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RICK STEINER FELL & BENOWITZ CASE STUDIES:
SEC Investigations and Enforcement

SEC Investigation: Senior Sales Officer

We were approached by a successful Vice President of a major educational publishing company. Our client's employer was being investigated by the SEC on a matter involving revenue recognition and our client had just been informed that she should retain her own attorney.

Our client was very distressed. For over a year, she had been cooperating with her employers' counsel - a top ranked law firm - and was never informed that she might be the target of the investigation herself. She had provided information to the SEC under counsel's direction and then received a Wells Letter advising that the SEC's Staff was recommending that she be sued for fraud by the SEC which would be seeking an injunction and monetary penalties against her.

At that point she engaged RSF&B. The biggest issue was that she had been advised by company counsel to respond to questions during a previous telephone interview with the SEC Staff by stating that she "did not recall" when she was not 100% certain rather than to provide her best recollection.

Our team, led by partner Robert Benowitz, felt that she must be afforded the opportunity to give the regulators a clear picture of her role in the matter under investigation and at our request the SEC scheduled a formal deposition in Washington where our client testified under oath. She was prepared by us intensively for the occasion and with our guidance she was well-prepared to answer the SEC's questions.

"Bob went through every document and detail of the case, and his thoroughness in preparing me for my testimony with the SEC made all the difference. He helped me answer questions confidently and helped the SEC understand my side."

Because of our intervention, our client was not sued by the SEC which withdrew its Wells Letter and she continues to work for a public company although others from the company were charged and are being brought to trial.

"It was such a relief to have the Benowitz team on my side," she said. "I was truly frightened that my professional career was going to end under a cloud and that I would not be able to continue my life as I had known it."

She continued, "The work that RFS&B did helped me through a very unpleasant situation and in the end gave me my life back" .

CFO: SEC Investigation/Severance Agreement

We recently represented the CFO of a major corporation as he was preparing to leave his post to take another position. RSF&B had negotiated a number of agreements for managers at the firm and the CFO knew of the firm's success in obtaining excellent results for senior managers.

Partner Robert Benowitz was in the process of negotiating the CFO's severance deal when we received news of an intervening event: the CFO, among other officers of the Company, was being investigated by the SEC on a Sarbanes-Oxley related financial reporting matter.

Thus, we were engaged to work with this client on two separate, but related tracks. One was to negotiate the best possible deal on his severance package, including terms which obligated the Company to advance our clients' legal fees incurred in connection with the SEC's investigation, and the other was to ensure that he did not become a target of a widespread SEC investigation focusing on the Company's internal financial reporting controls.

"When I found out that I was going to have to go before the SEC, I knew immediately that I wanted Bob, with his regulatory expertise and his experience as a former member of the SEC's Staff, on the case. It was great to be working with him on both of these matters."

After months of negotiations, the severance deal was concluded very much in our client's favor.

Our client said, "Bob has excellent business sense and can be tough when the situation calls for it. He understood what was important to me and got me a very good deal."

At the same time, the firm was preparing the client for complex depositions with the SEC. Working carefully with our client we prepared him to provide the SEC with information in a favorable manner. When the investigation was concluded, our client was exonerated.

"I would absolutely call Bob and his firm to advise me in both mission critical matters and on anything that could crucially affect my life. Although my career was at stake, Bob conveyed the confidence and calm needed to bring the situation to a successful close."

SEC Investigation: Software Sales VP

A software sales VP received a letter from the SEC (a Wells notice) indicating that he would be charged with violating securities regulations. He engaged RSF&B immediately.

"I was referred by a friend who had gotten help on regulatory issues from Bob Benowitz and his team and I knew that I needed a knowledgeable skilled attorney assisting me in this matter."

The SEC had been investigating the matter for over a year, but the VP was told by his companies counsel that he was not going to be named in the investigation, and he had every reason to believe this was the case.

"The day I got that letter was a very bad day," he said. "But the RSFB team did a great job of getting things back on track. They presented me with a timeline showing all of the relevant activities related to the matter under investigation - which was very helpful to my understanding of the issues."

Ultimately, RFS&B arranged for the client to speak to the SEC and with the proper guidance, he was able to accurately tell his story. The SEC withdrew the Wells and the client is working for a public company today.

"I greatly enjoyed working with Bob both on a professional and personal level and although I hope never to need him again, would enthusiastically recommend him to anyone who needs help with regulatory issues."

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