20 April 2006
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[Federal Register: April 20, 2006 (Volume 71, Number 76)]
[Rules and Regulations]
[Page 20340-20341]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ap06-3]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 202
[Release No. 34-53638]
RIN 3235-AJ55
Policy Statement Concerning Subpoenas to Members of the News
Media
AGENCY: Securities and Exchange Commission.
ACTION: Final rule; policy statement.
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SUMMARY: The Securities and Exchange Commission is issuing a policy
statement concerning the issuance of subpoenas to members of the media.
This policy statement sets forth guidelines for the agency's
professional staff to ensure that vigorous enforcement of the Federal
securities laws is conducted completely consistently with the
principles of the First Amendment's guarantee of freedom of the press,
and specifically to avoid the issuance of subpoenas to members of the
media that might impair the news gathering and reporting functions.
DATES: Effective Date: April 12, 2006.
FOR FURTHER INFORMATION CONTACT: Joan McKown (202-551-4933), Office of
the Chief Counsel, Division of Enforcement, or Richard Levine (202-551-
5468), Office of General Counsel.
SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission is
issuing a policy statement concerning the issuance of subpoenas to
members of the media. In this policy statement the Commission sets
forth guidelines for the agency's professional staff to ensure that
vigorous enforcement of the federal securities laws is conducted
completely consistently with the principles of the First Amendment's
guarantee of freedom of the press, and specifically to avoid the
issuance of subpoenas to members of the media that might impair the
news gathering and reporting functions.
Regulatory Requirements
The provisions of the Administrative Procedure Act (``APA'')
regarding notice of proposed rulemaking, opportunities for public
comment, and prior publication are not applicable to general statements
of policy, such as this one.\1\ Similarly, the provisions of the
Regulatory Flexibility Act,\2\ which apply only when notice and comment
are required by the APA or another statute, are not applicable.
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\1\ 5 U.S.C. 553.
\2\ 5 U.S.C. 601-602.
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List of Subjects in 17 CFR Part 202
Administrative practice and procedure.
Text of Amendment
0
In accordance with the foregoing, the Securities and Exchange
Commission amends 17 CFR chapter II as follows:
PART 202--INFORMAL AND OTHER PROCEDURES
0
1. The authority citation for part 202 continues to read, in part, as
follows:
Authority: 15 U.S.C. 77s, 77t, 78d-1, 78u, 78w, 78ll(d), 79r,
79t, 77sss, 77uuu, 80a-37, 80a-41, 80b-9, and 80b-11, unless
otherwise noted.
* * * * *
0
2. Add Sec. 202.10 to read as follows:
Sec. 202.10 Policy statement of the Securities and Exchange
Commission concerning subpoenas to members of the news media.
Freedom of the press is of vital importance to the mission of the
Securities and Exchange Commission. Effective journalism complements
the Commission's efforts to ensure that investors receive the full and
fair disclosure that the law requires, and that they deserve. Diligent
reporting is an essential means of bringing securities law violations
to light and ultimately helps to deter illegal conduct. In this Policy
Statement the Commission sets forth guidelines for the agency's
professional staff to ensure that vigorous enforcement of the federal
securities laws is conducted completely consistently with the
principles of the First Amendment's guarantee of freedom of the press,
and specifically to avoid the issuance of subpoenas to members of the
media that might impair the news gathering and reporting functions.
These guidelines shall be adhered to by all members of the staff in all
cases:
(a) In determining whether to issue a subpoena to a member of the
news media, the approach in every case must be to strike the proper
balance between the public's interest in the free dissemination of
ideas and information and the public's interest in effective
enforcement of the federal securities laws.
(b) When the staff investigating a matter determines that a member
of the news media may have information relevant to the investigation,
the staff should:
(1) Determine whether the information might be obtainable from
alternative non-media sources.
(2) Make all reasonable efforts to obtain that information from
those alternative sources. Whether all reasonable efforts have been
made will depend on the particular circumstances of the investigation,
including whether there is an immediate need to preserve assets or
protect investors from an ongoing fraud.
(3) Determine whether the information is essential to successful
completion of the investigation.
(c) If the information cannot reasonably be obtained from
alternative sources and the information is essential to the
investigation, then the staff, after seeking approval from the
responsible Regional Director, District Administrator, or Associate
Director,
[[Page 20341]]
should contact legal counsel for the member of the news media. Staff
should contact a member of the news media directly only if the member
is not represented by legal counsel. The purpose of this contact is to
explore whether the member may have information essential to the
investigation, and to determine the interests of the media with respect
to the information. If the nature of the investigation permits, the
staff should make clear what its needs are as well as its willingness
to respond to particular problems of the media. The staff should
consult with the Commission's Office of Public Affairs, as appropriate.
(d) The staff should negotiate with news media members or their
counsel, consistently with this Policy Statement, to obtain the
essential information through informal channels, avoiding the issuance
of a subpoena, if the responsible Regional Director, District
Administrator, or Associate Director determines that such negotiations
would not substantially impair the integrity of the investigation.
Depending on the circumstances of the investigation, informal channels
may include voluntary production, informal interviews, or written
summaries.
(e) If negotiations are not successful in achieving a resolution
that accommodates the Commission's interest in the information and the
media's interests without issuing a subpoena, the staff investigating
the matter should then consider whether to seek the issuance of a
subpoena for the information. The following principles should guide the
determination of whether a subpoena to a member of the news media
should be issued:
(1) There should be reasonable grounds to believe that the
information sought is essential to successful completion of the
investigation. The subpoena should not be used to obtain peripheral or
nonessential information.
(2) The staff should have exhausted all reasonable alternative
means of obtaining the information from non-media sources. Whether all
reasonable efforts have been made to obtain the information from
alternative sources will depend on the particular circumstances of the
investigation, including whether there is an immediate need to preserve
assets or protect investors from an ongoing fraud.
(f) If there are reasonable grounds to believe the information
sought is essential to the investigation, all reasonable alternative
means of obtaining it have been exhausted, and all efforts at
negotiation have failed, then the staff investigating the matter shall
seek authorization for the subpoena from the Director of the Division
of Enforcement. No subpoena shall be issued unless the Director, in
consultation with the General Counsel, has authorized its issuance.
(g) In the event the Director of the Division of Enforcement, after
consultation with the General Counsel, authorizes the issuance of a
subpoena, notice shall immediately be provided to the Chairman of the
Commission.
(h) Counsel (or the member of the news media, if not represented by
counsel) shall be given reasonable and timely notice of the
determination of the Director of the Division of Enforcement to
authorize the subpoena and the Director's intention to issue it.
(i) Subpoenas should be negotiated with counsel for the member of
the news media to narrowly tailor the request for only essential
information. In negotiations with counsel, the staff should attempt to
accommodate the interests of the Commission in the information with the
interests of the media.
(j) Subpoenas should, wherever possible, be directed at material
information regarding a limited subject matter, should cover a
reasonably limited period of time, and should avoid requiring
production of a large volume of unpublished material. They should give
reasonable and timely notice of their demand for documents.
(k) In the absence of special circumstances, subpoenas to members
of the news media should be limited to the verification of published
information and to surrounding circumstances relating to the accuracy
of published information.
(l) Because the intent of this policy statement is to protect
freedom of the press, news gathering functions, and news media sources,
this policy statement does not apply to demands for purely commercial
or financial information unrelated to the news gathering function.
(m) Failure to follow this policy may constitute grounds for
appropriate disciplinary action. The principles set forth in this
statement are not intended to create or recognize any legally
enforceable rights in any person.
By the Commission.
Dated: April 12, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. 06-3739 Filed 4-19-06; 8:45 am]
BILLING CODE 8010-01-P