Last month brought us this story from Reuters, in which we learned that the SEC “has become more aggressive in seeking full hard drives from the companies and individuals it investigates, startling defense lawyers who question whether the agency is allowed to obtain such information.” The story quotes a number of lawyers in private practice who have resisted such requests. Eugene Goldman at McDermott Will & Emery said he recently objected to an SEC request for a client’s hard drive because, as the story said, it “would potentially give the SEC a lot of information outside the scope laid out by the formal order of investigation.”
I think Goldman was right to object. The relevant statute, Section 21(b) of the Exchange Act, reads this way:
For the purpose of any such investigation, or any other proceeding under this title, any member of the Commission or any officer designated by it is empowered to administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, or other records which the Commission deems relevant or material to the inquiry.
I see “books, papers, correspondence, memoranda” there, but not “file cabinets” or “hard drives”. Of course, the SEC staff is free to define the documents they seek very broadly, and can gather a lot of information even with the statutory authority they have. But I don’t think hard drives, laptops, or other information containers – as opposed to the information itself – lie within the Commission’s mandate.