Securities and Exchange Commission v. Medallion Financial Corp.

Nature of the Order

The court entered a stipulated confidentiality order requested jointly by the Securities and Exchange Commission and defendants Medallion Financial Corp., Andrew Murstein, Lawrence Meyers, and Ichabod’s Cranium, Inc. The order governs confidential documents and information produced by parties or nonparties during discovery, and it may also apply to related litigation that may arise in the future.

Information That May Be Designated Confidential

A party, a nonparty producing information, or a federal or state banking regulator with a legal right to seek nondisclosure may designate nonpublic information as confidential if it has not previously been publicly disclosed. The order lists several categories, including sensitive commercial data, trade secrets, financial and customer information, bank examination and regulatory materials, personal and tax information, personnel records, medical and legal records, and other material that the designating party in good faith believes is entitled to protection under Federal Rule of Civil Procedure 26(c)(1)(G) or applicable case law.

Challenges to Confidentiality Designations

A receiving party may challenge a designation by giving written notice that identifies the specific material and the basis for the challenge. The designating party generally has seven business days to agree to remove the designation or arrange a meeting between counsel. If the dispute is not resolved, the designating party must provide a written explanation within five business days after that meeting. The receiving party may then ask the court to remove the designation. The designating party bears the burden of showing that the designation is proper.

Use and Filing of Confidential Material

Confidential material may be shown only to specified people involved in the case, including attorneys, parties, experts, consultants, actual or proposed witnesses, court personnel, and others necessary to review it for the litigation. Before receiving access, each person must be shown the order and advised of the confidentiality obligation.

The parties may use confidential discovery material publicly only as needed for the litigation, such as in briefs, exhibits, hearings, or trial testimony. They must make reasonable efforts to avoid unnecessary disclosure through careful selection, redactions, summaries, descriptions, and agreements. A party seeking to file confidential material under seal must generally first seek the court’s permission and show good cause. The order also establishes advance-notice procedures and deadlines for a designating party to seek sealing.

Inadvertent Disclosure and Privilege

The order provides that inadvertent production of material does not waive claims of attorney-client privilege, attorney work-product protection, or other applicable protection. A receiving party that identifies potentially privileged material must stop inspecting, using, or disclosing it, including related work product, and must promptly notify the producing party. The order sets additional notice, redaction, meet-and-confer, and court-review procedures for disputes over inadvertently produced material.

After the Litigation

Within 60 days after the litigation ends, including the exhaustion of appeals, confidential material must generally be returned or destroyed. Exceptions apply to material admitted into evidence or filed without disclosure restrictions, and to certain materials the Commission determines it must retain for record-keeping or permitted uses. The order allows counsel to retain attorney work product that refers to confidential information, so long as it does not duplicate substantial portions of the confidential material.

Disposition and Scope

Judge Lewis A. Kaplan entered the stipulated confidentiality order and retained jurisdiction to enforce its obligations. The order does not restrict the Commission’s uses or disclosures when otherwise required by law or permitted by Commission Form 1662, a producing party’s use of its own materials, or disclosure of information already public. This order concerns discovery and confidentiality procedures; the provided text does not decide the underlying enforcement claims.