Argument
I. The Court should assess the particular circumstances rather than treat the insider-trading label as a conclusive finding of moral turpitude
The State Bar must establish moral turpitude by clear and convincing evidence. In the Matter of Harold Salas requires reasonable doubts to be resolved in favor of the accused lawyer and an innocent inference to be selected when equally reasonable inferences arise from a proven fact. That demanding standard applies to the actual conduct at issue, not merely to a characterization supplied by opposing counsel.
Watkins does not ask the Court to vacate her criminal plea or disregard its admitted factual basis. Chadwick v. State Bar permits examination of that basis in deciding whether the particular facts and circumstances establish moral turpitude. It does not make the felony label dispositive. Chadwick expressly applies the same ethical test whether misconduct is a felony, misdemeanor, or not a crime at all. The question here is the conduct and any contemporaneous excuse, not whether Watkins's conviction carries a more serious label than Chadwick's.
A. The plea establishes serious adverse facts, but the threshold inquiry still requires their full context
The Court must confront the chronology directly. The admitted factual basis says Fort's general counsel told Watkins about the proposed acquisition on the morning of August 16 and requested patent files for due diligence. Watkins placed an order for 1,000 shares around midday, before the merger announcement. She later sold the exchanged shares for a $14,000 profit. She also told the SEC that she had not known of the merger when she purchased. Those facts support the State Bar's argument and cannot be omitted or replaced by a claim that no confidential communication occurred.
At the same time, the admitted criminal conduct does not dispense with the separate examination Chadwick requires. The State Bar's opening summary is not additional evidence. The factual basis identifies the communication as coming from Fort's general counsel, while the hearing summary describes knowledge gained through lawyers representing the acquiring company. The Court should use the actual admitted document and testimony rather than treat an advocate's broader description as a new admission. This distinction does not erase the disclosure; it keeps the threshold decision tied to the record.
The plea also records the statement Watkins made to the SEC, but the fact that she made a denial is not itself a separate express admission that she consciously fabricated that denial. Whether that statement reflects deliberate dishonesty, incomplete recollection, or an honestly held but mistaken account must be evaluated under the applicable burden and in light of the hearing evidence. The Court should not infer more than the actual admissions establish.
B. Watkins's account concerns distraction at the time of the purchase, not a request to excuse misconduct through later cooperation
Chadwick rejected an excuse based on willingness to cooperate with the SEC after the trading. An excuse must relate to conduct when the violation occurred. Watkins's argument is directed to that very period: she had undergone rotator-cuff surgery July 14, returned to work five days later despite pain and limited mobility, and had been prescribed Percocet for pain and Ambien for sleep. She describes poor memory and distraction during the period from surgery through September.
This is not an assertion that ordinary discomfort automatically authorizes insider trading. Nor does Watkins claim the medication compelled the trade or eliminated all ability to reason. She expressly rejected those propositions. Her narrower account is that pain and medication may have left her insufficiently attentive to the communication's significance and explain why she grasped the file-transfer task without clearly registering or remembering the merger discussion. That explanation addresses the circumstances surrounding the purchase, which is the temporal inquiry Chadwick identifies.
The State Bar emphasizes that fifty tablets would have been exhausted before August 16 if taken at three per day. The premise is not established. Watkins testified that she took medication intermittently in reaction to pain, sometimes for a day or two and then stopped. Arithmetic based on continuous daily dosing does not prove that she had ceased taking it by the relevant date. Conversely, Watkins cannot affirmatively establish from uncertain memory that she took a particular dose that morning. The record contains uncertainty, not a medical finding conclusively disproving her account.
There are limits to this explanation. Watkins offered no medical expert evidence establishing impairment at the purchase, did not complain to her doctor of mental incapacity, and acknowledged no delirium or inability to understand moral duties. Her colleagues' purported observations were stricken; the Court must not rely on them. Those weaknesses prevent presenting a proven diagnosis or a sweeping incapacity defense. They do not necessarily make conscious deception the only reasonable explanation for her limited recollection and distracted attention. The clear-and-convincing burden remains on the State Bar.
C. The public reasons for the investment and the file handling support a narrower inference about her conduct
Watkins had followed Fort for years. Before the private communication, public share prices had increased, major brokerages had upgraded recommendations, and message boards discussed Fort as a potential merger target. These public sources do not authorize trading on material nonpublic information, and public speculation is not equivalent to confirmation of an impending acquisition. But they provide an independent explanation for her longstanding investment interest rather than leaving the private call as the only conceivable source of the decision.
She also regarded the involvement of a respected intellectual-property firm as positive for Fort and believed the file transfer concerned a change in patent representation. She billed 0.7 hour to review files and prepare a transmittal letter. That record shows she understood and acted on a task; it also is consistent with her explanation that she did not treat it as urgent merger work and waited for further contact. Functional performance of a limited clerical-professional task does not by itself prove complete recollection of every part of the discussion.
The Court should not use these circumstances to contradict the admitted chronology or conclude that the public recommendations negate criminal liability. Their proper role is in evaluating the additional moral characterization and the claimed contemporaneous distraction. Taken together, they provide the basis for distinguishing a poorly attentive, independently contemplated investment from the State Bar's most culpable inference of calculated exploitation followed by fabricated explanations. If the Court finds the admissions and circumstances eliminate that distinction, Chadwick presents a substantial obstacle. But the finding must follow from the required individualized assessment, rather than a rule that a plea ends the inquiry.
II. Watkins's hearing testimony does not establish a separate act of moral turpitude by clear and convincing evidence
A. Salas distinguishes a rejected account from a demonstrated lie
In Salas, the hearing court inferred moral turpitude from testimony it did not accept about the purpose of a payment. The reviewing court required more: clear and convincing proof of dishonesty, not merely a different recollection or an honest, even mistaken, belief in innocence. When competing inferences are equally reasonable, the inference favoring innocence controls.
That distinction is essential here. Watkins repeatedly qualified her account by reference to her best recollection and acknowledged that it was incomplete. She did not unequivocally deny that the August 16 conversation occurred. Asked about the admitted statement, she said that was what she had agreed to. She explained that she understood the account to reflect Darmond's recollection and expected testimony and could not claim a clear contrary memory. Those qualifications differ from a categorical effort to persuade the Court that an admitted event was impossible.
B. The differences from Salas require candor, but do not automatically prove intentional falsehood
The State Bar has a substantial distinction: the plea in Salas was silent on the particular payment explanation, while Watkins's factual basis expressly places the merger communication before her purchase. Counsel cannot claim the documents are equally silent. The chronology is binding evidence against her and can impeach an inconsistent account. Her explanation that she accepted the plea because it secured probation also does not allow her to withdraw truthful admissions whenever they become inconvenient in discipline proceedings.
The narrower issue is whether her present description of memory itself is knowingly false. A person can accept a factual account based on other reliable evidence while honestly lacking an independent recollection of every detail. Watkins said she could neither deny the communication nor agree from memory that it led to the stock order. That position may be unpersuasive as a defense to the admitted offense, but its weakness does not alone prove that her claimed memory limitations were invented.
Her initial SEC denial is adverse evidence. It occurred many months after the surgery, and the State Bar can argue that its certainty conflicts with the uncertainty she now describes. Watkins explained that the unexpected call shook her and that she gave what remains her best recollection. The Court need not accept that explanation merely because it is offered. Under Salas, however, rejection of an explanation and affirmative clear proof of deliberate fabrication are different conclusions requiring separate support.
The absence of expert proof of drug effects similarly limits the weight of her explanation but does not itself establish a lie about memory. Watkins did not claim to diagnose the drugs' actual medical effects and said she was not the person qualified to do so. The Court should evaluate the record as it exists, without treating stricken colleague statements as corroboration or an unsupported medical assumption as conclusive disproof.
C. The threshold finding should not rest on choosing the most accusatory inference from uncertain recollection
Watkins's plea and the hearing evidence present difficult facts, and her investment was not rendered lawful by public optimism or postoperative pain. But this brief addresses the specified moral-turpitude questions, not punishment or a request for leniency. The State Bar must show the requisite culpability in the underlying circumstances and must separately prove any contention that her hearing testimony itself was dishonest.
On the latter issue, the record supports an honest if imperfect recollection as a reasonable inference. Salas prohibits converting that possibility into a finding of lying merely because the Court credits the plea's chronology over present memory. The Court should decline to find separate moral turpitude based on Watkins's qualified testimony and should assess the underlying conduct with the contemporaneous circumstances and burden of proof fully in view. Neither the conviction label nor dissatisfaction with a witness's explanation substitutes for that required analysis.