United States: OCC Files Brief Urging U.S. District Court For Southern District Of New York To Reconsider Its Ruling That Bank Examination Privilege Did Not Protect Supervisory Correspondence Between OCC And Bank Of China

Edited by: Eric R. Fischer, Jackson B.R. Galloway and Elizabeth Shea Fries

In an April 9, 2013 discovery order (the "Order") the U.S. District Court for the Southern District of New York (the "Court") ruled that the bank examination privilege did not protect documents containing certain sensitive communications (the "Documents") between the OCC and the Bank of China (the "BOC") related to the BOC's anti-money laundering ("AML") compliance performance.

On May 10, 2013 the OCC filed a brief (the "Brief") with the Court in which the OCC asked the Court to reconsider and vacate the Order.  The OCC argued in the Brief that the OCC, as holder of the bank examination privilege, must be provided an opportunity to review the Documents, and to assert the privilege and object to their production, prior to the production of the Documents in civil litigation.  The OCC asserted that in rendering the Order the Court failed to appropriately consider the so called "Fleet" factors articulated in In re Subpoena Served upon Comptroller of the Currency (Fleet) 967 F.2d 630 (D.C. Cir 1992).  The Fleet factors provide that before deciding whether documents subject to the bank examination privilege should nonetheless be produced in civil litigation, a court should consider: (1) the appropriateness of the scope of the production request, which goes to the relevance of the documents sought; (2) the availability of other non-privileged evidence; (3) the seriousness of the litigation and the issues involved; (4) the role of the government in the case; and (5) the possibility of future timidity by government employees who will be forced to recognize that their secrets are violable i.e., in the context of confidential bank regulatory communications, whether overriding the privilege could have a chilling effect on the free flow of information between a bank and a bank regulatory agency.  In the Brief the OCC argued, among other things, that (1) non-privileged internal BOC documents would provide the substance of the information sought by the plaintiffs in the case; (2) the Court had given insufficient weight to the OCC's interest and role in enforcing U.S. AML laws; and (3) the Court had failed to give adequate weight in this case to the chilling effect overriding the bank examination privilege would have on a bank's communications with its bank regulators.

The Alert will continue to follow this case and developments regarding the bank examination privilege.

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