|NMU||NEW YORK||Secret Courts||Mar 23, 2001|
Alleged injury to reputation insufficient to seal documents
- A federal magistrate enforces the presumption of judicial openness by denying a motion from the New York Stock Exchange to seal a request for sanctions against it.
A federal district judge in New York City denied a request by the New York Stock Exchange to seal certain documents in a securities regulation lawsuit brought by the Securities and Exchange Commission.
The NYSE asked Magistrate Judge Henry Pitman on March 16 to seal a motion for sanctions filed by the other parties in the case. The judge declined because, he said, there was no legitimate reason to overcome the presumption of openness.
During litigation, the parties sought discovery from the NYSE, which had been included in the case as a third party defendant. The Exchange provided some, but not all, of the requested documents. Pitman dismissed the NYSE from the case, but the numerous other corporate defendants requested sanctions against the Exchange, claiming it failed to produce all of the require documents. The NYSE opposed the motion, saying sanctions from the court would injure its reputation.
In his denial of the motion to seal, the judge said judicial proceedings are presumptively open. Even if the allegations against the NYSE of discovery misconduct were false, there was no reason to seal the motion for sanctions. The court said that the NYSE was “not a uniquely vulnerable entity that will wither in response to defendants’ charges of wrongdoing or suffer any harm at all.” The court noted that the NYSE has prospered despite that fact that it had been previously charged in other cases with antitrust violations, failure to properly supervise members, and gender discrimination.
More importantly, the court refused to seal the records merely because the allegations might be embarrassing. “If the possibility of embarrassment from the charges alone justified sealing here, the sealing of civil proceedings would rapidly become the general rule.”
Finally, the court rejected the argument that the motion should be sealed because the defendants were merely trying to wage a media campaign. The court noted, “defendants and their counsel have a right under the First Amendment to discuss the charges and the proceeding against them with anyone who is willing to listen.”
(SEC v. Oakford Corp.) — AG
© 2001 The Reporters Committee for Freedom of the Press