The SEC instituted administrative proceedings against a Greenberg Traurig partner for engaging in improper professional conduct during an SEC examination. The SEC alleges that the attorney, in the course of an SEC examination of his client NewPoint Securities LLC in April and May 2009 — altered private placement memoranda (PPMs) purportedly used in the offer and sale of securities issued by NewPoint Financial Services. The original PPMs purportedly provided to investors stated that the funds raised in the offerings would be used primarily for real estate related investments. According to the SEC, the vast majority of money raised in the offerings was misappropriated by NewPoint’s principal John Farahi.
The SEC alleges that the attorney added language to the PPMs to make it appear that it was disclosed to investors that much of the money raised by NewPoint would be loaned to Farahi. The PPMs were then produced to the SEC’s examination and enforcement staff. According to the Office of the General Counsel, Tamman knew that the language he added to the documents was not included in the PPMs actually provided to investors.
My thoughts, in two simple sentences. This is simply an accusation, and we all know that the SEC doesn't always have it's facts straight. It is certainly possible that the SEC is wrong, but assuming the allegations are true, what loon would alter an existing document on behalf of a client and then provide it to the SEC? And, if you were such a loon, given the fact that the PPM has been distributed to third parties during the course of the offering, did you really think that it would go unnoticed by the Staff?
And one more thought. He changed the language in the existing PPM to reflect that the money raised was going to be loaned to the issuer's principal? Really? Imagine what that PPM looked like after it was altered. Dozens of pages describing the company and its business and at the end of the use of proceeds section..."loan to officer."
Amazing.
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The SEC alleges that the attorney added language to the PPMs to make it appear that it was disclosed to investors that much of the money raised by NewPoint would be loaned to Farahi. The PPMs were then produced to the SEC’s examination and enforcement staff. According to the Office of the General Counsel, Tamman knew that the language he added to the documents was not included in the PPMs actually provided to investors.
My thoughts, in two simple sentences. This is simply an accusation, and we all know that the SEC doesn't always have it's facts straight. It is certainly possible that the SEC is wrong, but assuming the allegations are true, what loon would alter an existing document on behalf of a client and then provide it to the SEC? And, if you were such a loon, given the fact that the PPM has been distributed to third parties during the course of the offering, did you really think that it would go unnoticed by the Staff?
And one more thought. He changed the language in the existing PPM to reflect that the money raised was going to be loaned to the issuer's principal? Really? Imagine what that PPM looked like after it was altered. Dozens of pages describing the company and its business and at the end of the use of proceeds section..."loan to officer."
Amazing.
More...
2 comments:
If true, the partner deserves everything that comes such person's way for being such an idiot. Interested to see how this plays out.
don't know - been thinking about this one and something just doesn't add up. first, what was this guy's motive for obstructing an SEC investigation? there apparently was no financial or other incentive (or you can bet the SEC would have mentioned it), and this doesn't exactly sound like a "star" client. so, did this "partner at an international law firm" just wake up one day and decide he wanted to obstruct an SEC investigation for the hell of it? wow! second, the SEC says that Tamen "knew" the disclosures weren't in the PPMs. did he administer the offering? that would seem a little unusual. did he interview all of the investors to find out what they got? (isn't that what the SEC is supposed to do?). this poor sap was probably just conveying what his client told him (and it doesn't look like this client was any saint - he supposedly managed to trick dozens of people into investing lots of money with him). third - there were too many lawyers involved (at least 5 by the SEC's count - maybe more). doesn't sound like the perfect plan for a "cover-up." this guy wasn't even responding to the SEC - a lawyer at another firm was ("Attorney D"). why didn't "Attorney D" just go get the documents from the client? did this guy even know when and what "Attorney D" was providing to the SEC? it doesn't say. fourth, the SEC claims that Tamen initially resisted turning over the documents, but eventually turned over all of the documents after the SEC "insisted." did this guy one day all of a sudden accept Jesus into his life and decide that he no longer wanted to obstruct the SEC? was he scared because the SEC was now "insisting" (instead of, maybe, simply "asking?" for the documents?). maybe he was just waiting to get his client to waive the attorney client privilege? finally, assuming this guy suspected his client was being less than truthful, what was he supposed to do? accuse his client of lying? tell "Attorney D" he thinks his client is lying? tell the SEC he thinks his client is lying? stop representing the client for "ethical" reasons? simply relay the information on to "Attorney D"? (who is the one, after all, who is responding to the SEC). damned if I know. finally, let's not forget about that pesky little thing called the "attorney client privilege." is it really appropriate for the SEC to seek information about document revisions from their target's lawyer? really? doesn't the lawyer have an obligation to at least advise his client of the privilege (even if not to assert it)?
The SEC has said explicitly that they're going to start coming down hard on attorneys in their investigations (Robert Khuzami devoted a whole speech to this in June). it seems that lawyers no longer have ethical obligations to their clients - their primary obligation is to assist the SEC in their investigation of their clients. this case sounds like an unfortunate mix of a shady client, too many chefs in the kitchen, disregard for the attorney client privilege, and an over-zealous SEC. just some collateral damage. the government enters treachorous waters once they decide to target lawyers solely for "obstructing" an investigation (particularly when the lawyer apparently has no motive, and has nothing to do with the alleged underlying misconduct). the maryland district court just proved that in the recent case, US vs. Lauren Stevens.
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