A great story of the SEC and the way a hippy, former CPA, dealt with bureaucracy.
This is from a private unpublished manuscript.
"One Monday morning in 1974,
I get a phone call from a man who identifies himself at Matthew Brodsky.
I am not there at the time....
One Monday morning in 1974, I get a phone call from a man who identifies himself at Matthew Brodsky. I am not there at the time and he leaves a message with Barbara. He says that he is a lawyer with the Securities and Exchange Commission. He tells Barbara that he wants me to come to his office on Wednesday morning at ten A.M. He tells her that, if I don’t call him back and agree that I am going to show up, he will issue a subpoena.
"I am pretty sure that I know
what the call is about. I had been an officer and a member of
the Board of Directors of two successful ventures: Comprehensive Resources
Corporation of New York and Geodynamic Oil and Gas of Philadelphia.
I had run the Washington office for both. My function was to raise
venture capital in the DC area. I had succeeded and lots of money
had come in. But I had little influence and no decision-making
authority. I suspected that both companies were being investigated
because of the highly leveraged investment structure that resulted in
extremely good tax benefits for those who invested. Both companies
had successfully completed two public offerings and many private placements
and I was sure that the government wanted to prevent other companies
from using the same financial structure before it became a threat to
Federal revenues. Already a revision to the Internal Revenue Code
was being deliberated which would stop anybody else from doing what
we had done.
Before I call him back, I ask a wise friend's advice: “Just go on down there now with an empty mind and see what happens,” he says. I call Brodsky back. “There’s no reason to wait until Wednesday,” I say. “I’m not booked up. I can come on down right now.”
“No, we don’t want you here until Wednesday. If you are not going to cooperate, I can issue a subpoena.”
“I am trying to cooperate,”
“I have a court reporter
coming in on Wednesday morning and that is the time to come in.”
“OK,” I say and hang up.
Then I immediately get on the
bus and head for Brodsky’s office at the SEC. When his secretary
goes into his office and tells him my name, he immediately comes out.
“Sir, I told you that we don’t want you here until Wednesday. We are not prepared for you now. Do you understand?”
I say nothing.
“We are going to take your
deposition. We have to have a stenographer here for that purpose
and that is going to happen on Wednesday; not before. Since you
are here, I am going to serve you with a subpoena. Would you please
have a seat while I prepare it.” He disappears into his office.
I take a seat. It is a large room with eight secretaries working behind their desks. SEC lawyers’ private offices are behind the desks. It is a cold day. I am wearing a business suit and overcoat. While I am waiting, I remove my overcoat. For some reason that is beyond my conscious mind, I then remove my suit jacket, then my vest, then I remove my tie, then my shirt and then my undershirt. As I am removing my shirt, I notice that a couple of secretaries who have been eyeing me get up from their desks and leave the room. By the time my undershirt is off, every secretary has fled, including Brodsky’s who has gone into his office. Immediately he emerges from his office with the subpoena in his hand. He finds me standing naked from the waist up with my garments draped over my arm. His manner is very different. He addresses me like he was talking to a mental patient:
“Thank you for coming in today, sir. Now this paper that I am giving you is called a subpoena. It is an invitation to come back here to the office in two days on Wednesday. And it is a serious invitation. If you don’t accept the invitation, a policeman will come and get you. Now you wouldn’t want that to happen, so I hope you will come. Do you understand?”
I say nothing, but nod my head taking the subpoena from his hand. As I walk out he says: “Thank you for coming in.” When I walk down the hall, I see people peering at me from the offices on either side. Word has spread that there is a maniac on the loose. I enter the elevator and the door closes, but don’t press the button until I have put all of my clothes back on. When I reach the first floor, I emerge dressed like every other male in the building, but I cannot restrain my laughter.
I take the bus back across town grinning all the way. The next morning, Tuesday, I show up again at Brodsky’s office. Brodsky comes out of his office again: “Hello, Mr. Burnet I really appreciate your coming in, but there may be some confusion. It’s tomorrow that we want you to be here. Tomorrow, Wednesday.” I leave in silence. When I show up on Wednesday for the deposition, I suspect that the SEC had given up any idea that they might try to make any kind of a case against me, not that I had broken any law. Neither had my associates. Nothing came of the SEC investigation, but my office-emptying striptease had removed any possibility of being hassled by the investigators. My former business associates spent months in dealing with the SEC and spent thousands in legal fees to defend themselves. But I never heard another word from Brodsky or the SEC."