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Kentucky Bar Association v. Wiest

Supreme Court of Kentucky

April 27, 2017



         On December 19, 2016, the Supreme Court of Ohio suspended Christopher David Wiest[1] for two years, with the second year stayed on the condition he engage in no further misconduct. Thereafter, the Kentucky Bar Association (KBA) filed a petition with this Court asking that we impose reciprocal discipline under SCR 3.435(4). We ordered Wiest to show cause, if any, why we should not impose said discipline. Wiest responded to our show-cause order; however, we hold that he failed to prove by substantial evidence that the grounds set forth in SCR 3.435(4)(a) and (b) were met in his case. Because Wiest failed to show sufficient cause, this Court hereby suspends him from the practice of law, as consistent with the order of the Ohio Supreme Court.

         I. BACKGROUND

         Wiest represented Stanley Works in matters which typically concerned the company's proposed mergers, acquisitions, and divestitures. During this representation, Wiest personally purchased 35, 000 shares of InfoLogix stock- a company Wiest knew Stanley considered acquiring. In the course of his representation of Stanley, Wiest received an email indicating that his client was willing to pay $4.75 per share for the InfoLogix stock. He had never heard of the company before this email. He understood that Stanley's interest in acquiring InfoLogix was confidential until the acquisition became public later that year.

         InfoLogix announced in October 2010 that its stock had been delisted from the NASDAQ stock market. Wiest learned of this development and purchased 10, 000 shares of the stock using his 401k account. Days later, he purchased another 25, 000 shares. All of these purchases were at amounts well under what he knew Stanley would be paying if the acquisition went through (ranging from $2.84 to $1.95). He did not communicate with Stanley at any point about his purchase of the stock. He eventually sold 13, 510 of his shares for $1.35 per share, taking a loss of almost $18, 000. At that point, he was left with 21, 490 shares.

          In December, Stanley announced it was acquiring InfoLogix and paid $4.75 per share for its stock. Wiest contacted an attorney with experience in dealing with the Securities and Exchange Commission (SEC) for advice. On advice of that counsel, Wiest sold his remaining InfoLogix stock for a pretax profit of more than $56, 000. The SEC issued a subpoena compelling Wiest's production of Stanley's confidential information. Wiest provided Stanley's confidential information to the SEC without communicating with Stanley regarding the investigation.

         Wiest was initially charged with violating four ethical rules. However, two of these charges were dismissed by the Ohio Board of Professional Conduct panel assigned to his case and another was later dismissed by the Ohio Supreme Court. Specifically, the panel dismissed one charge against Wiest for providing confidential client information to the SEC without Stanley's consent and another charge involving his use of Stanley's confidential information about InfoLogix for his personal stock trading without seeking Stanley's informed consent. The panel dismissed these charges on due-process grounds, based on its finding that Wiest was not given adequate notice of the charges. The Ohio Supreme Court upheld the panel's dismissal of these two charges. That Court also dismissed another charge related to Wiest's disclosure of Stanley's financial information to the SEC without the company's consent on due process grounds.

         With all other charges against Wiest dismissed, the Ohio Supreme Court considered the sole remaining allegation-that he had violated Ohio Rule of Professional Conduct 8.4(c) (which is comparable to our SCR 3.130-8.4(c)) for "engag[ing] in conduct involving dishonesty, fraud, deceit, or misrepresentation.*' Under this charge, the Cincinnati Bar Association, which filed the complaint, asserted that Wiest used confidential information from his representation of Stanley in his purchase of InfoLogix stock and did not consult with Stanley before he did so.

         In responding to this charge, Wiest insisted that his purchase of InfoLogix stock was not based on any confidential information he obtained through his representation of Stanley. He also stated that, in his personal opinion, Stanley did not plan to go ahead with the acquisition. The panel, however, was unconvinced and found that he had engaged in dishonest and deceitful behavior through using Stanley's confidential information for personal monetary gain arid failing to obtain Stanley's or his firm's informed consent before doing so. On appeal to the Ohio Supreme Court, Wiest argued that there was not clear and convincing evidence that he went forward with the purchase based on Stanley's confidential information obtained through his representation of the company.

         In finding that Wiest violated the rule in question, the Ohio Supreme Court stated that the parties "misapprehend[ed] the true nature of his dishonesty and deceit and overlook[ed] Wiest's profound failure to appreciate what is perhaps one of the most fundamental of his professional obligations- his duty to communicate openly with his client." Cincinnati Bar Assn. v. Wiest, No. 2016-0263, 2016 WL 7386245, at *5 (Ohio Dec. 19, 2016). That Court further pointed out that while the charges "focused primarily on Wiest's use of Stanley's confidential information, they also alleged that he failed to disclose his actions to his client (or his firm) or to seek his client's informed consent to his actions." Id. It went on to explain that "it is Wiest's repeated concealment of information that he was duty-bound to communicate to his client from which we infer his intent to engage in dishonesty, fraud, deceit, or misrepresentation." Id. at *7. Ultimately, the court imposed a greater sanction than that recommended by the panel and suspended Wiest from the practice of law in Ohio for two years, with the second year stayed on the condition that he engage in no further misconduct.

         In response to this Court's show cause order, Wiest asserts that there was fraud in the Ohio proceedings and that any misconduct warrants a substantially different sanction than that imposed in Ohio. For the following reasons, we disagree and impose reciprocal discipline under SCR 3.435(4).

         II. ANALYSIS

         If an attorney licensed to practice law in this Commonwealth receives discipline in another jurisdiction, SCR 3.435(4) generally requires this Court to impose identical discipline. Subsections (4)(a) and (b) read, in pertinent part: "(4) . . . this Court shall impose the identical discipline unless Respondent proves by substantial evidence: (a) a lack of jurisdiction or fraud in the out-of-state disciplinary proceeding, or (b) that misconduct established warrants substantially different discipline in this State." Furthermore, SCR 3.435(4)(c) requires this Court to recognize that, in the absence of the circumstances set forth in subsections (a) and (b), "a final adjudication in another jurisdiction that an attorney has been guilty of misconduct shall establish conclusively the misconduct for purposes of a disciplinary proceeding in this State."

         A. Fraud

         Wiest first takes issue with the Ohio Supreme Court's statement that "he remained silent upon learning that his client was moving forward with its acquisition of that company and once again remained silent when the SEC issued a subpoena compelling him to produce his client's confidential information." Id. He asserts the Court should not have relied upon anything related to the SEC, as it had previously dismissed the SEC-related charges for lack of notice. Wiest contends ...

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