During the '90s bull market, Silicon Valley was a den of "new-economy" capitalists. Judging by the Securities and Exchange Commission's caseload, it may have been a den of miscreants too.
The SEC's San Francisco office, whose jurisdiction includes Silicon Valley, filed 33 lawsuits against alleged corporate wrongdoers in 2002, up 57% from 2001. That's more than twice the 24% increase in SEC suits nationwide.
Leading the charge from San Francisco is SEC District Administrator Helane Morrison. Her office has teamed with the Justice Department to speed investigations and file lawsuits faster, she said.
"We've tried to be creative, breaking the cases into pieces, bringing a smaller number of actions in the early stages and then keep investigating," said Morrison, who joined the SEC in 1996 from a career in private law practice.
Not everyone says Morrison's office is being fair.
Robert Friese, a San Francisco lawyer who represents accused insider traders, said the SEC is dredging up old cases and filing suits for violations that once would have drawn only warning letters. Roiled by the resignation of Chairman Harvey L. Pitt in November, the SEC now is trying to burnish its own sullied reputation, he said.
"The mentality is to hang high anyone who even looks like a corporate executive," Friese said.
Friese said that Morrison's office told one of his clients -- Michael Ofstedahl, a former vice president at Milpitas-based Adaptec Inc. -- that it had dropped an insider-trading investigation, only to charge him in July 2002 with giving his dentist inside tips. Ofstedahl has denied the charge.
SEC officials dismiss such criticism.
"If we sue the person within three months of a fraud, we're rushing to judgment; if it takes us three years, we're pulling it out of the freezer," said Robert Mitchell, the SEC's head of enforcement in San Francisco.
About 60% of the time, defendants have chosen to settle SEC charges, he said.