Securities & Exchange Commission v. Committee on Ways & Means of the U.S. House of Representatives
161 F. Supp. 3d 199
S.D.N.Y.2015Background
- SEC opened a non-public insider-trading investigation (the "Humana Investigation") into unusually timed trading tied to a CMS Medicare Advantage rate announcement on April 1, 2013; a flash report sent before the announcement preceded large insurer stock gains.
- Evidence suggested communications between House Ways & Means Health Subcommittee staffer Brian Sutter (later Staff Director) and a Greenberg Traurig lobbyist and CMS employees around the announcement; SEC sought to probe whether nonpublic legislative/agency information leaked.
- SEC issued a Section 21(a) Formal Order and, via its New York Regional Office, served subpoenas on the Committee and Sutter for communications, notes, calendars, and telephone records (Feb. 10–Apr. 10, 2013) and sought Sutter's testimony.
- The Committee and Sutter refused, asserting sovereign immunity, Speech or Debate Clause protection, lack of jurisdiction/venue in SDNY, and that Sutter (a high-ranking official) could not be deposed absent exceptional circumstances.
- The Court denied dismissal/transfer, held that sovereign immunity does not bar inter-branch enforcement here (and in any event STOCK Act and Exchange Act investigations waive immunity), found jurisdiction and venue in SDNY proper, construed scope of Speech or Debate Clause protections for documents and testimony, and ordered production of non-legislative materials while protecting legislative materials.
Issues
| Issue | Plaintiff's Argument (SEC) | Defendant's Argument (Committee/Sutter) | Held |
|---|---|---|---|
| Sovereign immunity | SEC enforcement permitted; Exchange Act authority and STOCK Act subject Congress/staff to SEC inquiry | Inter-branch sovereign immunity bars SEC subpoenas to Congress/ staff | No sovereign-immunity bar; House rules and STOCK Act/Exchange Act permit SEC investigations/subpoenas |
| Personal jurisdiction & venue | SDNY proper: investigation conducted from NY regional office; nationwide service authorized | Respondents are DC-based; SDNY lacks reasonableness / locus | Personal jurisdiction and venue in SDNY are proper under 15 U.S.C. §78u(c) and due process |
| Speech or Debate Clause (testimony & documents) | SEC: subpoenas seek non-legislative evidence of leaks/insider trading; many responsive items unprotected | Clause provides absolute bar to compelled disclosure of legislative acts and legislative materials | Clause protects materials and testimony that are within "legitimate legislative activity"; but does not protect non-legislative communications (e.g., public dissemination, cajoling executive, purely personal/admin matters); court adopts a non-disclosure privilege for legislative materials and narrows subpoenas accordingly |
| Deposition of Sutter / "exceptional circumstances" | SEC: needs to depose Sutter; he has unique, firsthand knowledge; less intrusive means insufficient | Sutter is senior staff; deposition barred absent exceptional circumstances | Sutter not treated as a high-ranking official for this doctrine; even if he were, exceptional circumstances exist (resigned, unique knowledge), so deposition permissible limited to non-protected matters |
Key Cases Cited
- Gravel v. United States, 408 U.S. 606 (1972) (Speech or Debate Clause protects members and aides for legislative acts but not for private publication)
- Eastland v. U.S. Servicemen's Fund, 421 U.S. 491 (1975) (Speech or Debate Clause is absolute bar against inquiry into legitimate legislative activity and protects committee investigatory functions)
- United States v. Morgan, 313 U.S. 409 (1941) (protects decisionmakers from probing their mental processes; rationale for limiting depositions of high officials)
- Brewster v. United States, 408 U.S. 501 (1972) (distinguishes legislative acts from other official activities; bribery and non-legislative misconduct not protected)
- United States v. Helstoski, 442 U.S. 477 (1979) (discusses limits on use of legislative-act evidence in prosecutions)
- RNR Enterprises, Inc. v. S.E.C., 122 F.3d 93 (2d Cir. 1997) (standard for judicial enforcement of administrative subpoenas)
- Lederman v. New York City Dept. of Parks & Recreation, 731 F.3d 199 (2d Cir. 2013) (deposing high-ranking officials requires exceptional circumstances)
- Brown & Williamson Tobacco Corp. v. Williams, 62 F.3d 408 (D.C. Cir. 1995) (Speech or Debate Clause bars compelled production of legislative documents and testimony)
- Rayburn House Office Building, Room 2113 v. United States, 497 F.3d 654 (D.C. Cir. 2007) (testimonial privilege under Speech or Debate extends to non-disclosure of written legislative materials)
- United States v. Renzi, 651 F.3d 1012 (9th Cir. 2011) (concluded Speech or Debate Clause is a use privilege, not a non-disclosure privilege, when investigating non-legislative wrongdoing)
- In re Fattah, 802 F.3d 516 (3d Cir. 2015) (held Speech or Debate Clause does not provide a non-disclosure privilege for legislative documents in criminal investigations)