Disclosure to regulators - NDA Provision: Difference between revisions

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Latest revision as of 11:28, 1 October 2024

NDA Anatomy™
JC’s guide to non-standard confidentiality agreements.
For the OneNDA, see the OneNDA Anatomy

A Jolly Contrarian owner’s manual™

disclosure to regulators in a Nutshell

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Original text

The Recipient shall be entitled to disclose such Confidential Information as shall be reasonably necessary and appropriate where it considers such disclosure to be, or be deemed to be, reasonably necessary to comply in good faith and a commercially reasonable manner with such requests, requirement, direction or order as may be given or issued by any regulator or any type, kind or variety, and any law, regulation or court order or similar direction of binding or persuasive effect.

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Comparisons

The circumstances in which one may disclose information to regulator, courts, officials and those having or asserting moral authority over your business, the conditions to such disclosure, non-violent protests one might make about having to disclose information to regulators, and the consequence on your confidentiality obligation of making any such disclosures.

Basics

There are times in the life of a regulated institution when it must open its kimono to those with the power to police it. These might be prudential regulators, competition and antitrust authorities, parts of the market infrastructure, courts, and, well, the police.

It really should go without saying that one may disclose information one is, in any case, legally obliged to disclose; there are grey areas of course: what if the information is requested but not demanded, or where there is no available power of compulsion? What happens to the information once the regulator has it? Is it still confidential?

The JC starts with the pragmatic observation that, in advanced democracies, competent regulators generally mean well, are there for our collective good, and so giving them information shouldn’t usually do great violence to the commercial principles of confidentiality (namely, protecting the commercial value of the information disclosed).

“Pragmatic” because, whether or not this is true, there is not much we can do about it. If you are not in an advanced democracy, you will generally have bigger things to worry about than whether your regulator can keep its trap shut,

So the starting point is to define “regulators” widely, not stand on ceremony, be able to provide information to themon request, without fuss and without troubling the discloser, much less assisting it in its efforts to stymie what we must presume is a bona fide motivation for disclosure. Yes, the information absolutely should remain confidential as far as it is in the recipient’s hands, or those of its voluntary disclosees. And in all likelihood it will stay that way in the regulator’s hands too.

Now there are nefarious regulators, to be sure, and there are certainly careless or stupid ones, and if they lose, leak or wantonly broadcast proprietary information it would be a shame, but should not really be the recipient’s problem. Regulatory disclosure is an externality. No-one asks for information in the hope of giving it away.

Note that incidences of regulatory indiscretion are rare — JC has never heard of one — and resulting diminution in commercial value rarer still. Most “confidential information” really isn’t half as special as its discloser would have you believe.

The NDA process is, largely, a pantomime, that is to say.

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See also

References