The WorldCom and Initial Public Offering securities litigations in the S.D.N.Y. are generating judicial opinions on a wide variety of topics, with the plaintiffs frequently getting the better of the argument. Two more opinions have come down from Judge Scheindlin in the IPO allocation cases over the holidays.
Discovery of Wells Submissions
On December 24, the court issued an opinion and order addressing whether "Wells submissions" to the SEC are discoverable in subsequent litigations. The target of a SEC investigation is permitted to file a written submission, known as a Wells submission, with the agency to respond to contemplated charges. The plaintiffs were seeking discovery of Wells submissions made by the underwriter defendants in connection with the SEC's investigation of the same IPO allocation practices at issue in the current litigation. Although the Wells submissions contained offers of settlement, the court found that they are not "settlement material" and, in any event, they are relevant to the current litigation and therefore discoverable.
Quote of note: "Offers of settlement, however, are not intrinsically part of Wells submissions, which were intended to be 'memoranda to the SEC presenting arguments why an enforcement proceeding should not be brought.' To the extent that a respondent may make a settlement offer, that offer is typically clearly identified and thus easily severable from the remainder of the submission."
Holding: The underwriter defendants are ordered to produce their Wells submissions to plaintiffs on or before January 20, 2004.
The New York Law Journal has an article (via law.com - free regist. req'd) on the decision and the Securities Litigation Watch has a