As I have noted here before,
SEC enforcement actions are civil matters, meaning no matter how badly a defendant may lose the case he or she isn't going to prison. However, there is a one easy way to parlay this situation into jail time, and that is by perjuring yourself in sworn testimony or, similarly, by obstructing justice by making false statements to the SEC during its investigation.
Or, as one defendant is now learning the hard way, you can allegedly engage in both perjury and obstruction of justice to get yourself charged by the criminal authorities.
Yesterday, federal prosecutors in the Southern District of New York announced that they have charged Steven Hart with obstruction of justice and perjury relating to an SEC investigation. In 2009, the SEC was investigating, among other things, whether Hart, who was a portfolio manager at an investment firm, had conducted improper “match trades” or “cross trades” between his personal fund and a fund he managed. Prosecutors allege that on two occasions when an SEC attorney called Hart's investment firm to speak with the firm’s president, Hart received the call and impersonated the president. Pretending to be the president, Hart allegedly told the SEC, falsely, that (1) the president was aware of Hart's improper trading activity, but nevertheless wanted Hart to remain an employee of the firm; and (2) that the president had approved Hart’s match trading activity.
Prosecutors also allege that Hart obstructed justice because he after receiving an SEC subpoena for documents directed to the president, Hart produced documents to the SEC "without (1) informing anyone else at the Investment Firm about the subpoena, or (2) informing the SEC that it was Hart alone who responded to the subpoena."
In addition to the obstruction of justice alleged above, prosecutors claim that Hart committed perjury, as well, in his sworn testimony to the SEC. According to prosecutors, Hart falsely testified under oath that the president had approved of the match trades, and that that he and the president had discussed the SEC investigation and the president was aware that Hart had been subpoenaed to testify before the SEC.