Dec 16 (Reuters) - A federal appeals court on Friday rejected a New York lawyer's bid to overturn a lifetime ban preventing him from ever appearing before the Securities and Exchange Commission.

Steven Altman, a commercial litigator, argued that the SEC overstepped its authority by banning him based on alleged violations of New York's lawyer code of professional responsibility. But the U.S. Court of Appeals for the D.C. Circuit denied Altman's request to review the agency's decision.

"The Commission was entitled to rely on Altman's knowledge of and duty to conform to the New York Bar disciplinary rules," Judge Rogers wrote on behalf of the three-judge panel. The SEC found that Altman had broken three ethical rules and that his violations were "egregious, recurrent" and reflected a high degree of awareness, the court noted.

Altman, who argued his own case on appeal, said he was "disappointed with the court's decision" and that he intended to request a rehearing before a larger panel of the court. Failing that, he would appeal to the U.S. Supreme Court, he said.

The disciplinary action stemmed from taped phone conversations from 2004 between Altman and the lawyer for a company under investigation by the SEC. Altman claimed that he was trying to negotiate a severance package for his client who had been subpoenaed by the SEC in the probe. The SEC alleged that the calls contained evidence of Altman trying to extort money for his client in exchange for thwarting the investigation.

After filing an administrative proceeding against Altman, the SEC in November 2010 permanently banned Altman from ever appearing or practicing before the commission again. It was the first time a lawyer received a lifetime ban for ethics violations.

On appeal, Altman argued that the SEC lacked the authority to issue a lifetime ban based on state disciplinary rules. That was the exclusive province of the New York State disciplinary system, he argued, which never brought any charges against him.

The SEC has stated a policy of not bringing disciplinary proceedings against an attorney without a judicial determination that the lawyer violated federal securities laws. That policy does not prevent the commission from acting in certain circumstances, the D.C. Circuit found.

The last time the SEC brought an administrative proceeding against an attorney for alleged ethics violations was 1988, court documents show. But just because the agency let its powers "lie dormant" does not mean they were lost altogether, the court ruled.

The lifetime ban only prevents Altman from appearing before the SEC in administrative proceedings, not on his ability to practice law in New York or appear before courts. But Altman said the ban has inflicted a severe injury on his professional reputation.

In his appeal, Altman pointed to his otherwise unblemished disciplinary record and the significant community service he has performed. But the court found such factors could not undo his improper professional conduct.

Jacob Frankel, a former SEC lawyer, said the activities of lawyers were "an area of heightened vigilance" for the SEC's enforcement division. But the commission understands that it needs to tread carefully between clamping down on lawyer misconduct and respecting the attorney-client relationship, he said.

The case "certainly serves as a warning to counsel that all discussions between a lawyer and other parties are potentially discoverable," he said.

SEC spokesman John Nester said the commission was pleased the court recognized its authority to sanction attorneys. "The opinion ensures that when an attorney's unethical conduct threatens the integrity of the SEC's processes, the agency has the power to respond," he said in a statement.

The case is Altman v. SEC, U.S. Court of Appeals for the D.C. Circuit, No. 11-1067.

For Altman: Pro se.

For the SEC: Christopher Bruckmann.

(Reporting by Terry Baynes)

Follow us on Twitter: @ReutersLegal