Lexplug logoLexplug

Securities Investor Protection Corp. v. Vigman

District Court, C.D. California
587 F.Supp. 1358 (1984)
ELI5:

Rule of Law:

Under ABA Model Rule 1.11(a), a former government attorney is disqualified from representing a private client in a matter where the attorney participated personally and substantially while in government service, unless the former government agency consents, regardless of whether the new representation is adverse to the government.


Facts:

  • Gerald E. Boltz and Charles R. Hartman were attorneys for the Securities and Exchange Commission (SEC) in its Los Angeles Regional Office.
  • During their SEC employment in the early 1970s, they were involved in an enforcement action, SEC v. Newport Securities Corp. (the '1973 civil action'), against individuals including Isadore Diamond, concerning the alleged fraudulent manipulation of DCS Financial Corporation stock.
  • In the 1973 civil action, Boltz, as Regional Administrator, signed the complaint and trial brief.
  • Hartman appeared as trial counsel for the SEC in the 1973 civil action, supervising a less-experienced colleague.
  • After leaving the SEC, Boltz and Hartman joined the law firm Rogers & Wells.
  • The firm, with Boltz and Hartman as counsel, undertook the representation of the Securities Investor Protection Corporation (SIPC) in a new lawsuit against many of the same defendants, including Isadore Diamond.
  • The SIPC lawsuit involved allegations of a widespread securities manipulation scheme that incorporated the same conduct, parties, and transactions from the prior SEC enforcement action.

Procedural Posture:

  • The Securities Investor Protection Corporation (SIPC) sued Isadore Diamond and other defendants in the U.S. District Court for the Central District of California.
  • Defendant Isadore Diamond filed a motion in the district court to disqualify SIPC's counsel, the law firm of Rogers & Wells, and specifically attorneys Gerald E. Boltz and Charles R. Hartman.
  • The district court directed SIPC's counsel to consult with their former government employer, the Securities and Exchange Commission (SEC), to see if it would consent to the representation.
  • The SEC communicated to the court that it declined to consent to the waiver of any personal disqualification for the attorneys.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does the representation of a private client by former government attorneys violate ABA Model Rule 1.11(a) when the current private lawsuit constitutes the same 'matter' in which the attorneys 'personally and substantially participated' as government employees, and the government agency declines to consent?


Opinions:

Majority - Tashima, District Judge

Yes. A former government attorney's representation of a private client is prohibited when it concerns a matter in which the attorney participated personally and substantially as a public employee, and the government agency withholds consent. The court adopted ABA Model Rule 1.11(a) as the appropriate ethical standard, rejecting the argument that it applies only to 'switching sides' cases where an attorney opposes the government. The rule's purpose is to protect public confidence and avoid the appearance that a government lawyer's actions could be influenced by future employment prospects. The court found the current SIPC lawsuit was the 'same matter' as the prior SEC action because it explicitly included the earlier fraudulent scheme as a predicate act in its broader allegations. Furthermore, the court held that both attorneys had 'personally and substantially participated' in the prior government case. Boltz's signature on the complaint and trial brief, under Fed. R. Civ. P. 11, created a personal and substantial responsibility to ensure the case had merit. Hartman's role as supervising trial counsel required sufficient familiarity with the facts and law to constitute personal and substantial participation. Because the SEC declined to consent to the representation, all requirements for disqualification under Rule 1.11(a) were met, requiring the disqualification of both attorneys and their firm.



Analysis:

This decision provides a significant interpretation of the 'revolving door' ethics rules for former government attorneys, confirming that ABA Model Rule 1.11(a)'s restrictions are not limited to 'switching sides' cases. It broadens the rule's application to situations where the attorney's new client is not adverse to the government, emphasizing the primary goal of maintaining public trust in the integrity of government officials. The court's expansive reading of 'personal and substantial participation' to include supervisory roles, such as signing a complaint as a regional administrator or overseeing a junior trial attorney, sets a high bar for former government lawyers. This precedent serves as a strong caution to law firms hiring former government employees to conduct thorough conflict checks and seek agency waivers where any overlap exists, reinforcing the prophylactic purpose of the rule.

G

Gunnerbot

AI-powered case assistant

Loaded: Securities Investor Protection Corp. v. Vigman (1984)

Try: "What was the holding?" or "Explain the dissent"