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The SEC’s curious view of the Constitution and privacy rights

Our recent celebration of Independence Day is a fitting time to reflect on its origin, and to remember that protecting liberty requires continued vigilance.  In 1761, the patriot James Otis delivered a speech denouncing the use of broad search warrants.  John Adams described the speech as “the first scene of the first act of opposition to the arbitrary claims of Great Britain.  Then and there the child Independence was born.”  

The Supreme Court has referred to this moment in history in reminding us of the Fourth Amendment’s importance in preventing unrestrained searches for evidence.  In a unanimous decision, the Court in Riley v. California held that the government may not, without a warrant, search digital information on a cell phone seized from an individual who has been arrested.  The Court made clear the importance of privacy even where there are competing law enforcement interests to combat crime. 

 “Privacy comes at a cost,” according to the Court.  That is consistent with the views of most Americans, as a recent Pew survey confirmed we have a low level of confidence in the privacy of our personal data, and do not believe there are adequate limits on information collected by the government.

Evidently, these developments have not sunk in at the SEC.  Chair Mary Jo White is opposing an effort in Congress that would protect the privacy rights of individuals in the content of their emails.  Congress is working to amend the Electronic Communications Privacy Act (ECPA) by establishing a uniform search warrant requirement for the government to compel a third-party service provider to disclose the content of an individual’s emails.  In order to obtain your personal emails from a provider such as Google, the government would have to demonstrate probable cause — the same standard required to search a home or open a letter.  

The Email Privacy Act, which updates ECPA, has more than 280 co-sponsors in the House and the backing of groups across the political spectrum, from the American Civil Liberties Union to Americans for Tax Reform. In the Senate, the ECPA Amendments Act has garnered wide support as well, from Sen. Pat Leahy (D-Vt.) to Sen. Mike Lee (R-Utah).  The bills essentially codify the holding in United States v. Warshak, where the Sixth Circuit Court of Appeals held that the use of something less than a warrant, such as a subpoena or court order under the ECPA, violates the Fourth Amendment’s prohibition against warrantless searches.  The court made the common sense point that emails are entitled to the same Constitutional protection as traditional forms of communication. Just as the government may not seize your unopened letters from a third party, it should not have the ability to seize your email from a third-party service provider.

Despite broad, bipartisan support in Congress to reform ECPA, the SEC is standing in the way.  Chair White claims that the legislation would harm the SEC’s enforcement efforts.  Yet the SEC has abided by the Warshak opinion and the requirement of a warrant for the last five years.  In recent testimony on Capitol Hill,  White admitted the SEC has not subpoenaed third party providers for private emails.  This is the power she claims is essential to SEC enforcement, yet she touts the SEC’s “record year in enforcement” in 2014 that was achieved in the absence of this power.  The SEC already has many tools to obtain the content of emails without violating the Constitution.  It can subpoena the source of the content — the very individual whose emails it seeks, and can file an action in federal district court to compel compliance.  The SEC can also seek to have the court impose an adverse inference against the individual for failing to comply, a sanction that would help the SEC in a later action alleging a securities law violation.  The SEC can also subpoena a third-party service provider for certain non-content information and require it to preserve any evidence in its possession from destruction.  This is a valuable tool, as Google’s Transparency Report revealed it received more than 4,000 preservation requests impacting 17,000 accounts.

White has proposed a compromise that would allow the SEC to obtain the content of emails from a third-party service provider upon a lesser standard than required for a warrant.  However, different standards for different law enforcement agencies misses a significant point.  Once a Fourth Amendment right exists and a warrant is required, there can be no compromise.  The Supreme Court addressed this point in Riley, where it rejected several loopholes offered by the government to avoid a warrant requirement for the content of cell phones.  The Court said when it comes to the Fourth Amendment its preference is to provide clear guidance to law enforcement through categorical rules, not in an ad hoc fashion.

If Congress makes an exception to the Constitution for the SEC, this will only be the beginning of the assault on personal privacy.  Other federal agencies such as the IRS will want the same exception, as will state agencies with comparable civil enforcement authority.  Imagine the entire contents of your inbox in the hands of a government regulator — with no opportunity to filter privileged communications with your lawyer, or to protect irrelevant personal information such as communications with your spouse.  That prospect threatens our liberties in the digital age in the same way as government abuse and arbitrary law enforcement threatened the patriots who crafted our Constitutional rights.  It serves as an urgent call to action for Congress to reject the SEC’s position and pass long overdue reforms to protect our privacy rights.

Mejia is the former chief litigation counsel of the SEC and a partner with Perkins Coie.  The firm represents technology and Internet companies.

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