I think you are confused. If the SEC advised N that it could never become compliant, it would have suspended trading. How would N be trading to this day? What I've heard is that N's SEC attorneys advised MK that N was a mess and would require a lot of work and money to clean up. If MK felt that he was sold a bad bill of goods, that falls squarely on his DD. But this SEC story is implausible, IMO.