A federal judge has ordered the release of redacted corporate monitor reports on American International Group written by now-Deputy Attorney General James Cole, granting a journalist’s motion.
Sue Reisinger, a senior reporter at Corporate Counsel magazine, argued that release of the reports on AIG’s transaction controls served a public interest by shedding light on events that led up to the financial industry collapse of 2008. U.S. District Judge Gladys Kessler in Washington, D.C., ruled Monday that the reports had become judicial records and thus fell under a common-law right of release.
Cole had already made the confidential reports available to the Senate Judiciary Committee after Republicans at his 2010 confirmation hearing asked whether he should have realized the damaging effect that credit default swaps and other industry practices would have on the insurance giant. (Cole responded that his legal authority at AIG did not extend to scrutinizing the unregulated credit default swaps.)
The insurance giant retained Cole, then a partner at the law firm Bryan Cave LLP, as its monitor after it resolved a 2004 complaint by the Securities and Exchange Commission about possible violations of Generally Accepted Accounting Principles and signed a deferred prosecution agreement with the Justice Department. The consent order required AIG to hire a monitor, or “independent consultant,” as the company preferred to call it. The monitor was selected by the Fraud Section of the Justice Department and approved by the SEC.
Cole and his successor, Therese Pritchard, reviewed transactions between January 2000 and Dec. 7, 2004 and reported their findings to the government and to AIG, which is supposed to use the findings to evaluate its internal controls.
The reports have been kept secret outside the government, though Reisinger contended that the review of transactions leading up to the financial crash of 2008 are important government documents.
Cole’s role as a top government official, Reisinger’s filing said, serves as further reason for disclosure, particularly since controversy over his work with AIG contributed to a year’s delay in his Senate confirmation process. The Deputy Attorney General is the No. 2 official at the Justice Department.
Reisinger had filed a Freedom of Information Act request with the Justice Department in January 2011. She was told that the DOJ could not find the monitor reports. She then turned to the SEC.
But the SEC and AIG had asked a court on June, 14 2006 to prohibit public release of the independent consultant reports. The court granted this joint motion. The SEC then cited the 2006 motion in March 2011 when it denied Reisinger’s FOIA request.
Reisinger filed a letter with the U.S. District Court for the District of Columbia last April, requesting release of the reports. She was told in June that a request must be lodged by formal motion, which she filed Feb. 7.
The SEC and AIG jointly opposed this motion, contending that the reports are not judicial or public records and that the reports contained confidential information. “[T]he information in which movant claims a public interest is the very information that must be protected from disclosure,” the SEC and AIG response says.
Kessler, the judge, said that Reisinger has no First Amendment access to the documents because they were created as a result of a civil – not criminal – proceeding. The Supreme Court has held that the public has the right to attend criminal trials, and Kessler said this right has not been applied by the Supreme Court to civil proceedings.
Reisinger likewise didn’t prove that the documents have historically been available, Kessler said. “The limits of this First Amendment access are clear in this Circuit,” Kessler wrote.
However, Reisinger has a common law right to the records, Kessler decided, because the reports are judicial records and the public interest outweighs concerns about confidentiality.
The reports are ordered to be released in a redacted form. They are believed to be the first corporate monitor reports released under court order.
“Access to judicial records is one of the most important means for the public to hold the unelected judiciary accountable,” said Josh Wheeler, an attorney with the Thomas Jefferson Center for the Protection of Free Expression at the University of Virginia. “Judge Kessler’s opinion reflects this.”
Wheeler prepared the motion for Reisinger’s intervention in the case, which is Securities and Exchange Commission v. American International Group Inc., civil action 04-2070 in the District of Columbia district court.