by Lisa Swan on March 5, 2012
Talk about no good deed going unpunished. When a broker-dealer’s general counsel noticed some shenanigans by a broker, the lawyer was “rewarded” with a five-year investigation by the feds.
Bloomberg News has the scoop on Theodore Urban. He was the general counsel for Ferris, Baker Watts Inc., an investment firm. In 2007, Stephen Glantz was accused by the feds of stock fraud, and ended up pleading guilty on one count, and was sentenced to 33 months in question. Even though Urban “spotted and questioned” Glantz’s “suspicious trading patterns” before the government got involved, and suggested to higher-ups that the broker be fired, he still was investigated for not stopping Glantz sooner. Urban was also considered to be a “supervisor” of Glantz, according to the feds, which helped prolong the investigation.
For his part, Urban was able to fight the Securities and Exchange Commission’s case against him because he had retired from Ferris, was working as a consultant, and was financially able to put up a defense. In similar cases, the person being investigated may not have the ability to fight the case the way he did. He told Bloomberg News, “For someone in a different financial circumstance, it would have been almost impossible to bear a five-year ordeal like this.”
The case could have ended in 2010, when Brenda Murray, the chief administrative law judge for the SEC, ruled in favor of Urban, saying that although she considered him a supervisor of Glantz, Urban “performed his responsibilities in a cautious, objective, thorough and reasonable manner.” Then the SEC asked for a review of Murray’s decision, and Urban’s attorney asked for a review of the finding about Urban being a supervisor.
Finally, on January 26 of this year, the commissioners of the SEC dismissed the case without comment. While this means that Urban’s ordeal is over, it doesn’t resolve the issue as to what compliance officers and in-house counsels are supposed to be responsible for, which means that what happened to Urban could happen to someone else.
Lisa Swan is a Feature Writer for the Compliance Exchange and the Wall Street Job Report. She is also a columnist for The Faster Times and a blogger for Subway Squawkers. Her work has also appeared in the New York Daily News, Yahoo Sports, Huffington Post and the books Graphical Player 2011 and Graphical Player 2010.