Wednesday, July 8, 2015

Ethics Updates: Threats & Trading (Insider, Outsider or In-between)

 

First, via the legal ethics forum: "Ethics Opinion: Can You Threaten Another Lawyer With Disciplinary Charges?" --
  • "A new opinion issued by the Professional Ethics Committee of the New York City Bar Association discusses whether -- and under what circumstances -- an attorney may threaten another lawyer with disciplinary charges.  From the digest:
  • "An attorney who intends to threaten disciplinary charges against another lawyer should carefully consider whether doing so violates the New York Rules of Professional Conduct (the “New York Rules” or “Rules”). Although disciplinary threats do not violate Rule 3.4(e), which applies only to threats of criminal charges, they may violate other Rules. For example, an attorney who is required by Rule 8.3(a) to report another lawyer’s misconduct may not, instead, threaten a disciplinary complaint to gain some advantage or concession from the lawyer. In addition, an attorney must not threaten disciplinary charges unless she has a good faith belief that the other lawyer is engaged in conduct that has violated or will violate an ethical rule. An attorney must not issue a threat of disciplinary charges that has no substantial purpose other than to embarrass or harm another person or that violates other substantive laws, such as criminal statutes that prohibit extortion."
(Cue vision of lawyer in mirror rehearsing: "Are you intimating that you're going to file a disciplinary charge _solely_ for tactical advantage in this matter? Because I don't see anyone else here..." Doesn't quite carry the same level of drama...)

Speaking of ethical accusations: "OSC seeking $1.5-million fine in Finkelstein insider trading case" --
  • "Ontario Securities Commission lawyers are seeking fines and other payments totalling almost $6.8-million from former Bay Street lawyer Mitchell Finkelstein and four others involved in a high-profile tipping and insider trading case."
  • "Mr. Finkelstein’s lawyer, Gordon Capern, said his client has already faced terrible consequences by losing his job as a senior partner at law firm Davies Ward Phillips & Vineberg LLP, and said an additional $1.5-million fine 'goes well beyond the line of punitive.'"
  • "Mr. Capern said Mr. Finkelstein made no profit from his tipping, and has suffered reputational harm from the publicity the case generated. He said the bans requested by OSC staff are unnecessary to protect the capital markets from further wrongdoing because Mr. Finkelstein will never 'do anything or be exposed to anything' in the future that would give him access to similar insider information."
Also in the news, on the topic of public law firms: "Slater & Gordon trading under scrutiny" --
  • "Several of Australia’s most influential fund managers have begun privately pointing fingers over the possible market ­manipulation of Slater & Gordon shares, with at least one lodging a formal complaint with the corporate regulator."
  • "Slater & Gordon has seen more than $1 billion wiped from its market capitalisation since reports emerged in The Australian Financial Review last week that ASIC was considering a probe of its relationship with audit firm Pitcher Partners."
  • "But hours later VGI partner Douglas Tynan told the Financial Review there was “more than one cockroach in the kitchen” at Slater & Gordon and called into question the entirety of the law firm’s work in progress accounting. VGI also admitted to shorting Slater & Gordon shares."
  • "'The Financial Review may have some sensational market reporters or it could be the hedge fund guys pointing it out, I know what my money’s on. Tens of millions of dollars made by the shorters, and it’s the ordinary investors that have lost out, it’s clearly market manipulation and insider trading.'"

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