U.S Securities and Exchange Commission v. Saw

Background

The Securities and Exchange Commission and Clarice Saw asked the court to enter a stipulated confidentiality agreement and protective order under Federal Rule of Civil Procedure 26(c). That rule allows a court, for good cause, to limit disclosure of information exchanged during discovery. The parties sought protection for nonpublic and competitively sensitive information that might be disclosed in this action.

The opinion is an order governing discovery and does not decide the underlying securities-enforcement claims.

Confidential and Privacy Information

The order defines “Discovery Material” as information produced or disclosed during discovery. A producing party may designate material as “Confidential” if it reasonably and in good faith believes that it includes previously undisclosed financial information, information about ownership or control of a nonpublic company, business or marketing information, personal or intimate information, or another category the court later protects.

The order separately defines “Privacy Information” to include specified personal identifiers and information protected by federal, state, foreign, or European data-protection laws. A party that obtains such information in this action may not disclose or use it except as the order allows for confidential discovery material, even if the information was not expressly marked confidential.

Permitted Disclosures and Use

Confidential Discovery Material may be disclosed only to categories listed in the order. These include the parties and their insurers, counsel and their litigation support staff, outside vendors, mediators or arbitrators, document authors and addressees, certain potential witnesses, experts and specialized advisers, deposition transcribers, and the court and its personnel. Mediators, arbitrators, witnesses, experts, and specialized advisers must first receive the order and sign a nondisclosure agreement.

Recipients may use protected material only to prosecute or defend this action and any related appeals. They may not use it for business, commercial, competitive, or unrelated litigation purposes. The order does not restrict a party’s rights concerning its own documents or information, and it allows production in response to lawful compulsory process if the producing party receives the required notice.

The order provides that the SEC may use and disclose documents produced in the action, without notice to defendants or others, to the extent permitted by law in carrying out its responsibilities to investigate and enforce the federal securities laws, consistent with the routine uses described in the SEC’s Form 1662.

Sealing, Challenges, and Enforcement

A party objecting to a confidentiality designation may provide written notice stating the grounds for the objection. If the parties cannot resolve the dispute, they must bring it to the court under the court’s individual practices. A party seeking additional disclosure limits, such as an attorneys’-eyes-only designation in extraordinary circumstances, must follow a similar procedure.

The order does not automatically require the court to seal confidential material filed in connection with a motion or proceeding. A party filing under seal must publicly file a redacted version and submit a letter brief and supporting declaration explaining, on a particularized basis, why continued sealing is justified. The court retains discretion over confidential treatment and states that it is unlikely to seal material introduced into evidence at trial merely because it was previously designated confidential.

Within 60 days after final disposition of the action, including appeals, recipients generally must return or destroy confidential material and certify that they retained no copies or reproductions. Specifically retained attorneys may keep archival copies of specified case materials, but those copies remain subject to the order. The order survives termination of the litigation, and the court retains jurisdiction to enforce its obligations and impose contempt sanctions.

Disposition

Judge Paul G. Gardephe found good cause for an appropriately tailored confidentiality order and ordered the parties and other persons subject to it to comply with its terms. The opinion contains no ruling on the merits of the SEC’s claims against Clarice Saw.