Here’s a new one. In the same court document yesterday, as part of the penalty phase for former Goldman Sachs Group Inc. Vice President Fabrice Tourre, the Securities and Exchange Commission simultaneously did the following: (1) asked the judge in the case to keep information about Tourre’s pay at Goldman a secret and (2) asked the judge to reveal the information and to make it a matter of public record.
What gives? The short answer is that the SEC seems to be playing nice with Goldman, but only to a point. Yesterday the SEC filed a slew of papers with U.S. District Judge Katherine Forrest of Manhattan as part of its request that Tourre pay$1.1 million after being found liable in August for misleading investors in a deal called Abacus.
One of the exhibits the SEC filed was a declaration by Scott Mehling, Goldman’s global head of firmwide compensation, who provided a list of the annual compensation that Goldman paid Tourre from 2005 to 2012. You and I can’t see what the list says, because it’s blanked out and marked "REDACTED” in large capital letters. The SEC said it submitted the unredacted version of the list under seal because Goldman designated the document as confidential.
The SEC also filed a separate motion to seal the document. In the same motion, however, the SEC said it doesn’t believe the information about Tourre’s pay meets the standards for filing under seal. And it asked the court to order that the document “shall not be filed under seal, but instead be filed as part of the public record in this case.”
So in other words, the SEC told the judge to deny its own motion, which is something you don’t see often.
“Information pertaining to Tourre’s compensation in 2007 is already in the public domain,” the SEC said. “It is difficult to articulate what additional confidentiality concerns would exist with respect to his compensation from the same company in other years.” Nevertheless, the SEC said it was treating the document as confidential and filing the motion to seal “in an abundance of caution.”
Keep in mind, Goldman Sachs originally was a co-defendant in this same lawsuit. The bank paid $550 million in 2010 to settle the SEC’s fraud claims, without admitting or denying them. You could be forgiven for wondering why the SEC would defer to Goldman’s request for confidentiality on this matter for even a minute.
Under normal circumstances, Tourre’s pay wouldn’t be any of the public’s business. But once the information is filed with a court of law, it’s everybody’s business. The judge should do what the SEC asked her to do and make the document public.
(Jonathan Weil is a Bloomberg View columnist.Follow him on Twitter.)