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December 17, 1979

WHEELING-PITTSBURGH STEEL CORPORATION, a corporation, and DENNIS J. CARNEY, its Chairman, President and Chief Executive Officer, Respondents.

The opinion of the court was delivered by: ZIEGLER

The Securities and Exchange Commission filed a civil enforcement action seeking to compel Wheeling-Pittsburgh Steel Corporation and Dennis J. Carney to produce evidence concerning the identity of any company or individual with whom merger or acquisition discussions were held. We decline to place the imprimatur of this court upon the activities of the Commission and, therefore, relief will be denied.

I. History of Case

 On August 17, 1979, the Securities and Exchange Commission (Commission) filed an application with this court for an enforcement order pursuant to section 21(c) of the Securities Exchange Act of 1934, 15 U.S.C. § 78u(c) (1976). *fn1" The Commission seeks to enforce that portion of a subpoena Duces tecum dated August 2, 1979, and directed to Wheeling-Pittsburgh Steel Corporation (W-P) and its president, Dennis J. Carney (Carney), which requires respondents to disclose information that the Commission deems relevant to its investigation.

 On August 27, 1979, respondents filed an answer and counterclaim advancing four distinct defenses. They are as follows: (1) The information sought is irrelevant to any legitimate inquiry by the Commission; (2) the subpoena demands confidential information and disclosure would cause irreparable harm to the company; (3) the subpoena was issued in bad faith and for the purpose of harassment; and (4) the investigation constitutes a misuse and abuse of an administrative agency by persons who oppose the grant of federal loan guarantees to W-P. As a result, respondents urge this court to enjoin the entire investigation.

 The court, tracking the procedures outlined in United States v. McCarthy, 514 F.2d 368, 372-73 (3d Cir. 1975), and its progeny, United States v. Genser, 582 F.2d 292, 302 (3d Cir. 1978), conducted hearings on September 7, 13 and 14. The testimony of the witnesses *fn2" and the exhibits raised serious issues concerning the propriety of the Commission's investigation. In particular, the court was concerned with respect to the apparent abuse of the investigative process by persons opposed to the grant of federal loan guarantees to W-P, as well as the role, if any, of the agency in furthering the conduct. Accordingly, at the close of the hearing on September 14, 1979, the court granted respondents' request for discovery. *fn3"

 The discovery order was narrowly drawn to insure that the burden on the administrative agency would be minimized as much as possible. *fn4" A final hearing was conducted on October 22, 1979, after completion of the authorized discovery. We now articulate the following findings of fact and conclusions of law in accordance with United States v. McCarthy and Fed.R.Civ.P. 52(a).

 II. Findings of Fact

 Wheeling-Pittsburgh Steel is a Delaware corporation with offices at Pittsburgh, Pennsylvania. It is engaged in the business of manufacturing and selling steel and related products. W-P's stock is registered pursuant to section 12(b) of the Securities Exchange Act, 15 U.S.C. § 78L(b) (1976), and is listed on the New York Stock Exchange. Annual and other periodic reports are filed with the Commission pursuant to section 13(a) of the Act. 15 U.S.C. § 78m(a) (1976). Dennis J. Carney has held the position of President and Chief Executive Officer for two years.

 During the preceding two years, W-P attempted to obtain loan guarantees from the Economic Development Administration (EDA) and the Farmers Home Administration (FmHA). The loans would be financed by private lenders and used to install pollution control equipment and a rail mill at Monessen, Pennsylvania. Receipt of the loan guarantees is critical to the company because the rail mill cannot be constructed without pollution control devices required by the Environmental Protection Agency which in turn cannot be financed without the loans. Three other companies United States Steel Corporation, Bethlehem Steel Corporation and CF&I manufacture steel rails. All have opposed the granting of loan guarantees to W-P. As we will explore in detail, CF&I, a company owned by Crane Company, has been particularly active in its opposition.

 On December 28, 1978, and January 9, 1979, Carney received identical "Letters of Intent" from EDA and FmHA. *fn5" The letters stated that the agencies "will recommend" loan guarantees of $ 100 million (EDA) and $ 40 million (FmHA). The "Letters of Intent" were contingent on a number of provisions. A careful examination of these provisions reveals, however, that the conditions involved ministerial matters which offered no major obstacles to receipt of the guarantees.

 On April 27, 1979, in a "Report on the Annual Meeting of Stockholders," Carney discussed the status of the loan guarantees. The language that precipitated this entire investigation is as follows:

We obtained commitments for federal loan guarantees of $ 140-million, and for a $ 10-million direct loan through the State of Pennsylvania. These commitments will enable us to finalize financial arrangements in June through a consortium of insurance companies. *fn6"
Later, in the same report, Carney remarked:
We are also exploring future acquisitions being proposed to us by several domestic and foreign firms. *fn7"
Following the report to shareholders, Carney spoke to news reporters. He related that the turnaround in W-P's financial position had attracted domestic and foreign concerns who were interested in entering business combinations, but "so far none of them looks good." *fn8" According to Carney, the discussions were preliminary and did not reach the point of discussing terms.
On June 11, 1979, Carney appeared before the Subcommittee of the Committee on Appropriations of the United States Senate. He was interrogated at length by Senator Lowell Weicker of Connecticut, an opponent of the loan guarantees, concerning use of the word "commitments" in the report to shareholders. *fn9" The exchange between Senator Weicker and Carney reveals that the Senator believed that use of the word "commitments," in describing the status of the loan guarantees, was a material misrepresentation of fact, since the letters from EDA and FmHA were only "Letters of Intent." In Carney's opinion, the terms were synonymous and use of the word "commitments" was at most a semantical distinction.
The Senator obviously felt otherwise. On June 14, a letter from Senator Weicker was hand delivered to Stanley Sporkin, Director of the Division of Enforcement of the Commission. *fn10" The letter directed Sporkin's attention to Carney's use of the word "commitments" in the April 27 report, and suggested that the statement constituted a violation of Rule 10b-5. No other alleged violations were indicated.
The letter was routed from Sporkin to Richard E. Brodsky of the Division of Enforcement, who in turn assigned the case to Martin Aussenberg, a staff attorney. On June 19, Aussenberg contacted Timothy Keeney, a legislative assistant of Senator Weicker. Keeney described the loan guarantee process, advised Aussenberg of W-P's pending application, pointed out Carney's use of the word "commitments" in the April 27 report and supplied Aussenberg with a transcript of the Senate hearings. *fn11" Keeney also referred Aussenberg to one "Art Downey," describing him as an attorney for CF&I, a corporate competitor of W-P that was vigorously opposing the loan guarantees.
Aussenberg called Downey the same day. During the conversation, Downey suggested other areas, apart from use of the word "commitments," of suspected violation of the securities laws. Downey has testified that he told Aussenberg that CF&I was "frustrated" and "exasperated" concerning its inability to block the loan guarantees and was providing much of the information as a means of "venting my exasperation." *fn12"
The deposition does reveal, however, that Downey and Keeney joined forces to block the loan guarantees to W-P and, when their efforts appeared doomed in a political forum, they began using the investigative authority of the Securities and Exchange Commission to achieve a political result. More importantly the Downey deposition, when considered with additional evidence of record, discloses that the Commission was aware that it was being used, and did nothing to prevent the abuse of its process.
All doubts concerning manipulation were resolved shortly after Aussenberg's initial contacts with Kenney and Downey. On June 21, 1979, Senator Weicker introduced ten amendments relating to W-P to the Supplemental Appropriations Bill for the EDA. *fn14" Amendment No. 273 provided:
None of the funds provided in this Act shall be available for a new loan or guarantee under the Economic Development Revolving Fund to any corporation which is the subject of an investigation by the Securities and Exchange Commission. *fn15"
Prior to the introduction of this amendment, Keeney telephoned Aussenberg on two occasions. In the first call, Keeney inquired of the status of the investigation. *fn16" In the second call, Kenney advised Aussenberg that Weicker was considering introducing the amendment. *fn17" Aussenberg testified that he objected to Weicker's amendment; however, the amendment was introduced and, despite knowledge of this fact, the contacts between Aussenberg, Downey and Keeney continued. *fn18"
On June 25, Aussenberg called counsel for W-P to request production of certain documents. This was the first notice to W-P of any investigation. On July 2, George Raynovich, counsel for W-P, supplied numerous documents to the Commission. *fn19"
On July 31, the Commission issued its formal order directing a private investigation and designating officers to take testimony pursuant to section 21(a) of the Act, 15 U.S.C. § 78u(a). *fn20" The order stated that members of the staff had reported information tending to show that W-P had disseminated "untrue statements of material fact and omitted to state material facts," concerning: (1) federal loan guarantees; (2) loans, line of credit and other sources of financing; (3) possible acquisition of other persons by W-P or of W-P; and (4) trading in W-P stock.
On Wednesday, August 1, 1979, Aussenberg notified Raynovich that the Commission desired to depose Carney as soon as possible. *fn21" Raynovich responded that Carney would be without the city for one week. Aussenberg refused to delay and Raynovich agreed to produce Carney for the deposition on Friday, August 3. *fn22"
A subpoena Duces tecum was issued on August 2, 1979, *fn23" and the deposition proceeded the next day. Aussenberg's inquiries focused primarily on the loan guarantee process, particularly Carney's use of the word "commitments" in the Report of April 27. Carney answered all questions relating to the loan guarantees and the Commission does not contend otherwise. However, during a final phase of the deposition, Aussenberg instructed Carney to disclose the name of every company that had approached him, or he had approached since January of 1979, concerning possible acquisition by or of W-P. *fn24" Carney refused to divulge names or turn over any documents pertaining to such discussions, and the instant action followed.
III. Discussion
Respondents assert four defenses to the application for enforcement of the subpoena. They are: (1) the information is irrelevant to any legitimate inquiry; (2) the subpoena demands privileged and confidential information and disclosure would cause W-P irreparable harm; (3) the subpoena was issued in bad faith and for the purpose of administrative harassment; and (4) the investigation constitutes a misuse and abuse of the Commission by persons who oppose the grant of federal loan guarantees to W-P.
Before we examine these contentions in detail, some general observations must be made. The Securities and Exchange Commission is statutorily authorized to "make such investigations as it deems necessary to determine whether any person has violated, is violating, or is about to violate" the federal securities laws or "the rules or regulations thereunder." 15 U.S.C. § 78u(a) (1976). In furtherance of that purpose, the Commission "is empowered to . . . require the production of any books, papers, correspondence, memoranda, or other records which the Commission deems relevant or material to the inquiry." Id. at § 78u(b). In the event of disobedience, the Commission may apply to a district court for compliance. Id. at § 78u(c); See SEC v. Arthur Young & Co., 190 U.S.App.D.C. 37, 41-2, 584 F.2d 1018, 1022-23 (D.C.Cir.1978).
There are limits, however, on the power to subpoena. The inquiry must be for a proper purpose, the information sought must be relevant to that purpose and statutory procedures must be observed. United States v. Powell, 379 U.S. 48, 58, 85 S. Ct. 248, 13 L. Ed. 2d 112 (1964). In addition, a district court "has a broad power of inquiry to ensure that its process is not abused . . . ." SEC v. Howatt, 525 F.2d 226, 229 (1st Cir. 1975). As the Supreme Court stated in United States v. Powell :
It is the court's process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation.
379 U.S. at 58, 85 S. Ct. at 255.
Respondents argue that use of the word "commitments" and statements concerning acquisitions could not possibly constitute violations of Rule 10b-5. *fn25" However, whether certain conduct violates the securities laws should not be decided in a subpoena enforcement action. See Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 63 S. Ct. 339, 87 L. Ed. 424 (1943); SEC v. Brigadoon Scotch Dist. Co., 480 F.2d 1047, 1052-53 (2d Cir. 1973). Moreover, the Commission is not required to limit its investigations to persons against whom "probable" or even "reasonable" cause has been established. SEC v. Howatt, supra at 229. The SEC has a power of "original inquiry." Id. citing United States v. Morton Salt, 338 U.S. 632, 642, 70 S. Ct. 357, 94 L. Ed. 401 (1950). Thus, we cannot and will not adjudge whether Carney's statements may be violative of the securities laws, and therefore we turn to the defenses raised by respondents.
A. Relevancy
Subpoenaed documents or testimony are relevant unless they are "plainly incompetent or irrelevant for any lawful purpose." Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509, 63 S. Ct. 339, 343, 87 L. Ed. 424 (1943). And the trend of recent cases admits an inquiry to the extent necessary to effectuate the investigative power of the agency. SEC v. Arthur Young & Co., supra, 190 U.S.App.D.C. at 49, 584 F.2d at 1030.
In the instant case, the Commission contends the information and materials which it is seeking are relevant for two distinct and lawful purposes: (1) if Carney's statements in the April 27 report or to the news media, concerning discussions of acquisitions were false or misleading, such statements may constitute material misrepresentations under Rule 10b-5; and (2) there was heavy trading in W-P stock prior to Carney's statements, *fn26" and the traders may have possessed information relating to potential combinations between W-P and another entity. If this information was not generally available to the public, such trading may constitute a violation of Rule 10b-5. Moreover, even if respondents did not buy or sell stock during the period in question, they may be liable as "tippers." Shapiro v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 495 F.2d 228 (2d Cir. 1974). Thus, the names of persons with whom Carney had discussions is necessary to determine: (1) whether material nonpublic information relating to W-P was exchanged; (2) who possessed such information; and (3) whether these persons traded in W-P stock.
Respondents rejoin that the Commission can obtain such information from other sources. They note the agency maintains a market surveillance staff that investigates any unusual activity in listed stocks and, therefore, the traders who purchased or sold W-P stock should be interrogated. We disagree.
Without disclosure of the names of the persons with whom Carney spoke, the agency would be forced to interrogate or depose every trader. Such an approach is impractical and unreasonable. Accordingly, the claim of respondents that the information is irrelevant is rejected.
B. Confidentiality
Respondents next contend that the information sought is privileged and confidential and disclosure would cause irreparable harm to the company. This contention is without merit.
In FCC v. Schreiber, 381 U.S. 279, 295-96, 85 S. Ct. 1459, 14 L. Ed. 2d 383 (1965), the Supreme Court held that a claim of confidentiality is premature and improper until the subpoenaed information has been made available to the agency and an opportunity exists to rule on specific requests for confidential treatment. As the court in FTC v. Texaco, 180 U.S.App.D.C. 390, 555 F.2d 862 (D.C.Cir.), Cert. denied, 434 U.S. 883, 98 S. Ct. 250, 54 L. Ed. 2d 168 (1977) observed, "it is the agencies, not the courts, which should, in the first instance, establish the procedures for safeguarding confidentiality." Id., 180 U.S.App.D.C. at 412 n. 62, 555 F.2d at 884 n. 62. Moreover, W-P has failed to establish that disclosure of these names will, in Carney's words, "kill the deal." The mere suggestion of possible damage is not sufficient to block an authorized inquiry into relevant matters. SEC v. Brigadoon Scotch Dist. Co., 480 F.2d 1047, 1056 (2d Cir. 1973).
If the information is in fact confidential, it will be exempt from disclosure under the Freedom of Information Act, 5 U.S.C. § 552 (1976). The Commission has offered to provide 10 days notice prior to release of any information, if a request is received and a determination is made that the material is not exempt and must be disclosed. Several courts have found such protections to be adequate and we are satisfied respondents will suffer no harm. See, e.g., SEC v. Dresser Industries, Inc., 453 F. Supp. 573, 576 (D.D.C.1978), Aff'd Nos. 78-1702, 78-1705 (D.C.Cir. Nov. 19, 1979); FTC v. Texaco, supra, 180 U.S.App.D.C. at 412, 555 F.2d at 884.
C. Bad Faith and Harassment
If the instant subpoena was issued "for an improper purpose, such as to harass . . . or for any other purpose reflecting on the good faith of the particular investigation," it is unenforceable. U. S. v. Powell, supra, 379 U.S. at 58, 85 S. Ct. at 255. The Powell standard is equally applicable to enforcement proceedings instituted by the Commission. SEC v. Arthur Young & Co., supra, 190 U.S.App.D.C. 43 n. 39, 584 F.2d at 1024 n. 39.
Respondents' primary contention throughout these proceedings relates to the alleged abuse of the investigative process of an executive agency by third-persons. Although it is claimed that the agency's motivations were also improper, there is no substantial evidence of record to support the contention. The burden, when allegations of bad faith and harassment are made, is a "heavy one." United States v. LaSalle National Bank, 437 U.S. 298, 316, 98 S. Ct. 2357, 57 L. Ed. 2d 221 (1978). That burden has not been met in this case. *fn27"
D. Abuse of the Investigative Process
Respondents contend the evidence establishes that the investigative process of the Commission has been used by a competitor and a United States Senator and his staff, not for the purpose of vindicating claimed violations of federal law, but for the collateral purpose of blocking the consummation of federal loan guarantees and loans from private lenders to W-P. On the other hand, the agency asserts "the motivations of persons with whom the SEC has had contact concerning the investigation . . . are simply irrelevant to a determination of whether the Commission acted in good faith in this matter." *fn28"
The starting point of our analysis must again be United States v. Powell, supra. The Court stated:
379 U.S. at 58, 85 S. Ct. at 255.
We do not question the limited function of a district court in a proceeding to enforce an administrative subpoena. On the other hand, the judiciary must not function as a rubber-stamp and accede to every request regardless of the circumstances. As Justice Frankfurter explicated:
Instead of authorizing agencies to enforce their subpoenas, Congress has required them to resort to the courts for enforcement. In the discharge of that duty courts act as courts and not as administrative adjuncts.
Penfield Co. of California v. SEC, 330 U.S. 585, 604, 67 S. Ct. 918, 928, 91 L. Ed. 1117 (1947) (dissenting opinion). Judge Wilkey's remarks in FTC v. Texaco, supra are also apposite:
There are limits to the subpoena power of an administrative agency, and the duty and authority to enforce those limits rests on our federal district courts. As the Ninth Circuit has stated,
There is no rule requiring a court to act against conscience. The proceeding (judicial enforcement of administrative subpoenas) is equitable in character. Equitable considerations should prevail. There is no power to compel a court to rubber-stamp action of an administrative agency simply because the latter demands such action.
F. T. C. v. Texaco, Inc., supra, 180 U.S.App.D.C. at 431, 555 F.2d at 903, Citing Chapman v. Maren Elwood College, 225 F.2d 230, 234 (9th Cir. 1955).
As one might expect, the case law is sparse. Some guidance is available. In United States v. Fensterwald, 180 U.S.App.D.C. 86, 553 F.2d 231 (D.C.Cir.1977), the taxpayer sought to quash an I.R.S. summons. However, an attempt to initiate discovery by filing interrogatories directed to the agency was denied by the district court. On appeal, the Court of Appeals for the District of Columbia reversed and stated:
The factual allegations of appellant Fensterwald here have taken him out of the class of the ordinary taxpayer, whose efforts at seeking discovery would, if allowed universally, obviously be too burdensome to the Internal Revenue Service.
180 U.S.App.D.C. at 86-87, 553 F.2d at 231-32.
Fensterwald, an attorney, had represented James McCord and James Earl Ray. He alleged that representation of these men "led to an extraordinary interest" in him by certain persons in the executive branch and that "such persons . . . were possessed of sufficient power to stir an interest" by the Internal Revenue Service. Id., 180 U.S.App.D.C. at 87, 553 F.2d at 232. Under such circumstances, the court held that some discovery was required to determine "how taxpayer Fensterwald's name was selected for this audit." Id., 180 U.S.App.D.C. at 88, 553 F.2d at 232-33.
The teaching is clear. If discovery revealed that Fensterwald was selected for audit due to pressures from the executive branch, the court would quash the summons.
In Center on Corporate Responsibility v. Shultz, 368 F. Supp. 863 (D.D.C.1973), the plaintiff sought a refund from the I.R.S. claiming to be a tax-exempt organization, and also a tax-exempt status ruling. The court found "unmistakable" evidence of "political intervention" in the decision to deny tax-exempt status. Id. at 871. The intervention consisted of pressures from John Dean, Patrick Buchanan, and other members of the White House staff. The court concluded:
A looming issue in this case has been whether political interference or intrusion has played a role in the Internal Revenue Service's consideration of the Plaintiff's exemption application. Should this specter prove to have substance, the complexion of this case changes. A showing of political influence renders the Service's ruling null and void. It is outside the law.
Id. at 871.
The decision was noted in a subpoena enforcement context in United States v. Church of Scientology, 520 F.2d 818 (9th Cir. 1975). In that case, the Church appealed the district court's decision enforcing an I.R.S. subpoena and refusing to conduct a hearing or allow discovery relative to the claim of harassment. Relying in part on United States v. McCarthy, 514 F.2d 368 (3d Cir. 1975), the court remanded for a hearing on the allegations. 520 F.2d at 824. In so doing, the court stated:
In short, we agree with the district court that the allegations of harassment and improper purposes were not supported by the record and standing alone did not require the court to deny enforcement. However, our inquiry does not end here, for it may be that the Church's allegations have more substance than meets the eye. See, e.g., Center on Corporate Responsibility, Inc. v. Shultz, D.D.C., 1973, 368 F. Supp. 863 (evidence of White House use of IRS administrative actions against certain "activist' organizations whose views were offensive to the White House.)
Id. at 823. It is clear that, if harassment for political reasons was proved, enforcement would be denied. *fn29"
In the instant case, the Commission, in arguing that the motivations of its sources are totally irrelevant, attempts to distinguish these authorities. First, it notes that Weicker's letter referred to a specific violation of the law and the staff conducted an inquiry for over one month prior to the formal order. *fn30" Secondly, it contends that any rule which prevents a law enforcement agency from utilizing biased sources would severely impede legitimate law enforcement efforts. *fn31"
The first argument is vacuous. The holdings of these cases do not turn on whether there was substance to the charges proferred by the executive branch. The mischief, which the courts sought to address, was the exertion of pressure by the executive over an agency in order to compel a response.
We agree, of course, that adoption of a rule which bars an agency from pursuing an investigation predicated on a biased source is unsound. However, we reject the proposition that the motivations and actions of third-persons are totally irrelevant when an agency seeks judicial enforcement of a subpoena. Fensterwald, Center on Corporate Responsibility and Church of Scientology reflect the concern of the judiciary that an administrative agency pursue its statutory mandate in an independent and apolitical manner, with a modicum of sophistication, and free from extraneous influences or other unworthy considerations.
In our view, the Commission owes a duty to the public, who are its clients, to disassociate itself from persons who are knowingly abusing its process. While we do not suggest that the agency adopted the motives of the third-parties, the totality of the circumstances here presented creates the appearance of a partnership between the Commission and these persons. Wittingly or not, the agency has permitted, and at times encouraged, the abuse of its investigating function. This court will not compound the gross lack of judgment by sanctioning such abuse.
We emphasize that we are not condemning, per se, contact between legislators and the Commission. Rather, we hold only that under the circumstances of this case, this court cannot affix its imprimatur to either the abuse of process by third-persons or, more importantly, the Commission's response to that abuse. Congress, by requiring the SEC to request judicial enforcement of its subpoenas, could not have intended such a result.
With these principles in mind, it is important to reexamine the particular facts of the case. The agency knew its original source, Senator Weicker, was a staunch opponent of loan guarantees. On June 19, Aussenberg called Weicker's legislative assistant, Timothy Keeney, in response to Weicker's letter. Keeney supplied Aussenberg with information and material relating to Carney's use of the word "commitments" in the April 27 report. Thus, Aussenberg learned from Kenney that Weicker's allegations against W-P were grounded on a technical, almost semantical misstatement in the Report to Shareholders. While we cannot and will not assess the merits of the allegations in these proceedings, the trivial nature of the original charges against respondents is relevant to our assessment of the agency's conduct. In our judgment, any reasonable individual presented with a charge that Carney violated Rule 10b-5 by use of the word "commitments" instead of "Letters of Intent," would conclude that under these circumstances, the charge was patently frivolous.
Keeney next supplied Aussenberg with the name of Arthur T. Downey. He told Aussenberg that Downey represented CF&I, a competitor of W-P, who was fighting the loan guarantees. At this time, Aussenberg should have recognized that Keeney and Downey had pooled their efforts in an attempt to block the loan guarantees. Nevertheless, Aussenberg immediately called Downey. During the conversation, Downey informed Aussenberg that his client, CF&I, was "frustrated" by its inability to prevent the grant of the loan guarantees, and the information was offered to "vent" his "exasperation."
Certainly Aussenberg then knew that the SEC was being used. The events that followed only confirmed the fact. Shortly after June 19, Aussenberg received two phone calls from Kenney. In the first call, Keeney inquired of the status of the investigation. In the second, Keeney advised that Senator Weicker was considering the introduction of an amendment in the Senate of the United States barring loan guarantees to companies under investigation by the Commission. Aussenberg objected to the amendment, yet Weicker introduced it anyway. Under these circumstances, it must have been apparent to Aussenberg that Keeney's telephone calls were a means of confirming the existence of the investigation, so that Weicker's amendment would have a basis in fact.
Despite the overwhelming evidence that the administrative role was being subverted, the SEC continued to utilize Keeney and Downey as sources for the record establishes that Aussenberg had three further conversations with Keeney and one with Downey. *fn32"
It is also significant that from the time W-P learned of the SEC's inquiry on June 25, it cooperated to the fullest extent possible. On July 2, the company voluntarily turned over numerous documents. *fn33" The President and Chief Executive Officer was produced for a deposition within 48 hours of demand. Finally, W-P's general counsel, Mr. Raynovich agreed during the August 3 deposition to submit to a deposition on August 6. Thus, the SEC was not confronted with a recalcitrant party who was seeking to hinder its investigation.

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