I've been following the plight of one Melissa Mahler on this blog since September 2009. As you may recall, Mahler was sued by the SEC following an epically poor effort at insider trading. The SEC alleged that while she was working as an associate at law firm Nixon Peabody, her client Teleplus Consumer Services Inc. called her and asked her to draft a letter of intent about a possible merger between Teleplus and a company called Rooms.com. 15 minutes later, Mahler allegedly called her broker and told him to buy 10,000 shares of Teleplus at 12 cents per share. The stock price jumped when the deal was announced two days later, giving her a quick $5,800 profit.

Yesterday, a court approved an agreement between Mahler and the SEC to settle the lawsuit against her that requires Mahler to pay disgorgement, interest, and a penalty totaling $13,792, according to the Blog of the Legal Times. Mahler's lawyer declined to comment to the BLT as to whether Mahler faces any disciplinary charges.

Of course, a $13,000 settlement of the SEC's civil case and potential discipline from some bar association may be the least of Mahler's worries. As discussed here, on October 15, 2009, federal prosecutors in Washington charged Mahler with the crime of making false statements to SEC investigators under 18 USC Section 1001. According to prosecutors, on Nov. 29, 2004, Mahler conducted a telephone interview with two SEC lawyers who interviewed Mahler over the telephone and asked her about the Teleplus trade. In that interview, “Mahler allegedly denied that she placed the order and said she only found out about the trade when she received her account statement from her broker. She also said her husband had the authority to make purchases on her account.” In fact, prosecutors allege, “Mahler knew about the trade, having allegedly made it herself. The charges also say that her husband does not have the authority to make trades on her brokerage account.”

So while the SEC's case against Mahler may be over, a much bigger problem still appears to loom ahead.