Telltale Signs Your Case May Not Have a Happy Ending

It happens.  From time to time, an SEC investigation that you have invested considerable time and energy into, and that seems to be heading for a just and satisfying outcome, doesn’t end up quite the way up you expected it would.  Sometimes it’s entirely obvious why.

Other times things are not so simple or clear.  Something happens along the way to disrupt the normal course of events.

Many times you realize right away what has occurred; other times you later learn things that would have changed how you proceeded had you known them at the time.  Sometimes, if you are lucky, you are able to figure out the mystery or at least imagine that you have, and, sometimes, you are never able to understand at all what really happened.  Below, I list, in no particular order, based on real life events, some signs that things are not going to necessarily work out the way you had thought they would.

1. The SEC trial attorney assigned to your case, who just joined the SEC, has never tried a case in federal court before.
2. After a lengthy investigation, the SEC filed a complaint against a defendant in your case and the case is in the discovery stage.  The trial is not far off.  Then, suddenly, a new SEC trial attorney is assigned to the case to take over the case from the existing trial attorney.   This person is the seventh different SEC trial attorney who has been assigned to your case.
3. The putative defendant won’t agree to sign an agreement to extend the statute of limitations (a tolling agreement), and the statute of limitations for the fraudulent conduct will expire in just a few weeks.
4. The Enforcement Associate Director tells you he won’t be able to complete his review of your memo recommending enforcement action (a so-called action memo) before the statute of limitations will expire.
5. Defense counsel calls the Director of Enforcement.  During the call they the discuss the culpability of an individual under investigation and the Director of Enforcement provides confidential relevant information to defense counsel.  Yet you never learn about what was discussed on the telephone call or even of the existence of the call until years later.
6. You have diligently completed more than 70 different drafts of an action memo and the Associate Director who has reviewed all the drafts tells you that the memo is getting close to being done.
7. Defense counsel asks to meet with the Director of the Enforcement Division to discuss the penalty amount — alone, without staff present — and the Director agrees.
8. Even though you are the primary investigative attorney on the investigation, senior SEC executives meet regularly without you to discuss the merits of the case.
9. During a meeting with defense counsel to discuss the merits of your case, you find yourself nodding your head in agreement during the defense counsel’s presentation.
10. During a meeting with defense counsel to discuss the merits of your case, the head of the SEC trial unit sighs and makes a face during the SEC Associate Director’s  presentation.
11. You are the primary attorney assigned to the case and you call defense counsel to make a request for a tolling agreement.  To your surprise, defense counsel tells you that they have already talked to someone higher up in the Enforcement Division who told them that a tolling agreement is probably not necessary.
12. During a meeting with defense counsel to discuss the merits of the case, it becomes obvious that critical documents haven’t been studied, let alone looked at, by the primary investigative attorney  assigned to the matter.
13. During a meeting with defense counsel to discuss the merits of the case, the SEC trial attorney constantly interrupts the presentation, advancing new theories that haven’t been vetted or even discussed internally prior to the meeting.
14. During a meeting with defense counsel to discuss the merits of the case, the SEC trial unit attorney remains completely mute during the entire meeting.
15. The SEC trial unit attorney tells you before an important meeting with the Director of Enforcement to discuss the case that the best way to proceed has already been determined.  That information is news to you.