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United States Securities and Exchange Commission v. Ahmed

United States District Court, D. Connecticut

September 6, 2018

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
IFTIKAR AHMED, Defendant, and IFTIKAR ALI AHMED SOLE PROP; I-CUBED DOMAINS, LLC; SHALINI AHMED; SHALINI AHMED 2014 GRANTOR RETAINED ANNUNITY TRUST; DIYA HOLDINGS LLC; DIYA REAL HOLDINGS, LLC; I.I. 1, a minor child, by and through his next friends IFTIKAR and SHALINI AHMED, his parents; I.I. 2, a minor child, by and through his next friends IFTIKAR and SHALINI AHMED, his parents; and LI. 3, a minor child, by and through his next friends IFTIKAR and SHALINI AHMED, his parents, Relief Defendants.

          RULING ON PARTIES' MOTIONS TO SEAL [DOCS. # 867, # 868, # 870, # 893, # 907, AND #922]

          JANET BOND ARTERTON, U.S.D.J.

         In this civil enforcement action, the Securities and Exchange Commission, Relief Defendants, and non-party Oak Management Corporation ("Oak") each ask the Court to seal a multitude of documents. For the following reasons, Relief Defendants' Motions [Docs. ## 868, 907] to Seal are granted in part, non-party Oak's Motion [Doc. # 867] to Seal is granted, and the SEC's Motions [Docs. ## 870, 893, 922] to Seal and Unseal are granted in part and denied in part.

         I. Discussion

         As this Court has previously held [Docs. ## 706, 867], and as is provided by Local Rule 5(e)(3), documents may not be sealed merely by stipulation of the parties. The Court's Standing Protective Order [Doc. # 6] explains that documents filed with the Court are "public documents" which will be sealed not automatically but "only upon motion and in accordance with applicable law." Any order to seal issued by the Court must include "particularized findings demonstrating that sealing is supported by clear and compelling reasons and is narrowly tailored to support those reasons." D. Conn. L. Civ. R. 5(e)3. For a document to be properly sealed, the Court must determine the weight of the presumption of public access to that document and balance against it any competing considerations, such as the privacy interests of those resisting disclosure. See United States v. Amodeo, 71 F.3d 1044, 1050 (2d Cir. 1995) ("the weight to be given the presumption of access must be governed by the role of the material at issue in the exercise of Article III judicial power and the resultant value of such information to those monitoring the federal courts.").

         A. Relief Defendants' Motions to Seal

         The Relief Defendants move [Docs. ## 868, 907] to seal portions[1] of the transcript of Ms. Ahmed's January 23, 2017 deposition[2] and portions[3] of the transcript of her July 16, 2015 deposition[4] relating generally to the Ahmeds' minor children, the personal finances of Ms. Ahmed and friends and family, and the location and value of some property; and an exhibit to the Declaration [Doc. # 906] of Steven Hayes-Williams, filed in support of the Relief Defendants' Opposition to the SEC's Motion for Judgment and Remedies, which details the calculation of partner compensation in several Oak funds.[5] The Relief Defendants request that the Court keep in place its Endorsement Order [Doc. # 171] which prohibited disclosure of any documents or information provided by Ms. Ahmed in connection with her December 30, 2015 deposition and request that certain portions[6] of that transcript remain under seal.

         The "privacy interests of innocent third parties . . . should weigh heavily in a court's balancing equation" between the presumption of access and a request to seal. Amodeo, 71 F.3d at 1050. Both "financial records" and "family affairs" are among those "privacy interests" which may support sealing of documents. Id. at 1051. Records which would aid "[commercial competitors seeking an advantage over rivals" may also properly be sealed. Id.

         The portions of the three deposition transcripts the Relief Defendants request the Court to seal include a wide range of information regarding the Ahmeds' minor children, personal financial information related to Ms. Ahmed and the Ahmeds' family members and friends, personal contact information, and information regarding the location and value of personal and real property. Because those portions of the deposition transcripts contain personal financial and familial information, the privacy and confidentiality of which outweigh the public's interest in access to that information, those portions will remain sealed.

         Relief Defendants also request that the entirety of Ms. Ahmed's deposition transcripts remain under seal, citing this Court's Order [Doc. #171] that documents provided by Ms. Ahmed in connection with her December 30, 2015 deposition not be disclosed to any persons not involved in this case or used for any purpose other than this case "until further order of this Court." The Court later ordered [Doc. # 195] that the December 30, 2015 deposition transcript would "remain under seal until the earlier of termination of [Ms. Ahmed's] criminal money laundering prosecution or order from this Court." Since that prosecution has been terminated, that order is no longer in effect. Relief Defendants argue nonetheless that "the circumstances this Court considered then, specifically the pending criminal proceeding against the Defendant, Iftikar Ahmed, remain." (Relief Defs.' Mem. [Doc. # 868-1] at 5). It is clear from the Court's earlier order, however, that the circumstances the Court considered then were actually the then-pending criminal proceeding against Ms. Ahmed, not the still-pending criminal proceeding against Mr. Ahmed. Absent any other argument as to the ongoing need for sealing the entirety of the transcripts of Ms. Ahmed's depositions, the Court declines to seal the remaining portions of those transcripts.

         The exhibit to the Declaration of Steven Hayes-Williams at issue shows detailed information about the calculation and components of Mr. Ahmed's compensation during his time as an Oak partner. Given the subject matter of this fraud litigation, the public's interest in access to that information may be strong. However, the Court must "weigh heavily" the privacy interests of "innocent third parties" like Oak. Amodeo, 71 F.3d at 1050. In light of those interests and this Court's earlier recognition of the importance of protecting Oak's internal compensation structure, (Order [Doc. # 834] Granting Oak's Mot. at 8), Exhibit 8 to Mr. Hayes-Williams' declaration will also be sealed, but for only ten years from the date of this order, after which time motions showing good cause will be required to continue the sealing.

         For the foregoing reasons, the Relief Defendants' Motions [Docs. ## 868, 907] to Seal are GRANTED as to the specifically enumerated portions of deposition transcripts and as to Exhibit 8 to Mr. Hayes-Williams declaration, and DENIED insofar as the Relief Defendants' move to seal the entirety of Ms. Ahmed's deposition transcripts.

         B. Oak's Motions to Seal

         Oak moves [Doc. # 867] to seal employment agreements between Mr. Ahmed and Oak;[7]securities purchase agreements and documents related to investments made by Oak Funds in third party entities;[8] the unredacted copy of a webpage which identifies a portfolio company by name;[9]and the confidential portions of the transcript of the May 4, 2017 deposition of Ms. Ames.[10]

         Oak argues that the employment agreements should be sealed because they contain "confidential business information," including Oak's "compensation and bonus structure, . . . management hierarchy, and employee responsibilities." (Oak's Mot. [Doc. # 867] to Seal at 3.) Oak explains that publication of this information "could inflict serious economic injury upon Oak," if, for example, competitors accessed that information and used it to "gain an unfair advantage" against Oak by hiring employees away from Oak or frustrating Oak's attempts to hire new talent. (Id.)

         Oak argues that the securities purchase agreements and documents related to investments in third party entities must be sealed because they also contain "confidential commercial information and trade secrets," the disclosure of which would be "injurious to Oak and the Funds" because it would provide competitors "a free look at what strategies Oak employs, and what terms it has agreed to in previous investments," the opportunity to "undermine Oak's potential deals," and insight into Oak's "inner workings, including its investment decision-making process, internal procedures, and pricing information." (Id. at 4-5.)

         Oak argues that the webpage which identifies a portfolio company by name should be sealed "to minimize any commercial or reputational harm that could ...


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