SEC Is A Due Process Nightmare: Searches Emails Without A Warrant, Refuses To Share Exculpatory Evidence

from the the-sec-doesn't-like-the-constitution dept

Back in December, we wrote about the effort to push for ECPA reform by noting that one of the main government agencies fighting against it was the SEC, which wanted the ability to snoop through your emails without getting a warrant. If you don’t remember, ECPA is an excessively outdated law from 1986, whose definitions make no sense in the internet era (especially one with cloud computing). The key example often given is that emails on a server that are over 180 days old are considered “abandoned” and thus no warrant is needed to access them. That may have kind of made sense in an era when people downloaded all of their email, but now that nearly all email remains on servers somewhere it makes no sense at all. There are other problems with ECPA similar in nature (opened vs. unopened emails are treated differently, for example), but it’s clear the law is outdated.

Two stories popped up last week that raise serious concerns about the way that the SEC tramples on the Constitution. The first is that in a hearing, SEC boss Mary Jo White was asked why the SEC is so resistant to ECPA reform and what’s wrong with getting a warrant, and more or less admitted that it’s standard practice for the SEC to not get a warrant, but to rely on loopholes in ECPA to get access to emails. Prior to this, many had assumed that this was just a desire of the SEC, not that they were regularly doing it. But White’s answer makes it clear that the SEC views this practice — which seems like it should be a clear 4th Amendment violations — as standard operating procedure.

While she insists that the privacy issues aren’t a huge deal, because the SEC tries to “give notice” to the subscriber whose email is being accessed, that still doesn’t explain why paper documents require a warrant, and yet the SEC doesn’t bother with the much higher standard (including judicial review) of a warrant for electronic documents.

Meanwhile, concerning a separate issue, Mark Cuban and his lawyer published an op-ed in the Wall Street Journal last week, discussing the SEC’s totally bogus case against him for insider trading, which got tossed out by a lawyer. The key issue they discussed is how the SEC had exculpatory evidence that proved Cuban had done no wrong from back in 2004 — and then did everything possible to avoid turning over that evidence, as is normally required in legal proceedings.

In a criminal trial, the federal government has long been obliged to promptly turn over to the defense any evidence that could show that the accused did not commit the offense of which he is accused. The Brady rule (announced in the 1963 Supreme Court case, Brady v. Maryland), prevents one-sided prosecutions in which the defendant is kept in the dark about information that might show that he is innocent.

The government’s job as criminal prosecutor is not to obtain convictions, but “to do justice,” according to the traditional legal maxim. It should be required to follow the Brady rule in civil trials as well. But the SEC does not, even when it accuses a citizen of fraud. Had the agency complied with this simple rule in its recent insider-trading case against one of us, Mark Cuban, it is unlikely that a lawsuit would even have been filed, let alone go to trial.

At issue were notes the SEC had concerning the details of Cuban’s conversation with the CEO of, the search engine Cuban had invested in (and then sold all his shares in), which showed that, contrary to the SEC’s claims in the case against him, Cuban had never made certain promises. When Cuban and his lawyer asked for these notes, the SEC resisted.

The SEC, however, resisted the disclosure of these notes for the next three years. Even up until the time Mr. Cuban took the stand, the SEC continued to fight to keep the notes from being shown to the jury by asking the judge to exclude them from evidence. Fortunately, the judge disagreed and the jury ultimately cleared Mr. Cuban of a charge of insider trading.

So, reading both of these stories, we see that the SEC feels that it is free to ignore both the 4th Amendment (against search and seizure without a warrant) and the 14th Amendment (concerning due process). Don’t we think that agencies of the federal government should be required to follow the Constitution — especially basic concepts like protecting the privacy of individuals and giving them basic due process? And, for those of you who think this is no big deal, because it’s the SEC, and the SEC just goes after big bad bankers and the like, recognize that the agency following right behind the SEC in fighting ECPA reform is the IRS. Do you feel it’s similarly okay for the IRS to search your emails and electronic records without a warrant while also believing that it need not share any of the exculpatory evidence it finds, proving your innocence, while bringing a case against you for violating the law?

Oh, and just for the hell of it, let’s take this a step further. Just a few weeks ago, the NY Times reported on an increasingly popular tactic of law enforcement to effectively use the SEC to trick people into effectively implicating themselves in criminal cases. It tells the story of a low-level guy who worked at a law firm, and was asked by the SEC to “help out” with an investigation. Only at the last minute, was it mentioned that someone from the district attorney’s office would be present — and at no time was there any indication that the guy was being investigated for criminal behavior. But thanks to the SEC smokescreen, the guy was indicted, and he’s still not sure why.

So, now it’s an SEC that ignores the Constitution, searches emails without a warrant, hides exculpatory evidence and surreptitiously uses these “investigations” to help build out criminal charges against people on a highly questionable basis. See the problem, yet?

The folks over at are fighting to reform ECPA, which would at least solve half of the problem above. Right now, the SEC and the IRS remain the main government agencies aligned against such reform. It’s time to tell those agencies that they need to obey the Constitution too.

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Comments on “SEC Is A Due Process Nightmare: Searches Emails Without A Warrant, Refuses To Share Exculpatory Evidence”

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Anonymous Coward says:


So, reading both of these stories, we see that the SEC feels that it is free to ignore both the 4th Amendment (against search and seizure without a warrant) and the 14th Amendment (concerning due process).

Not that it really matters, but federal due process is a 7th amendment issue, not a 14th. The due process part of the 14th specifically only applies to the states (because the 7th already covered the federal government, most likely.)

That One Guy (profile) says:

Re: Re:

They are NOT a law enforcement agency.

Hence why they’re so bent on never getting a warrant, they know they’d have quite the time explaining just why it should be granted.

Just because they are a government agency doesn’t mean they have the authority to snoop our communications.

Unfortunately, most government agencies these days seem to operate under the idea of ‘We have authority to do whatever we want, until a judge actually tells us to stop'(at which point they continue to do so anyway, they just try and hide their activity better, because no judge so far has had the guts to actually apply some freakin’ penalties when an agency is caught bending/breaking the law).

DensityDuck says:

Re: how are they doing it?

“Just how the hell is the SEC snooping on our emails?”

If my friends in the investment industry can be given credence, it’s because the SEC says it must be allowed. If a company refuses to give the SEC total access to its email, then that company is not given certification and can’t sell anything to anybody, can’t handle money, can’t buy or sell stocks, and so on.

Anonymous Coward says:

Oh, this rings a bell

“The government’s job as criminal prosecutor is not to obtain convictions, but “to do justice,” according to the traditional legal maxim.”

Let us listen to the character of Arthur Kirkland as he delivers the best courtroom speech in the history of cinema:

“Your Honor, Mr. Foreman, ladies and gentlemen of the jury, my name is Arthur Kirkland, and I am the defense counsel for the defendant, Judge Henry T. Fleming. Now, that man over there, he’s the prosecuting attorney. And he couldn’t be happier today. He is a happy man today because today he’s going after a judge. And if he gets him…if he gets him, he’s gonna be a star. He’s going to have his name in this month’s Law Review, centerfold, “Lawyer of the Month.”

Now, in order to win this case, he needs you. Naturally. You’re all he’s got, believe me. So, he’s counting on tapping that emotion in you which says, “Let’s get somebody in power. Let’s get a judge.”

However, these proceedings are not about that. These proceedings are here to see that justice is done. And justice is, as any reasonable person would tell you, the finding of the truth. And what is the truth today? One truth, a tragic one, is that that girl has been beaten and raped. Another truth is that the prosecution doesn’t have a witness. Does not have one piece of substantiating evidence other than the testimony of the victim herself. […]

[…] Let’s get back to justice. What is justice? What is the intention of justice? The intention of justice is to see that the guilty people are proven guilty and that the innocent are freed. Simple, isn’t it? Only it’s not that simple. However, it is the defense counselor’s duty to protect the rights of the individual as it is the prosecution’s duty to uphold and defend the laws of the state. Justice for all.

Only we have a problem here, and do you know what it is? Both sides wanna win. We wanna win. We wanna win regardless of the truth. And we wanna win regardless of justice. Regardless of who’s guilty or innocent. Winning is everything. […]”

trollificus (profile) says:

How can this be???

Gee…and I remember learning, in “Civics Class”, back when we had “Civics Class”, that the government operated for the good of the people, indeed, was to serve the people!!
Doesn’t seem to be the case, does it? Seems more like every department, agency, and “Office of ….” aspires to empire-building, expanded ‘responsibilities’, increased influence, staff and budget ad infinitum and horrific screams at any HINT of reduction.

How can this be? Well, I hate to be an asshole*, but it’s your fault.

Yep. As long as you buy into the fiction that there are ‘good guys’ and ‘bad guys’ in this leviathan of a scam. and support the ‘good guys’, you are supporting crony capitalism, corruption and a status quo that props up undeserving elites. The examples are endless, but you keep falling for “Oh we have to stop those mindless, racist, gun-loving Puritanical homophobic redneck science-haters!” (or, possibly, “We have to stop those America-hating, race-baiting, culture-degrading, reality-deconstructing, vote buying redistributors of ‘wealth’ I worked for!!”)

They’re ALL in on it. They divide you over stupid inconsquentialities like abortion and gun control while steadily increasing and entrenching their own power. There are no ‘good guys’. Sorry.

*-truth value of this statement=

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