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SEC Charges Lawyers for Clients’ Securities Fraud

The SEC charged two lawyers with securities fraud for providing legal opinions and other assistance to fraudulent blank check company schemes.  One of the lawyers also faces criminal charges brought by the U.S. Attorney’s Office.  The lawyers are accused of issuing due authorization and Rule 144 opinions, prerequisites to the public offering and sale of the shell companies, as well as other substantial assistance including moving assets through their lawyer trust accounts.  The Director of the SEC’s Miami Regional Office warned that “Lawyers are critical gatekeepers when it comes to protecting the integrity of our capital markets.”

OUR TAKE: Lawyers and other securities markets gatekeepers cannot plead ignorance when red flags indicate that they knew or should have known about their clients’ wrongdoing.  Firms must conduct significant due diligence both before accepting a client and during representation.  It is also noteworthy that the SEC charged the lawyers with securities fraud and not just aiding/abetting.


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