The opinion of the court was delivered by: LOUIS F. OBERDORFER
Movants in this matter are plaintiffs in a securities fraud action brought against United Telecommunications Inc. ("United Telecom") in the United States District Court for the District of Kansas. They have moved to compel documents responsive to a subpoena served on the Securities and Exchange Commission ("SEC"). The SEC claims that the documents are protected by the investigatory law enforcement privilege. For the reasons that follow, the Court concludes that the assertion of the privilege is appropriate, and the motion to compel will therefore be denied.
The subpoena at issue was served on the SEC in September 1991, seeking numerous documents relating to an ongoing SEC inquiry into possible insider trading and other securities violations by United Telecom. Specifically, the subpoena sought the following four categories of documents:
(1) Documents obtained or received by the SEC from United Telecom and other persons in connection with the SEC's investigation.
(2) Transcripts of testimony given in connection with the SEC investigation.
(3) Subpoenas or requests for production of documents issued by SEC staff to United Telecom and other persons in connection with the SEC investigation.
(4) Correspondence between SEC staff and United Telecom and other persons relating to the SEC investigation.
In a letter to movants' counsel in response to the subpoena, the SEC asserted the investigatory law enforcement privilege with respect to all categories of documents, prompting movants' motion to compel.
In its opposition to the motion and in attached declarations, the SEC supports its assertion of the privilege with respect to all documents covered by the subpoena as follows:
The documents subpoenaed by plaintiffs are all part of an ongoing Commission investigation. . . . Release of these documents could impair the Commission's investigation by disclosing, among other things, the evidence the Commission has obtained (and as yet to obtain), what matters the staff considers important, what the staff knows, and the strategy the Commission might take should there be a civil enforcement proceeding. . . . Premature disclosure could also lead to the intimidation of witnesses, the destruction or fabrication of evidence, and the tailoring of defenses and testimony to conform to the evidence. . . Moreover, such disclosure could compromise the Commission's position in any settlement discussions resulting from its enforcement efforts.
In their reply memorandum, movants concede that the SEC has properly asserted the privilege with respect to all but the following three categories of documents: (a) documents the SEC obtained from United Telecom, (b) subpoenas or requests for production issued by the SEC staff to United Telecom, and (c) correspondence between the SEC staff and United Telecom. See Reply ...