Difference between revisions of "Permitted disclosures - Confi Provision"

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{{confianat|permitted disclosures}}
 
{{confianat|permitted disclosures}}
{{regulator requests}}
 
 
==={{confiprov|Regulatory disclosure}} and the definition of {{confiprov|confidential information}}===
 
==={{confiprov|Regulatory disclosure}} and the definition of {{confiprov|confidential information}}===
 
{{confidentiality and regulatory disclosure}}
 
{{confidentiality and regulatory disclosure}}
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{{regulator requests}}
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===Court proceedings===
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Is it any different for court proceedings? Now, my friends, we are deep in anally retentive territory here.<ref>This may seem a rather unsavoury metaphor, but it seems apposite.</ref> If you should find yourself even broaching the question of what one must do when compelled by ''[[sub poena]]'' or court-mandated [[discovery]] to submit another fellow’s {{confiprov|confidential information}} into the hands of your combatants in connection with an unrelated civil proceeding, then the game is up, this is a [[I’m not going to die in a ditch about it|ditch you might, if you insist on it, die in]], and for the betterment of all you should really just surrender and move on, but for what it is worth, it ''is'' arguably different from a required disclosure to a regulator:
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On one hand:
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*A (third party) litigant may be the disclosing party’s competitor, and its intentions may not be as pure as driven snow — a disposition which one can (or has little choice but to) take as read for a regulator;
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*The discovery request may thus be an abusive use of a court progress to fish out some commercial material. So one should be on one’s guard and ready to defend it, to the advantage of the disclosing party;
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On the other hand:
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*It is a compulsory legal process and, at the limit, you can’t stop it;
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*A civil litigation between you and some other dude, even if it somehow involves the disclosing party’s {{confiprov|confidential information}}, is generally sensitive and may not be the sort of thing you want the disclosing party to know about: there is a “clash of the confidentialities” here
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*As a litigant you will be generally incentivised to resist wider disclosure than is absolutely necessary and so shouldn’t need to have to promise this to the disclosing party. But it is not inconceivable that this confidential agreement ''is'' exactly the ammunition you need to shut down the litigation, so your interests may favour disclosure, while the “discloser’s” may not. You don’t want your confidentiality agreement to crimp your ability to show your best you to the court process.
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When all is said and done, these are all ''extraordinarily'' remote and implausible hypotheticals. They neatly illustrate the fatuity of obsessing over the minutiae of an imponderable future, and it pains me to even talk about them. ''However'', it is in just such a fatuous neck of the woods that the [[legal eagle]] likes to build its nest so — unless you want to [[die in a ditch]] in that fatuous neck of the woods (some do; there is no accounting for taste) — you might just take a view and nod along.
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{{ref}}
 
{{ref}}

Latest revision as of 06:03, 31 July 2020

Confi Anatomy


A sensible permitted disclosures clause:

Permitted disclosure: We may disclose Confidential Information:

view template

Resources: Confidentiality agreement | Confi — Led Zeppelin style | GDPR | Copyright vs. confidence | |
Common terms | Certification | Confidential information | Confidentiality obligation | Derived information | Disclosed information | Discloser | Exclusivity | Indemnity | No licence | Non-solicitation | Permitted disclosees | Permitted disclosures | Procure compliance | Purpose | Receiver | Remedies | Reps and warranties | Return of information | Term |

Regulatory disclosure and the definition of confidential information

Don’t make the schoolboy error of excluding from the definition of “confidential information” “information required to be disclosed to regulators or government authorities”. Now to be sure this is a legitimate exception to a fellow’s general covenant not disclose confidential information to anyone[1] — but it shouldn’t disqualify the information from being “confidential informationaltogether. If it did, once you were required to give any information to a regulator, it would suddenly be open season and you could tell everyone about it. Not the intention.

Obligation to notify provider of regulator requests

This is a common and oft accepted provision: where you are obliged to disclose to a regulator, you must first notify the provider of the information, to allow them to make representations, or try to get an injunction, to prevent disclosure. However excitable your counterparty is on this point — and junior lawyers at real money firms can be quite exciteable — resist this. It is potty. When you step through it, it is hard to see any real-world cases where your counterparty could or would actually try to stop disclosure to a regulator, and plenty of benign circumstances where disclosure is a matter of course. To wit:

  • Trade/transaction reporting: Brokers will be obliged to disclose a lot of trade-specific client information to regulators and exchanges every day on account of MiFID/EMIR trade and trade reporting. We are not going to repeatedly tell the client that.
  • Ad-hoc general information requests: Outside trade/transaction reporting, when regulators ask for ad hoc information from a broker, it is usually for a wide-ranging data set across whole trading books and sectors, covering multiple clients. It is unrealistic to accept Brokers to monitor which clients within that population have confis, much less a right to be specifically notified beforehand. Nor will they want to go to the trouble of getting all those consents. Why? BECAUSE LIFE IS TOO SHORT.
  • Ad-hoc client-specific information requests: Where a regulator specifically asks for data on a single client, it is likely the regulator will also have made equivalent disclosure requests to the client at the same time (or copied the client on those requests to the broker) — if the request is benign — and if it has not, the investigation is likely to be one where the regulator would not allow the broker to alert the client anyway, and indeed where such notification could be a criminal offence (market abuse, etc). Even where the notification clause carves out where “notification being illegal” this leaves the empty set of circumstances where the broker would have to give info about a specific client and the client doesn’t, but was entitled to know about it.
  • Commercial sensitivity: Lastly, the legitimate point of a confi is to respect the client’s legitimate interest in protecting the commercial value of non-public information. It is not to keep silent about behavioural turpitude; indeed a broker’s regulatory obligations may oblige it to report, without invitation, bad acts it observes, whether the client likes it or not and whether there is a confidentiality agreement or not. Generally, client information a broker holds is not legally or professionally privileged. Since, by definition, passing information to a regulator should not[2] prejudice the commercial value of that information, it is hard to see when client would have a valid reason to seek injunctive relief to prevent disclosure of information to a competent regulator.

And that is borne out by the JC’s tawdry personal experience (anecdotal though it may be, it does span 22 years and three different investment banks): the JC has never ever, ever seen anyone even try to get an injunction to stop disclosure of confidential information to a regulator.

There is a nice, un-snippy explanation of this that you can cut out and send to your favourite mediocre lawyer here.

Court proceedings

Is it any different for court proceedings? Now, my friends, we are deep in anally retentive territory here.[3] If you should find yourself even broaching the question of what one must do when compelled by sub poena or court-mandated discovery to submit another fellow’s confidential information into the hands of your combatants in connection with an unrelated civil proceeding, then the game is up, this is a ditch you might, if you insist on it, die in, and for the betterment of all you should really just surrender and move on, but for what it is worth, it is arguably different from a required disclosure to a regulator:

On one hand:

  • A (third party) litigant may be the disclosing party’s competitor, and its intentions may not be as pure as driven snow — a disposition which one can (or has little choice but to) take as read for a regulator;
  • The discovery request may thus be an abusive use of a court progress to fish out some commercial material. So one should be on one’s guard and ready to defend it, to the advantage of the disclosing party;

On the other hand:

  • It is a compulsory legal process and, at the limit, you can’t stop it;
  • A civil litigation between you and some other dude, even if it somehow involves the disclosing party’s confidential information, is generally sensitive and may not be the sort of thing you want the disclosing party to know about: there is a “clash of the confidentialities” here
  • As a litigant you will be generally incentivised to resist wider disclosure than is absolutely necessary and so shouldn’t need to have to promise this to the disclosing party. But it is not inconceivable that this confidential agreement is exactly the ammunition you need to shut down the litigation, so your interests may favour disclosure, while the “discloser’s” may not. You don’t want your confidentiality agreement to crimp your ability to show your best you to the court process.

When all is said and done, these are all extraordinarily remote and implausible hypotheticals. They neatly illustrate the fatuity of obsessing over the minutiae of an imponderable future, and it pains me to even talk about them. However, it is in just such a fatuous neck of the woods that the legal eagle likes to build its nest so — unless you want to die in a ditch in that fatuous neck of the woods (some do; there is no accounting for taste) — you might just take a view and nod along.

References

  1. See also permitted disclosure and permitted disclosees.
  2. Absent a severe dereliction of the regulator’s duty, and in that case there’s not really much the broker can be expected to do about it, is there?
  3. This may seem a rather unsavoury metaphor, but it seems apposite.