A Response to SEC Enforcement Director Robert Khuzami’s June 1, 2011 Speech Barry J. Mandel Foley & Lardner LLP November 2, 2011 Chair of Foley & Lardner’s Securities Enforcement & Litigation Group ©2011 Foley & Lardner LLP

Khuzami Speech: 4 Concerns 1. Multiple Representations 2. Excessive Lack of Recollection by Witnesses 3. Counsel Signaling Witnesses During Testimony 4. Excessive Delays in the Production of Documents and Privilege Logs ©2011 Foley & Lardner LLP

Concern #1: Multiple Representations  Concedes there is no problem when lawyer represents employees who are purely witnesses with no conflicting interests or no material risk of legal exposure  Problematic Scenario: Representing company and multiple employees when there is real potential for material legal exposure  Problematic Scenario: Representing various entities with seemingly divergent interests  SEC’s New Cooperation Program raises the stakes in these cases ©2011 Foley & Lardner LLP

Concern #1: Multiple Representations New York Professional Conduct Rule Conflict Of Interest: Current Clients (a) Except as provided in paragraph (b), a lawyer shall not represent a client if a reasonable lawyer would conclude that either: (1) the representation will involve the lawyer representing differing interests; or (2) there is a significant risk that the lawyer’s professional judgment on behalf of the client will be adversely affected by the lawyer’s own financial, business, property or other personal interests. (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) each affected client gives informed consent, confirmed in writing. ©2011 Foley & Lardner LLP

Concern #1: Multiple Representations Khuzami  Concedes no problem when situation involves only witnesses with no conflict and no material risk of legal exposure Counterpoint  Counsel want to have a grasp on the entire matter ©2011 Foley & Lardner LLP

Concern #1: Multiple Representations Khuzami  Representing company and multiple employees  Multiple witnesses with seemingly divergent interests Counterpoint  Counsel, not SEC, must evaluate each situation for conflicts  At least certain conflicts may be waived ©2011 Foley & Lardner LLP

Concern #1: Multiple Representations Khuzami  SEC New Cooperation Program raises the stakes Counterpoint  The New Program can be used to divide interests and insist on separate counsel ©2011 Foley & Lardner LLP

Concern #2: Lack of Recollection New York Professional Conduct Rule 3.3: Conduct Before a Tribunal (a) A lawyer shall not knowingly: … (3) offer or use evidence that the lawyer knows to be false. If a lawyer, the lawyer’s client, or a witness called by the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the testimony of a defendant, in a criminal matter, that the lawyer reasonably believes is false. New York Professional Conduct Rule 3.4: Fairness to Opposing Party & Counsel A lawyer shall not: … (a)(4) knowingly use perjured testimony or false evidence (a)(5) participate in the creation or preservation of evidence when the lawyer knows or it is obvious that the evidence is false ©2011 Foley & Lardner LLP

Concern #2: Lack of Recollection Khuzami  Witness testifying only to things he or she recalls with certainty Counterpoint  Risk of Perjury  “Don’t Recall” may be accurate even if SEC does not like it  Things now important to SEC might not have been so to witness ©2011 Foley & Lardner LLP

Concern #3: Signaling During Testimony Khuzami  Change of testimony after attorney’s long speaking objection Counterpoint  Speaking Objections  Attorney not bump on log  Clarifying for witness ©2011 Foley & Lardner LLP

Concern #3: Signaling During Testimony Khuzami  Change of testimony after consultation with attorney Counterpoint  SEC may not be hearing what witness thinks he or she is trying to say, so the attorney must counsel clarification of testimony ©2011 Foley & Lardner LLP

Concern #4: Late Production of Documents New York Professional Conduct Rule 3.2 Delay of Litigation In representing a client, a lawyer shall not use means that have no substantial purpose other than to delay or prolong the proceeding or to cause needless expense. ©2011 Foley & Lardner LLP

Concern #4: Late Production of Documents Khuzami  Eve of witness testimony  Over-inclusive privilege material and double reviews Counterpoint  Sometimes result of  Overbroad requests  Refusing to reschedule testimony  Cautious non waiver  Overbroad requests  Time consuming ©2011 Foley & Lardner LLP