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Mintz Prevails Over SEC in Closely-Watched First Circuit Case

Court of Appeals Completely Exonerates Senior Financial Services Executive

A controversial Securities and Exchange Commission (SEC) decision that levied sanctions against James D. Hopkins, a former product engineer at State Street Global Advisors, has been overturned by the Court of Appeals for the First Circuit.  The decision, which completely exonerates Mr. Hopkins, marks another significant victory for the Securities Litigation Practice of Mintz, Cohn, Ferris, Glovsky and Popeo, P.C. and is certain to feature prominently in the ongoing debate surrounding the SEC's use of administrative tribunals to prosecute securities law violations. 

"The First Circuit plainly shared our view that the Commission’s position was untenable, and, notwithstanding the deference the law accords to agency decisions, vacated the decision in its entirety," said Jack Sylvia, co-Chair of Mintz’s Securities Litigation Practice. “We are grateful that the First Circuit moved expeditiously to right this wrong, issuing its decision a mere five weeks after oral argument.”

The closely-watched case stemmed from charges brought in 2010 by the SEC, which alleged that Mr. Hopkins and co-defendant, John P. Flannery violated multiple securities laws in connection with communications to investors during the subprime mortgage crisis.  In 2011, after an eleven day trial, the SEC’s Chief Administrative Law Judge exonerated Mr. Hopkins and Mr. Flannery, dismissing all charges.  Following an appeal by the SEC’s Division of Enforcement, the Commission subsequently reversed its own judge – in a 3-2 split decision among the five-member panel – and imposed fines and additional sanctions against Mr. Hopkins. Mr. Hopkins promptly appealed the Commission’s decision to the First Circuit Court of Appeals.  On December 8, the Court of Appeals vacated the Commission’s decision in its entirety, concluding that the SEC not only failed to prove its case, but also “abused its discretion in holding Hopkins liable.”

The Mintz team, led by Mr. Sylvia, included attorneys Andrew N. Nathanson, Jessica C. Sergi, McKenzie E. Webster and Geoffrey A. Friedman.