Securities and Exchange Commission v. Alderson
- Valerie Caproni
- 1:18-cv-04930
- U.S. District Court · Southern District of New York
- 4
In SEC v. Alderson, Judge Caproni ordered DVU to produce two documents after finding they were relevant, covered by a privilege waiver, and not burdensome.
Brite Advisors USA, Inc. (called DVU in the order) must produce the remaining documents to the parties; the documents may affect the SEC’s claims against Benjamin Alderson and Bradley Hamilton’s defenses.
What happened
In Securities and Exchange Commission v. Alderson, Defendants Benjamin Alderson and Bradley Hamilton sought production or unredaction of 14 documents held by nonparty Brite Advisors USA, Inc., which the order calls DVU. The Court had already denied production of 12 documents and reviewed the remaining documents privately.
DVU argued that the remaining documents were outside the time limit of its privilege waiver, that Alderson could not use selective waiver because DVU was not an opposing party, and that producing the documents would impose an undue burden. The documents concerned past practices related to the creation and maintenance of books and records relevant to the Securities and Exchange Commission’s claims against Alderson.
Judge Valerie Caproni ordered DVU to produce the remaining documents to the parties by January 17, 2020. The Court found that the documents fell within the waiver, that DVU and Alderson were sufficiently adversarial for selective-waiver principles to apply, and that production of fewer than 20 pages would not impose an undue burden.
The detailed version
- Securities and Exchange Commission v. Alderson · No. 1:18-cv-04930
- Valerie Caproni
- Jan. 14, 2020
Background
Defendants Benjamin Alderson and Bradley Hamilton requested the production or unredaction of 14 documents held by nonparty Brite Advisors USA, Inc., referred to in the order as “DVU.” The Court previously denied production of 12 documents and ordered the remaining documents to be submitted for private judicial review. The remaining materials were identified as CTRL00478418 and CTRL01156482, CTRL01156483, and CTRL01156542.
The Court found that the remaining documents were relevant to the claims and defenses in the case, particularly the Securities and Exchange Commission’s claim that Alderson aided and abetted DVU’s alleged violations of federal investment-adviser books-and-records requirements under 15 U.S.C. § 80b-4 and 17 C.F.R. § 275.204-2.
Privilege Waiver
DVU had previously waived attorney-client privilege for documents concerning certain subjects, including the creation and maintenance of books and records alleged in the complaint, during the period from July 2012 through November 23, 2015. The disputed documents were created on April 13, 2016, and July 11–12, 2016. DVU argued that the documents were outside the waiver’s time period, but did not dispute that they concerned the subjects covered by the waiver.
The Court rejected DVU’s argument. It held that although the communications occurred after November 23, 2015, they discussed past practices and therefore related to the creation and maintenance of books and records during the covered period. The Court also held that a limited expansion of the waiver’s end date was appropriate because the documents were relevant to a claim the SEC was actively pursuing against Alderson.
Selective Waiver and Burden
DVU argued that Alderson could not benefit from selective waiver because DVU was not a party or adversary in the case. The Court disagreed. It found that Alderson had asserted advice-of-counsel and similar arguments to shift responsibility for alleged wrongdoing to DVU, while DVU resisted those efforts. In that setting, the Court concluded that DVU and Alderson were sufficiently adversarial to create a risk that protected documents could be selectively disclosed for DVU’s benefit.
The Court also rejected DVU’s argument that production would cause an undue burden or expense under Federal Rule of Civil Procedure 45. The Court noted that the documents had already been located and totaled fewer than 20 pages.
Ruling
Judge Valerie Caproni ordered DVU to produce the remaining documents to the parties no later than January 17, 2020. The Court concluded that DVU had not met its burden of showing that the documents should be withheld despite their relevance and their coverage by the privilege waiver.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.