## Facts

- In 1973, while employed as attorneys at the Securities and Exchange Commission (SEC), Gerald Boltz and Charles Hartman filed two related SEC civil enforcement suits against multiple defendants, including DCS Financial Corporation (DCS) and several individuals, alleging fraudulent manipulation of DCS stock.
- After the SEC actions, DCS later merged with Bunnington Corporation (a related successor entity named among defendants in later litigation).
- Boltz and Hartman left the SEC and joined the law firm Rogers & Wells.
- In 1983, Rogers & Wells, with Boltz and Hartman as lead counsel, filed a civil action on behalf of the Securities Investor Protection Corporation (SIPC) (and related SIPA liquidation trustees) against Seymour Vigman and roughly 74 other individuals and entities.
- The 1983 complaint alleged a broad stock-manipulation scheme and asserted claims under § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as claims under the Racketeer Influenced and Corrupt Organizations Act (RICO).
- Two defendants moved to disqualify Boltz and Hartman (and sought disqualification of their firm) on the ground that, as former government lawyers, they were barred from representing a private litigant in a matter connected to work for which they had personal and substantial responsibility at the SEC.
- The SEC did not consent to Boltz and Hartman’s participation after being consulted.
- The district court addressed only the disqualification motion, not the merits of SIPC’s securities-fraud or RICO claims.

## Issues

1. Whether Boltz and Hartman, as former SEC attorneys, were barred under former-government-lawyer conflict principles (reflected in Model Rule 1.11(a)) from representing SIPC in a private action substantially related to SEC matters in which they participated personally and substantially.
2. Whether SEC consent was required to permit the representation, and whether the SEC’s refusal (or absence of consent) required disqualification without any showing of actual misuse of confidential information.
3. Whether any disqualification should be limited to Boltz and Hartman or extend to their entire law firm.

## Decision

- The court granted the motion to disqualify Boltz and Hartman from further participation as counsel for SIPC in the case.
- The court found that Boltz and Hartman had substantial responsibility in the prior SEC matters and that those matters were the same as, or substantially related to, the private SIPC litigation.
- The court treated the lack of SEC consent as a controlling factor under the former-government-lawyer rule it applied.
- The court characterized disqualification as a protective measure aimed at avoiding conflicts and the appearance of improper use of government work, not as a finding that counsel had acted in bad faith.
- The court did not dismiss SIPC’s lawsuit; the action could proceed with other counsel and appropriate protections.

## Legal Principles

- A former government lawyer may not represent a private client in connection with a matter in which the lawyer participated personally and substantially as a public officer or employee unless the appropriate government agency gives informed consent.
- “Personally and substantially” includes direct involvement in key investigative, charging, and litigation steps; it is more than nominal supervision or incidental contact.
- For former-government-lawyer conflicts, a “matter” may be treated broadly where the private case arises from the same core events, transactions, and actors (including successor entities) as the earlier government work.
- Courts may order disqualification as a preventive remedy to protect confidence in the integrity of government enforcement and to prevent the risk (or appearance) that information obtained through public service will be used in later private litigation.
- In applying these standards, a court supervising lawyers who appear before it may look to widely recognized professional-responsibility rules (such as Model Rule 1.11) and related authority.
- Disqualification under former-government-lawyer principles does not require proof that the lawyer actually used confidential information; the bar can apply based on the prior role and the relationship between the matters.
- Depending on the circumstances and safeguards used, the remedy may focus on the conflicted former government lawyers rather than automatically extending to the entire firm.

## Conclusion

Securities Investor Protection Corp. v. Vigman required disqualification of two former SEC attorneys who led SIPC’s private securities-fraud and RICO suit because they had participated personally and substantially in earlier SEC enforcement litigation concerning the same alleged stock-manipulation conduct and closely related parties, and the SEC did not consent to their private representation; the court treated disqualification as a preventive step to protect the integrity of the government-to-private transition rather than as punishment for misconduct.


Securities Investor Protection Corp. v. Vigman, 587 F.Supp. 1358 (1984)