Latest Case: United States v. Bacon (Constitutional Law)

The Clients’ Waiver of Their Rights Under Regulation BI of the Securities and Exchange Commission

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses the Securities and Exchange Commission (SEC)’s Regulation Best Interest (BI), which imposes on broker-dealers a commitment to act in the best interests of their clients. Specifically, Frankel addresses the SEC’s treatment of client waivers of the Regulation BI, which goes even further than general fiduciary law to prohibit any waiver of the broker-dealer’s conflicting interests.

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United States v. Bacon

Docket: 18-4163

Opinion Date: February 21, 2020

Judge: Mary Beck Briscoe

Areas of Law: Constitutional Law, Criminal Law

Defendant-Appellant Michael Bacon appealed a district court’s decision to keep the supplement to his plea agreement filed under seal. In 2015, Bacon pleaded guilty to two counts of bank robbery and one count of robbing a credit union, pursuant to a written plea agreement. At his combined plea and sentencing hearing, the district court asked Bacon if he had signed the documents relating to his plea agreement. After responding that he had not, Bacon’s counsel explained that Bacon was “concerned about the [plea] supplement” and asked “for permission to file the plea agreement without the [plea] supplement. The district court responded that under Utah local rules, supplements were sealed in every case, “and we do that to protect the rare person who does cooperate.” Plea supplements describe the nature of the defendant’s cooperation with the government or lack thereof. Bacon ultimately refused to sign his plea supplement, explaining to the court that “[w]hen you go off to prison and you’ve got something sealed inside your paperwork and the yard gets the paperwork and they see you’ve got a sealed document, they think you cooperated, and they want to hurt you.” His counsel signed it on his behalf. At Bacon’s resentencing, the parties did not dispute that Bacon’s supervised release term should have been reduced to 36 months, however, a dispute emerged over the sealed plea supplement. Bacon addressed the court himself, regarding the sealed plea supplement, stating, “If I don’t wan’t [sic] to place my life in jeopardy, I don’t see how the federal government can force me to do that.” Bacon contended the district court erred by failing to consider the common law right of access to court documents and by failing to make case-specific findings regarding sealing on the record. The Tenth Circuit determined defendant was challenging the district court’s decision to keep a specific document under seal, not its authority to enact a local rule. “A presumption of openness must be overcome for a judicial record to remain under seal. The record demonstrates that the district court did not consider this presumption of access to judicial records.” Because the Court determined the district court failed to articulate a case-specific reason for its sealing decision, its decision was vacated and the matter remanded.