SEC Follows DOJ Regarding Requests for Waiver of Privilege

The National Law Journal is reporting that the SEC has released its "Red Book" publicly for the first time. The Red Book is similar to the Department of Justice's U.S. Attorney's Manual and provides guidance to the staff of the SEC Enforcement Division in the investigation of potential violations of the securities laws.

The manual addresses the privilege waiver issue as well as a number of areas that should aid practitioners, including the evaluation of possible investigations, issuing Wells letters, communicating with senior SEC officials, responding to document subpoenas, "witness assurance" letters and contacting current and former employees.

In the privilege section, the manual contains the following statement in bold face type: "The staff should not ask a party to waive the attorney-client or work product privileges and is directed not to do so."

It adds that all decisions about potential waivers are to be reviewed by the assistant supervising the matter and may involve more senior members of management.

"The Enforcement Division's central concern is whether the party has disclosed all relevant facts within the party's knowledge that are responsive to the staff's information requests, and not whether a party has elected to assert or waive a privilege," the manual states.

If a party seeks cooperation credit for timely disclosure of relevant facts, the manual adds, that party must disclose all such facts within the party's knowledge. "On request, and to the extent possible, the staff should continue to work with parties to explore alternative means of obtaining factual information when it appears that disclosure of responsive documents or other evidence may otherwise result in waiver of applicable privileges."

Stephanie Martz, director of the white-collar crime project of the National Association of Criminal Defense Lawyers (NACDL), said the manual language appears to be a "hybrid" of recent approaches by the Department of Justice. "I think on the positive side, it seems to recognize there is a problem," she said. "There is a line where staff is specifically instructed not to ask for waivers, but on the other hand, that's followed by the statement that says supervisors can approve it."

Although the manual claims the relevant inquiry is going to be whether relevant facts have been disclosed, Martz added, "It will be interesting to see how this works if you do have facts and its work product, and the government wants them."