Eric Wanger has one last appeal available to the Securities and Exchange Commission before he has exhausted his administrative remedies. Yet, hard as it is to believe, Wanger’s attorney may not be given the opportunity to represent his client in front of the commissioners.
The SEC staff has already recommended that Wanger’s appeal should be denied because it would not be “consistent with the public interest.” What does that mean? We don’t know either. Since the agency’s commissioners historically have rubber-stamped the recommendations of their staff, it seems likely that Wanger will remain barred, possibly for the rest of his life.
Without the opportunity for Wanger’s counsel to appear or present a case, it’s hard to imagine that the commission will even read the documents.
Wanger’s case is clearly among the smallest infractions the SEC enforcement division has ever prosecuted. Since no one believes that Wanger ever personally benefited from any of the trades in question, it remains inexplicable that the SEC has devoted more than three years of investigatory resources to such a de minimis case.
Even if you believe that Wanger engaged in bad acts, the agreed-upon sanction should have ended four years ago. The SEC has never proven, and Wanger has never admitted, any form of wrongdoing. How can it be enough for an administrative agency to simply allege, without proof or admission, that the denial of someone’s basic rights is not “consistent with the public interest”?
Wanger’s attorney, Tom Sjoblom, has finally had enough:
I have received your letter dated February 22, 2017 in which you state that the Chief Counsel’s Office of the Division of Enforcement intends to recommend to the
Commission that Mr. Wanger’s [request for readmission] … should be
denied as not “consistent with the public interest.”
The staff has failed to articulate the criteria under which it makes the ultimate
subjective determination that a particular case is or is not in the “public interest.” In
doing so the staff neglects to address both the underlying actual factual and legal bases for such “finding,” resorting instead to the staff’s allegations in the OIP and Order Imposing Remedial Sanctions (“Bar Order” or “Sanctions Order”). Staff allegations do not undergo a metamorphosis and become “findings” when there has been no factual presentation and due process hearing to support them. Particularly is that true and compelling in this case where the staff investigation by-passed the real underlying conduct (corporate waste and mismanagement and insider trading). Instead, the staff charged Mr. Wanger with an alleged fraud involving an investment management company, Wanger Investment Management (“WIM”), which the staff claimed earned management fees of $2,269 over the course of 33 months. That equates to $69 per month for those 33 months. Worse, since respondent Wanger Long Term Opportunity Fund (“WLTOF”) had 41 clients at that time, that translates into a total loss of $55 per client over those 33 months, which is $1.67 per month per client. The Commission simply cannot justify a lifetime bar as being “in the public interest” on such grounds.
In the staff’s “public interest” determination, it has completely failed to look at
the underlying facts that led to this misuse of the administrative process.
Full Text of Thomas Sjoblom’s letter to the Chief Counsel of the SEC Division of Enforcement: