Corporate entities are ever vigilant about protecting legal privilege and confidentiality. To maintain maximum protection, corporations and their counsel would be well-advised to take a hard look at their disclosures to regulators and monitors, as recent court decisions have indicated that even compelled, narrowly-tailored disclosure could erode the expectations of privilege and confidentiality historically associated with such disclosures.
Involuntary Waiver
Recently, in connection with a high-profile insider trading trial, Judge Laura Taylor Swain of the Southern District of New York ruled that JPMorgan waived its attorney-client and work product privileges for certain communications underlying a written response to a regulatory inquiry. See Mem. Order, United States v. Stewart, No. 1:15-cr-00287-LTS-2 (S.D.N.Y. July 22, 2016), ECF No. 141. In response to a Financial Industry Regulatory Authority (FINRA) inquiry into pre-acquisition trading in the stock of Kendle International Inc., JPMorgan submitted a letter affirming that none of its employees with knowledge of the deal—including investment banker Sean Stewart—knew the individuals on a list of traders of the stock. FINRA independently verified that Stewart’s father was on the list, and followed up with JPMorgan to address the discrepancy. JPMorgan then interviewed Stewart, and sent a clarifying letter to FINRA stating that Stewart had merely overlooked his father’s name on the original list and confirmed that he had not discussed the transaction with his father before it was publicly announced.
