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SEC loses 'unprecedented' bid to share Volkswagen's secret docs

2 minute read

A Volkswagen logo is seen as it launches its ID.6 and ID.6 CROZZ SUV at a world premiere ahead of the Shanghai Auto Show, in Shanghai, China April 18, 2021. REUTERS/Aly Song

  • SEC sought to share with U.S. and overseas agencies
  • VW said ruling would expose confidential information
  • Judge said SEC's proposal would hamper discovery

(Reuters) - The U.S. Securities and Exchange Commission lost a bid to share Volkswagen AG's confidential documents with other government agencies after a federal judge in San Francisco rejected the request as "unprecedented" on Thursday.

The agency sued the German automaker and its former chief executive Martin Winterkorn in 2019, alleging they defrauded U.S. bondholders in connection with the automaker's diesel emissions scandal.

U.S. Magistrate Judge Jacqueline Scott Corley on Thursday denied the SEC's bid to modify a protective order to let it share the information obtained from Volkswagen in the litigation with U.S. and foreign regulators.

Corley said such an order would make defendants "even more reluctant" to produce confidential documents in cases, "because they are not producing documents just for the current litigation, but potentially for whatever entity the SEC wants to share the information with — even foreign governments."

The company's attorney Robert Giuffra of Sullivan & Cromwell said on Friday that Volkswagen is pleased with the ruling. An SEC spokesman declined to comment beyond what the agency has filed in the case.

The agency had argued that Volkswagen had designated "nearly every page of every document" as confidential, and that sharing the information with government entities would not violate the order's purpose of protecting Volkswagen's trade secrets.

Volkswagen had said the carveout would undermine the protective order, expressing concern that the information would ultimately end up in the hands of German litigants or competitors.

Under the SEC's proposal, the agency would have notified Volkswagen when it intended to share documents and the company could try to block it in court.

Corley said the agency should instead ask the court to strip the confidential label from any documents it believes should not be shielded.

The case is SEC v. Volkswagen Aktiengesellschaft et al., U.S. District Court, Northern District of California, No. 19-01391.

For the SEC: Daniel Hayes, Eric Phillips, Kevin Wisniewski

For VW: Robert Giuffra Jr, Sharon Nelles, Suhana Han and others of Sullivan & Cromwell

For Winterkorn: Gregory Joseph, Peter Jerdee and Christopher Stanley of Joseph Hage Aaronson

Read More:

U.S. judge narrows SEC lawsuit against VW over diesel emissions

U.S. judge questions SEC on delay in filing Volkswagen suit

Jody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com

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