Andrew Vollmer Comment

Publication Date
December 13, 2016

I apologize that these comments are late, but I thought submitting them in writing even shortly before the meeting would be better than raising them at the meeting.

Page 4, para 3 on separation of functions.  The recommendation should apply to an agency head as well as staff when the agency head participates in charging a violation of law or in initiating a proceeding.

Page 4, para 4, lines 61-63 on staff advice to the decision-maker.  The recommendation is not entirely clear.  Is it meant to permit staff to give expert, technical, or other advice on the meaning or significance of factual materials?  If so, the Conference should consider drawing a different and better line or letting an opposing party know that the staff has provided expert or technical advice.  The opposing party should have notice and an opportunity to respond.  In the securities law area, expert or technical advice on the meaning or significance of factual materials can be influential and can make the difference between liability and no liability.  In litigated enforcement cases, liability can turn on issues of materiality or causation or the meaning of and industry compliance with generally accepted accounting standards and generally accepted auditing standards.  Parties often introduce expert testimony on topics such as these.

Page 7, para 16, line 121 on an agency’s ability to sanction lawyers and parties for misconduct.  Some if not many agencies are not competent to evaluate and sanction lawyer or party misconduct, and a question about the authority of many agencies to do so exists.  As a matter of policy, an agency should not have the ability to investigate, judge, and sanction lawyer or party conduct during a proceeding.  The agency decision-maker could use the power to favor the agency’s case or could be perceived to use the power in that way.  An agency head or ALJ could threaten or intimidate a lawyer or party with possible sanctions when the head or ALJ does not agree with the lawyer or party’s aggressive or zealous defense.  This has been an area of concern at the SEC.  See the SEC decision in Monson (June 30, 2008).  The question of lawyer or party misbehavior should be left to state bar associations or criminal investigations for obstruction of justice.