

[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
