United States Securities and Exchange Commission v. Aktiengesellschaft

Background

The Securities and Exchange Commission brought a discovery dispute concerning its second set of interrogatories—written questions that must be answered in writing and under oath. The Commission alleged that statements in bond offering memoranda and responses to due-diligence questionnaires were false and misleading. It asked the defendants to identify the people who drafted, reviewed, approved, or furnished information for those statements.

The defendants identified two or three people who were “responsible” for particular sections or responses. They also referred, under Federal Rule of Civil Procedure 33(d), to documents identified by Bates numbers. The Commission argued that these answers were inadequate.

Court’s Analysis

The court agreed that the responses were inadequate for three reasons. First, saying that a person was “responsible” did not specify whether that person drafted, reviewed, approved, or furnished information. The defendants were required to answer those questions under oath.

Second, the document references did not necessarily identify which people performed those activities. The court used Gunnar Krause as an example: he appeared on certain emails as a copied recipient, direct recipient, and drafter, while the defendants stated elsewhere that he was not connected to the challenged statements. Because the documents required interpretation and the Commission lacked the defendants’ context and understanding of them, the defendants could not shift the burden of deriving the answers to the Commission.

Third, the responses did not say whether the defendants knew of other people who had drafted, reviewed, approved, or furnished information but were not mentioned in the identified documents. Rule 33 requires interrogatories to be answered separately and fully in writing under oath. The court also held that the passage of time did not excuse the defendants from answering.

Ruling

The court ordered the defendants to supplement their responses to the Commission’s second set of interrogatories and to answer fully under oath to the best of their ability. The order stated that it disposed of Docket No. 77. Judge Jacqueline Scott Corley issued the order without oral argument.