in effect been accused of being and found to be unfit to practice law at all, a conclusion which is not in any way supported by and contrary to his record."
Altman alleges "unconstitutional usurpation of the New York State Disciplinary Rules," and violation of his right to equal protection, due process and privacy. He wants the SEC order enjoined.
He is represented by Jeffrey Hoffman with Hoffman & Pollok.
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