Court Rules Bernstein Litowitz Can Hire Former SEC Chief Litigation Counsel--No "Appearance of Impropriety"

Judge Rules Law Firm in Litigation With Musk Can Hire Ex-SEC Chief Litigation Counsel

The U.S. District Court for the Southern District of New York ruled Thursday that Bernstein Litowitz Berger & Grossmann can hire as a partner Jorge G. Tenreiro, who held a number of positions at the U.S. Securities and Exchange Commission, including chief litigation counsel, and, most recently, served in the agency’s Office of Information Technology.

Defendant Elon Musk argued that the “extremely short time” that elapsed between the filing of an SEC action over the billionaire’s purchase of Twitter Inc. and Tenreiro’s outreach to BLB&G, which is lead counsel for the plaintiff, the Oklahoma Firefighters Pension and Retirement System, in a class action over the Twitter acquisition, created an “appearance of impropriety.”

But U.S. Magistrate Judge Gabriel W. Gorenstein disagreed.

“[T]he timing of Tenreiro’s departure appears to have been precipitated by his being assigned to detail in an office with a focus unrelated to his prior work and the agency’s offering of a voluntary separation package,” Gorenstein found. “More to the point, given that Tenreiro did not know that BLB&G was counsel in this case until sometime between March 15 and March 17, 2025, the length of the period between Tenreiro’s alleged involvement with SEC actions against Musk and outreach to BLB&G is immaterial.”

The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling

An SEC press release accompanying the civil complaint offered some reassurance. The hack’s take was a few million dollars. The flaw that allowed it to happen had been quickly patched. While the traders took “multiple steps to conceal their fraud,” the SEC’s “sophisticated analysis” cracked the case open. “Today’s action shows the SEC’s commitment and ability to unravel these schemes and identify the perpetrators even when they operate from outside our borders,” the agency’s head of enforcement said.

Both the SEC and the Department of Justice charged the hackers in absentia with securities and wire fraud. The SEC also charged seven traders, including two Americans, with participating in the conspiracy, describing the evidence against them as “overwhelming.”

That’s the official SEC version of events. But, when someone involved suggested I take another look, I set about trying to find out exactly what happened, and whether it could happen again. I interviewed people from the DOJ, Secret Service, SEC and the Cyber Police of Ukraine; talked to defendants under gag orders; and reviewed evidence seized during raids.

What I uncovered challenges the very foundation of the SEC’s case and signals danger ahead. After being easily breached, the SEC expended investigative resources on low-level scapegoats who were hardly criminal masterminds, if they were financial criminals at all. Meanwhile, the most culpable, and dangerous, players remain at large. The system that was hacked remains in place. And the Trump administration is cutting cybersecurity budgets, effectively undermining the ability of government agencies to defend themselves.

At the center of the story is a figure largely airbrushed from the official account.  

Builder. ai

And so if you are in the business of selling AI widgets, you might go to your mom and say “hey mom would you buy $1 billion of AI widgets from me,” and she would say “I’d love to honey but I don’t have $1 billion,” and you would say “that’s okay I’ll just buy $1 billion of cookies from you, which will give you the money to buy the widgets,” and she would say “but I’d have to bake a lot of cookies,” and you would say “no just bake one, the cookies are so good that I’ll pay a billion dollars for one,” and she would say “okay but do you have $1 billion,” and you would say “no but it’s fine we’ll just net the transactions.” Or variations on that theme. We have discussed some of those variations, which play a crucial role in a lot of tech market bubbles. As long as investors are investing on revenue rather than profitability, someone will find a way to pay for revenue.