New York District Court Bars Discovery of SEC's Requests for Extension Under Dodd-Frank

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Explore:  Discovery Dodd-Frank SEC

The US District Court for the Eastern District of New York recently ruled that Securities and Exchange Commission enforcement actions cannot be dismissed on grounds that the SEC failed to comply with Section 929U of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act, which requires the agency to file an action within 180 days of notifying the target of the pendency of an investigation or to obtain an extension of time if the matter is “sufficiently complex.” The defendants sought discovery related to the SEC’s multiple requests for extensions of time pursuant to Section 929U, including noticing the depositions of the SEC’s litigation counsel and its custodian of documents, as well as requesting the production of internal SEC documents. The SEC moved to quash these discovery requests and the court held that evidence concerning the SEC’s compliance with Section 929U was not discoverable because the section did not create a jurisdictional bar to enforcement actions. Accordingly, the discovery sought by defendants was not relevant to a claim or defense in the enforcement action. The court also noted that the defendants already had sworn statements from government counsel regarding the process used to obtain the extensions at issue in the case and that further discovery would be unnecessary and wasteful.

SEC v. NIR Group LLC, No. 11-cv-4723 (E.D.N.Y. March 24, 2013).