ARIZONA HOUSE OF REPRESENTATIVES

SB 1145: corporation commission; securities; subpoena

PRIME SPONSOR: Senator Leach, LD 11

BILL STATUS: Regulatory Affairs

Overview

Outlines permissible actions and requirements relating to compliance with a subpoena in an investigation by the Arizona Corporation Commission (ACC).

History

The ACC, the Director of the Securities Division of the ACC (Director) or other agents designated by the ACC may make public or private investigations to determine whether a person has violated any provision, rule or order relating to the sale of securities (A.R.S. § 44-1822). For the purpose of investigations or hearings, any member of the ACC, the Director or any officers designated by the ACC may administer oaths and affirmations, subpoena witnesses, take evidence and require, by subpoena or citation, the production of any information that the ACC deems relevant to the investigation (A.R.S. § 44-1823).

The names of complainants and all information or documents obtained by any officer, employee or agent of the ACC in the course of any examination or investigation are confidential unless made a matter of public record. The names, information or documents are prohibited from being made available to anyone other than the statutorily outlined individuals, except pursuant to ACC rule or unless the ACC or the Director authorizes the disclosure as not contrary to the public interest (A.R.S. § 44-2042).

Trade secret means information, including a formula, pattern, compilation, program, device, method, technique or process that: 1) derives independent economic value from not being generally known or readily ascertainable by other individuals who can obtain economic value from its disclosure or use; and 2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy (A.R.S. § 44-401).

Provisions

1. Allows the recipient of a subpoena in an investigation to either object to, claim privilege from or move to quash the subpoena or initiate these actions in superior court. (Sec. 1)

2. Allows the recipient to certify under oath that documents responsive to the subpoena are trade secrets. (Sec. 1)

3. Requires the subpoenaed party to specifically identify to the ACC the portion of the document that contains the trade secret and the reason it is a trade secret. (Sec. 1)

4. Prohibits the ACC from making any information identified under oath as a trade secret public without:

a. Redacting the information from the document; or

b. Notifying the party at least 14 days before the ACC intends to make the complete document public. (Sec. 1)

5. Allows the party to apply to the superior court for injunctive relief on the basis that disclosure of the information will cause the party irreparable harm. (Sec. 1)

6. Requires the court to exercise its contempt powers if the court finds that the trade secret certification or request for injunctive relief is made in bad faith. (Sec. 1)

7. Removes language allowing the ACC or the Director to authorize the disclosure of names, information, or documents in an investigation as not contrary to the public interest. (Sec. 2)

8. Makes technical and conforming changes. (Sec. 1,2)

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12. Fifty-fourth Legislature                       SB 1145

13. First Regular Session                            Version 1: Regulatory Affairs

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