Securities Law

Former BigLaw partner says he felt like a pawn in securities fraud case after judge tosses claims

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A former BigLaw partner says the Securities and Exchange Commission went beyond overzealous enforcement when it filed a civil suit against him that was tossed on Monday by a federal judge.

U.S. District Judge P. Kevin Castel in his opinion (PDF) dismissed civil securities fraud and aiding and abetting claims against William Uchimoto of Pennsylvania, the New York Law Journal (sub. req.) reports. Uchimoto is a former partner at Buchanan Ingersoll & Rooney, at Saul Ewing and at Stevens & Lee.

The SEC had alleged that Uchimoto misled Nasdaq about whether two companies had satisfied shareholder requirements to be listed on the exchange. He was a partner at Buchanan Ingersoll at the time of the alleged misrepresentation.

Castel said the SEC complaint failed to allege that Uchimoto obtained money or property as a result of the alleged misrepresentation. Cases in the Southern District of New York are split on whether obtaining money from an employer is enough to prove that alleged negligent misrepresentation violated Section 17(a)(2) of the Securities Act, Castel said. However, he thinks the better view is that a defendant must personally gain money or property from the fraud.

Castel also said the SEC had failed to allege its claims of misrepresentation under 17(a) and the SEC’s Rule 10b-5 with particularity and had failed to allege that Uchimoto was aware of market manipulation in connection with the alleged aiding and abetting claim.

Uchimoto told the New York Law Journal that he felt like a “pawn” used by the SEC to build a stronger case against others, and the agency “gerrymandered” details to supports its claims. Uchimoto said he “did everything absolutely by the book” in his communications with Nasdaq.

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