October 28, 2011 7:33 PM
Former Nixon Partner Sues Firm, Says He Was Made Scapegoat in SEC Probe
Posted by Sara Randazzo
A former Nixon Peabody partner caught up in a Securities and Exchange Commission investigation of a former client's alleged securities fraud sued the firm this week, claiming Nixon made him a scapegoat in the matter and took most of his $1.5 million book of business out from under him.
The lawyer, David Tamman, was cited by the SEC in January for his role in the alleged investment scam, alleging that in early 2009, Tamman altered and falsified documents that Beverly Hills–based NewPoint Securities used to hide the fact that investments billed to investors as "low risk" were actually being used to construct a mansion for the company's co-owner.
In 2010 the SEC sued NewPoint and several of its top executives, accusing the financial services firm of securities fraud and the unregistered sale of securities. As part of that action, the regulator also sought and obtained an injunction from a federal court in Los Angeles freezing NewPoint's assets and placing the company into receivership.
Filed Tuesday in California superior court in Los Angeles, Tamman's complaint catalogs what he claims are several actions that Nixon took to pin anything related to the NewPoint scandal on him and to distance the firm from the SEC probe in a bid to save its reputation and protect its self-insured malpractice policy.
Tamman, who worked at Nixon from February 2007 to October 2009, says in the complaint that he brought NewPoint with him as a client from Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor, where he worked as senior counsel prior to joining Nixon. However, he also says in the complaint that he was not the only Nixon attorney who represented the company or should have known about the investment documents at issue in the SEC probe. The complaint lists Nixon partners Edward O'Callaghan, William Kelly, and Robert Bernius and associate Matthew Grazier as also playing roles in the NewPoint representation.
(NewPoint made up less than 3 percent of Tamman's billings during five years at Liner Grode, and less than 6 percent at Nixon Peabody in 2009, according to the complaint.)
When the SEC began to investigate the company, Tamman alleges that, through its action, Nixon portrayed him as the sole firm lawyer working for NewPoint and, in violation of the firm's partnership agreement, refused to represent him. "Far from supporting him," the complaint states, "his partners, with whom he had consulted and whose advice he had followed upon every step . . . had abandoned him, as has Nixon."
Nixon Peabody spokesman Brian Moynihan said in a statement that the firm fired Tamman "as soon as we learned that he was under SEC investigation and he failed to explain his actions to us." The firm also said that it "has acted completely appropriately in cooperating with the SEC on this issue."
According to the complaint, Tamman realized he was being "thrown under the bus" and claims he resigned on October 22, 2009—the same day the firm says it terminated him. Nixon officials then contacted his clients and the media about the termination, the complaint alleges, costing him roughly 75 percent of his $1.5 million book of business when he was subsequently hired by Greenberg Traurig. (That firm fired Tamman in January of this year when it learned of the SEC investigation.)
Tamman is being represented by Stanton Phillips and James Wohl, both with their own law offices in Los Angeles. Tamman and Phillips did not return a call seeking comment Friday. A secretary at Wohl's office said he would have no comment.
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