SECURITIES AND EXCHANGE COMMISSION

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: Policy Statement.

SUMMARY: The Securities and Exchange Commission is issuing a policy statement

concerning the issuance of subpoenas to members of the media.

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.

List of Subjects in 17 CFR Part 202

Administrative practice and procedure.

Text of Amendment

In accordance with the foregoing, the Securities and Exchange Commission

amends 17 CFR chapter II as follows:

PART 202 – INFORMAL AND OTHER PROCEDURES

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.

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2. Add § 202.10 to read as follows:

§ 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

1

5 U.S.C. 553.

2

5 U.S.C. 601-602.

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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 nonmedia 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.

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(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,

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:

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(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

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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.

Nancy M. Morris

Secretary

April 12, 2006

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