A Securities and Exchange Commission (SEC) administrative hearing was held in December 1993 and as a result of Berliner failing to acknowledge the apparent conflicts between Rounds and Fainter the SEC administrative judge had no choice but to render the same adverse judgment against Rounds as he did against Fainter causing CIS to close it’s doors after 18 years in business. The SEC administrative judge questioned Berliner at the beginning of the hearing in court: “You are going to represent both Rounds and Fainter together?” Berliner responded emphatically “yes”. Ethically, Berliner should have voluntarily withdrawn from representing both parties and CIS due to the apparent conflicts between the parties.
Due to the closure of CIS, the SEC brought in Security Investor Protection Corporation (SIPC) to unwind the affairs of CIS. SIPC subsequently appointed a trustee, Stephen Snyder, who appointed his former law firm, Holme, Roberts and Owen (HRO), to handle the legal segment.
The El Paso civil trial involving the McCormick victims took place in March 1994 whereas CIS, Fainter, Rounds and all CIS Board Members were all named defendants. However, Rounds was the only defendant who was present at the trial. The plaintiff’s counsel took three weeks to present their case. Berliner took “20 minutes” to present the defense as Rounds was his only witness which Berliner asked only a few questions to Rounds. After Rounds got off the witness stand, one of the Texas plaintiff’s counsel leaned over and remarked to Rounds, “I assume you are going to sue Berliner.” Rounds’ was clearly upset at Berliner but held back his temper as he walked out of the courtroom. Rounds, in fact, did later sue Berliner.
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