Legal News: AAN files to unseal compliance reports in HSBC Bank case

AAN recently joined 25 other media companies and organizations on a brief that has implications both short and long term for journalism and the public interest alike.

This case involves the prosecution of HSBC Bank for failing to prevent money laundering by drug cartels and other entities, which resulted in HSBC’s agreement to pay a $1.92 billion fine in exchange for a “deferred prosecution agreement.”  The deferred prosecution agreement required that a corporate compliance monitor review HSBC’s ongoing compliance activities, part of which involves filing a series of reports with the court.  Unfortunately, all of those compliance reports are sealed from public view.

An individual named Hubert Dean Moore Jr. filed a motion with the United States District Court for the Southern District of New York to intervene in the case for the purpose of unsealing the corporate compliance monitor reports.  The District Court ruled in Mr. Moore’s favor, ordering the corporate compliance monitor reports be made public. In response, the government and HSBC have appealed to the United States Court of Appeals for the Second Circuit. Our amicus brief asks the Appeals Court to affirm the District Court ruling that the reports be publicly available.

Specifically, we argue:

  • There is an overwhelming history of access to court records in the United States that exists for several reasons, primarily promoting public confidence in government and creating an informed citizenry.  It is well-settled that there is a broad right of presumptive access that is at its highest when documents shed light on governmental actions and possible misconduct.  Unsealing judicial records is most proper when the issues involved are “manifestly ones of public concern.”  That is certainly the case here, where we are dealing with a record-breaking $1.9 billion fine and deferred prosecution of a multinational organization. This is a decision that has been scrutinized in the US and elsewhere. The specific decision to enter into this deferred prosecution agreement was the subject of heated debate among state and federal officials and significant press coverage.  Both HSBC and the DOJ need to be scrutinized to ensure that this was the right decision.
  • Sealing documents in their entirety is inappropriate when there are less restrictive alternatives available. In this case, providing a redacted copy of the monitor’s reports would provide such a less restrictive alternative. Redaction has proven to be an appropriate means of protecting sensitive or confidential information while still allowing the public to gain access to information of public concern. The government argues that redaction will interfere with the public’s interest in and understanding of the rest of the document. But this is hardly the case: the brief cites several news stories that have been based on heavily redacted documents. Thus, the District Court’s order that the corporate compliance monitor’s reports be released with “targeted redactions” is entirely appropriate.

There are clear reasons that our members and their readers would want access to the compliance monitor’s reports.  DOJ oversight of HSBC and other major banks is an important financial issue as we continue to unravel the reasons behind the banking collapse of the last decade and the government’s efforts to ensure it is not repeated.  In the bigger sense, we are constantly fighting for access to court records, which seem to be sealed for good at the whim of the court or either party. In reality, these documents should only be sealed in limited circumstances, when a compelling reason exists and the sealing order is no broader than necessary. This order, like many others, seems to be broader than necessary and protecting those who we should be overseeing.

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