Federal Judge Blasts SEC for "Playing Fast and Loose with the Facts"
Summary judgment for defendants in civil cases involving insider trading claims brought by the SEC is a rarity. Courts tend to be hospitable to cases that are necessarily based on circumstancial rather than direct evidence, and the key issues of materiality, intent to defraud, and whether the information is non-public tend to be factbound determinations.
Nevertheless, the Court in SEC v. Heartland Advisors, Inc., 2006 WL 254090 (E.D. Wisc. August 31, 2006) recently granted summary judgment to two individuals accused of insider trading by the SEC in a civil lawsuit. Moreover, the Court expressed hostility to the SEC claims in this case. For example, the Court suggested that the SEC is not unlike Brittany Spears in their misuse of quotes:
[T]he SEC makes much of the Heartland offices tour that Krueger allegedly testified to and never had. SEC's proposed factfinding of fact 87 states, "Defendant Krueger claims that he came back to HAI's offices for a "tour" after lunch. However, a thorough review of citations given for that proposition reveals that Krueger never said anything about a tour.
In a footnote the Court adds:
By putting the word "tour" in quotes, the SEC indicates that Krueger used that work in his testimony - a misleading indication, at best. Perhaps the SEC is not unlike Britney Spears in its inability to use quotation marks correctly. . . .("As evidenced by her Dateline interview, [Britney Spears] has a knack for misusing air quotes, placing them in between words or around the wrong ones.")
The Court proceeds to chastise the SEC for "playing fast and loose with the facts" and providing an incomplete cite to a case. The Court concluded by urging SEC's counsel to review the Wisconsin Rules of Professional Responsibility rule requiring candor with the Court.
