SEC Enforcement Chief Hits Defense Lawyer Toe-Tapping, Scapegoating in Internal Probes
White-collar defense lawyers beware: The enforcement chief of the Securities and Exchange Commission is aware of your tactics.
Speaking last week to the criminal law group of the UJA-Federation of New York, Robert Khuzami said he’s sure that no audience members are engaging in conduct that frustrates his agency’s investigations. But too frequently, he said, he is hearing of “defense counsel behavior that is questionable, or worse.”
The New York Times DealBook blog covered the speech, which was recently released.
Among the tactics he criticized:
• Signaling by defense lawyers during investigative testimony. The signals could take the form of lengthy objections or a well-timed break after which the witness returns and repudiates earlier testimony. In one “troubling episode,” a defense lawyer was tapping the witness’s foot, prompting the witness to “invariably and immediately answer, ‘I don’t remember,’ ” Khuzami said.
• Internal corporate investigations involving “questionable investigative tactics,” including interviewing multiple witnesses at once, promoting exculpatory evidence while dismissing red flags, and scapegoating lower-level employees.
• Witnesses who answer “I don’t recall” dozens and sometimes hundreds of times, to the point of lacking credibility. One former vice president seemed unable to remember even the job he performed.
• Multiple representations where witnesses all adopt “the same implausible explanation of events.”
• Multiple representations of clients with adverse interests.
• Waiting until the eve of testimony to release documents, or making a supplemental release of documents after many witnesses have testified.
