Honorable Jno. '4.

McBdama, comiss ioner Dapertmqmt

of Banking Austin, Texaa

Dear ?kr.

&Adams: opinion Ho. o-5134 Re: Whether or not reports,documents, instruments, or information in possession of ,tbe:~,~ BankingCommissioner of TV&& with respectto loan and brokerage companies

doing busf?,::: ness in Texas are privileged matters. Yom request for,

an opinion

upon the above-captioned subject matter is as follows:

“A suit has baen instituted >y the Securities

and Exchange Commission

againstInvestors

Syndicate

of America,Inc., and Investors Mutual, Inc., in the FederalCourt at Mime&3lbs, Minnesota. The exact nature of the charges contained

in the complaint

have not been communicated

to this Department. Representatives of the Securities

and Exchange

Conamission

have presented

themselves

to this officerequesting certain information relating

to the business

of these concerns

within this State. These Representatives have requested

amwers to the following: "1. Number of Investors in Texas holdingdebentures issued by Investors Syndicate. "2
. The amount of oUtstandi<& certificates

In Texas.

“ 3. The amount if any, of deposits made by the Invest&a Syndicate within this State to secure certific&es issued i&Texas. "4. The type of certificates sold in Texas or authorized to be sold. #The information

which this Department has in its file is COIlIposed of annual statements filedby this condarq pursuant

to the provisionsof the statutes of this State, monthlystatements submitted

to the Department

pursuant

to the provisions

contained

in a trust agreement entered into by and betweenthe Investors ,Z,yn$icate.ind

the ,Guardian Trust Company,

and the examination reports,

which have been epared by examiners

representing

this Department

making periodic

examinations ss are required

by law. A copy of such trust agreement is also on file in this officepursuant to the provisions

of the statuteand copies of the kinds of debentures issuedare attached to and a part of this trust agreement.Honorable Jno. Q. &Adams, page 2 (o-5134)

"In view of the requestvhichhas been made and the facts above recited

we desire to have your answersto the following questions: "1. Is the information contained

in the foregoing

documents on file in this department privileged

or confidentail? "2. Would the Banking Commissioner

be authorized

under the law~todisclose

to the representatives of the Securities

and Exchange Commission

anawerato the questions which they have propounded, the anawersto be compiled from the%uments and papersabove described? "3. In the event that the Department shoulddetermine

that the interest

of the Securities

and Exchange

Commission

and those of Texas investors

are aonflicting

would the Department be authorized

to deny the representatives

of the Securities

and ExchangsCommission such information as it may desire?"

"Th<question

of the right of public inspection of the documants, papers,files, recordsand instruments whatsoever,

constituting

the files and archives

of a State department is a const@&y recurring one, and ardses under a multiplicity of fact situations. In many iwtancer the Legislature

has prescribed

a privilege

or qualified

privilege

with respect to such mattars,

and in others it has not done ao. In all oases, however, there is presentas a consideration the public interest involved

in a disclosure

with respectto such matters. Investors

Syndicate

of America,Inc. is a loan and brokerage companf, organiaed

under tha laws of Minnesota, and doing business in Texas, underArticle l52ka, Vernon ’ s Civil Statutes

of Texas. This Articleprovidesfor examination of such corporations by the Banking Commission,

(Sec.>), the publication by the corporation of certain statements,

(Sec.&), a submleaion by the corporation to the Banking Commissioner

for apqoval certain deposits

of securities

for its bonds, notes, certificates, debentures,

and other obligations, and shall submit to the bankingCommissioner for his approval

specimen

copies of such bonds,notes, certificates, debentures,

or other obligations, to be offered for sale to the public, (Sec. 7), and requires the corporation's officers,,

directors,

employees

and agents to executecertainfidelity bon&, (Sec. 3).

The variousprovisiona of the Act are made to apply to foreign corporations

havingpermission

to do businessin Texas, (Sec., 10). Wow, the statute,

vhile authorizing

the bankingCommissioner to exam&e or cause to be examined such corporations,

doas not in anywise deal with the question of the privilege

of such examiner's

reports. There is no statute, so far as we have been able to discover, that bears upon the privilege of examiner's

reports,

or upon the other statemants, instruments or information

mentioned

by you. So that, the matterHonorable Jno. 8. McAdams,

page 3 (o-5134)

must be determined according

to generallaw, and in the light of public policy.
In the absenceof statute--the authoritative

publicpolicyof the State--no

public officershouldat any time do any act that would be harmful to the public interests. Such officer, therefore,

is always clothed

with a certain

discretion

in such mattersas we are considering. Where no statutesupervenes, and where no public interest could be prejudicially

affected,

there is no reason for denyingthe right of the public to inspectthe records, files, documents,

and the like archives of publicofficesor departments. Where there is reasonable probability of injuryor hurt to the public interests, however,the custodian of such archivesshoulddeny the right of public inspection.

We discussed

these general

principles

in Opinion

No. 0-4610, addressed

to you, concerning

a State bank in liquidation.
We also discussed

the principles

applicable

to situations where therewere not pertinent statutesin Opinions Nos. o-2044, O-3755and 0-3987,copiesof which opinions we are handingyou herewith. Article 3722 of the RevisedCivil Statutes makas it the duty of certain

public officers,

including

the BankingCommissioner, to 'furnish any personapplying for the same with a copy of any paper,document or record in their offices, and with certificates under seal, certifying to any fact contained in the papers,documents or recordsof their office-.? This Article, however, is to be considered in the light of what wa have said with respectto privileged instruments

or information. In other words, the statutory and other --tablished rules of privilega, and this statuteof evidence (Art. 3722)must be considered together

and not as being in anywisecontradictory or inconsistent;

each must be respected.
In considering

the question

of the public interests involved

in your presentsituation, .youwill of coursebear in mind that the inquiry and requestcome from a department of the Government

itself.
You are thesefore

respectfully

advisedthat it is entirely within your official disbretion

to supply the information requasted,

or, if in that disoretion you th'nk it would be inimitable to the public interests;

to deny such request. If you should exercise your discretion againstgranting

the inspection,

the matter

would be subjectto judicial review for any abuse of such discretion.

APPROVED

JCL 20, 1943 Croover

Sellers &lET ASSISTANT AlTORNEYCWERAL CS-WR:br Very truly yours All'ORWEY

cTEmRAL

OF TEXAS
BY /s/ Ocie Speer

@ie Speer Assistant

EWCCLOSWE