Lawyers Of The Year 2006
DAVID P. BERGERS
Boston
Born: July, 5, 1967; Mount Kisco, N.Y.
Education: Yale Law School (1992); Eastern Nazarene College (1989)
Bar admission: 1992
Professional experience: SEC (1998-2000, 2001-present); Tucker Anthony (2000-2001); Lowenthal & Abrams (1993-1995); Choate, Hall & Stewart (1992-1993, 1995-1998)
The staff at the Boston office of the Securities and Exchange Commission has grown by 50 percent in the last seven years, prompting a recent move to more spacious digs on Arch Street.
The larger office has had plenty of work to keep it busy. More than $500 million in settlements has been agreed to by major financial firms such as Fleet, MFS and Prudential over alleged deceptive market timing. Generally, the funds raised through the settlements are designated for investors who were victims of the alleged fraud.
The SEC has also taken numerous emergency actions to stop fraud. Some of those actions have targeted companies allegedly trying to defraud immigrant groups.
The settlements have come to fruition under the watch of David P. Bergers, who earlier this year was promoted from associate district administrator for enforcement to head of the SEC's Boston office.
Local securities lawyers call Bergers fair and professional — but tough. When asked how he made it to the No. 1 spot in Boston at the tender age of 39, Bergers modestly credits his colleagues.
"All the credit goes to our talented team of professionals — over 100 lawyers, accountants and other staff members — who have always been committed to the mission of protecting investors," he says, adding that he is "honored" to work with the group.
"The goal is to get the money back to the right people," he adds, noting that the Boston office has started conducting seminars for seniors around New England in an effort to educate investors.
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Q. You've gone from a staff of 80 to a staff of almost 120. Where has the growth come, and what challenges have come with it?
A. We've grown significantly on the examination side, given the number of investment advisors, brokerage dealers and transfer agents in the New England region subject to registration and examination. We have responsibility for all six New England states.
The greatest challenge we face with this rapid growth is to make sure we provide the staff with the resources and training necessary to the tasks at hand. However, we also benefit greatly from the training and expertise many of our new staff members bring to the table. In many cases, we learn as much from the newcomers as they learn from us. Most people come here with significant legal or industry experience, which enables them to hit the ground running and helps them to know where to look for misconduct. We never lose sight of the fact that we have a public trust and we work hard to earn that trust every day.
Q. Does your work here at all influence your personal investing philosophy or the advice you would give to others when it comes to investing?
A. On holdings, the commission has a certain number of restrictions so our work won't be influenced by our holdings. But as far as advice I would give someone looking to invest, I would tell them: Do your homework. Verify the representations being made to you. Make sure people are who they say they are. So many of the sad stories we see here could have been avoided if the investors had taken the time to check out an investment opportunity before they invested. It doesn't matter if you are a beginner or have been investing for many years; it's never too early or too late to start asking questions. Don't feel intimidated. Remember, it's your money at stake. You are paying for the assistance of a financial professional. A good financial professional will welcome your questions, no matter how basic. Once you have verified that the salesperson is legitimate, watch out for fees and expenses. Even small fees can, and do, add up and eat into a significant chunk of the returns.
Q. Following all of the recent financial scandals that have resulted in SEC actions, have you seen any changes in the culture of the companies you regulate?
A. We have seen changes in the cultures of individual companies. One large company that was going through a difficult time hired a new CEO to bring about a culture change in the organization. Shortly after he came to the company, the CEO learned of a significant problem involving senior officers at the firm. He had a choice as to whether to handle the problem quietly or to let investors and regulators know. He chose to disclose it to the SEC and other regulators. The company also took disciplinary action and made the injured client whole. The SEC later brought charges, that are still pending, against a number of former employees, but it did not bring a case against the company in light of its extraordinary cooperation.
I think the vast majority of companies are trying to get it right. They want to make money for investors and they want to do it the right way — by telling investors the truth. My advice to companies, to executives and to board members is simple: Do things the right way. The tone at the top is what counts. If management is seeking to make the numbers at any cost, that attitude will prevail. If management is emphasizing fairness and doing things the right way, that's what you'll see throughout the company.
Q. If a wrongdoing is self-reported, does that change the sanction?
A. We certainly take cooperation, including self-reporting, into account when determining what recommendation to make to the commission about the consequences for that company or those individuals. Our goal is to get to the truth as quickly as possible. When a company is helping us to do that, it makes our investigation easier, and we try to make sure that is reflected in the ultimate sanctions that are imposed. … We continue to look hard at the conduct of gatekeepers — the auditors, the directors, the lawyers — because they are the first line of protection for investors. In the last two years, our office has brought charges against six CEOs, one outside director, four CFOs and two general counsels in connection with a wide variety of conduct. And we've sought officer and director bars against 21 individuals.
Q. In 2003, the head of the Boston office resigned, citing "press coverage of certain matters involving the Boston office." At the time, the office was criticized over its handling of market timing allegations against Putnam Investments. How did the office respond to the criticism?
A. First, let me say that I'm very proud of our office's record on market timing, and that includes the case we brought against Putnam as well as those we brought against MFS, Prudential and two Fleet subsidiaries — all of which enabled us to recover well over half-a-billion dollars for investors. The Boston office has been aggressively policing the markets and protecting investors for years — before, during and since market-timing matters were in the news — and we'll continue to do that.
As regulators, we recognize criticism is inevitable, we take it very seriously and we strive to learn from it. I believe the office dealt with the challenges posed by the criticism we received, as well as the challenge of responding to market timing, with extreme professionalism, commitment and dedication.
Q. Someone with SEC experience must be in high demand in the private world. Is it hard to retain talent?
A. We certainly have had people recruited away by law firms, financial service firms and compliance consultants. Good people are in demand everywhere. I'm just very proud of the staff here, because we have so many wonderful people. We try to motivate the people here with the work we're doing because I can't think of any place that has a greater sense of responsibility of trying to make sure people get all the information they need to make their investments.
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David Bergers on ...
His most memorable moment at law school: Being grilled by [U.S. Supreme Court] Justice [Antonin] Scalia on a case opinion he wrote
Highlight of his legal career: Having the opportunity to work at the SEC and serve the public
How he celebrates a big win: By acknowledging the work of all the people here in this office responsible for it
How he deals with a big loss: We try to learn from it and use that knowledge to inform our future efforts.
His role models: My grandfather
One thing he would change about the practice of law: The public's perception of lawyers
What he does to relax: Singing with the Tanglewood Festival Chorus, reading, watching baseball
His all-time favorite film or book: Book: "The Brothers Karamazov" by Fyodor Dostoevsky; film: "Schindler's List"
One thing about him that might surprise other people: Despite being a New Yorker, I'm an avid Red Sox fan.
What has kept him in the practice of law: The wide variety of engaging issues that confront me every day
The biggest challenge facing Massachusetts courts: Based on the experiences of trial lawyers in our office, it would be the numerous advances in technology that constantly change the way evidence is being presented in court. ... I also believe that judicial salaries continue to be a problem.
The most important legal decision of the last 25 years: U.S. v. O'Hagan, the 1997 U.S. Supreme Court decision that adopted the misappropriation theory of insider trading.