Opinion ID: 548
Heading Depth: 2
Heading Rank: 1

Heading: SEC's Alleged Regulatory Disclosure Obligations

Text: In ruling against Dr. Gerber, the district court relied, in part, on the SEC's alleged statutory and regulatory obligation to share information with other governmental law enforcement agencies. Aplt.App. at 367. While this alleged obligation is reflected in the plain language of the orders permitting sharing of information with specified agencies for very limited purposes, it will not support the nearly unlimited construction placed on it by the government. The assertion of a law enforcement purpose is insufficient, without more, to justify actions in derogation of a valid protective order. See Chem. Bank v. Affiliated FM Ins. Co., 154 F.R.D. 91, 93 (S.D.N.Y.1994). Moreover, we find this reliance on a law enforcement rationale as a means of bypassing the limitations reflected in the protective orders to be unfounded. The statutes the government identified, see id. at 168 n. 15, and on which this alleged duty was predicated, are permissive rather than mandatory. See 15 U.S.C. § 77t(b) (The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General who may, in his discretion, institute the necessary criminal proceedings under this subchapter.); 15 U.S.C. § 78u(d)(1) (same); 15 U.S.C. § 78x(c) (The Commission may, in its discretion and upon a showing that such information is needed, provide all `records' (as defined in subsection (a) of this section) and other information in its possession to such persons, both domestic and foreign, as the Commission by rule deems appropriate if the person receiving such records or information provides such assurances of confidentiality as the Commission deems appropriate.). See also 17 C.F.R. § 240.24c-1(b) (same; further delimiting authorities to whom such information may be provided). Because, based on these statutes, the SEC's ability to share information with other governmental authorities represents a permissive power rather than a mandatory duty, it does not provide an extrinsic limit on the SEC's ability to enter into binding protective orders. The SEC can certainly make a discretionary decision to forego its opportunity to share documents with others, including law enforcement agencies, in the interest of obtaining such documents from a deponent. Moreover, we cannot endorse the government's shift of position here. Having cabined its discretion by agreeing to a protective order that limited the purposes for which Confidential Information could be sharedthus showing a lack of concern for the effect of such limitations on the use of the Confidential Information for law enforcement purposesit is odd to find the government now advancing a much broader alleged law enforcement duty as a shield to a charge that it violated the protective order.