SEC Rule 122

Overview and Regulatory Purpose

The Commission's authority to examine registration statements and investigate potential violations of the federal securities laws depends substantially on its ability to obtain candid and complete information from the persons and entities it examines or investigates.

Witnesses providing testimony in Commission investigations, companies producing documents in response to Commission subpoenas, and registrants submitting information in connection with Section 8(e) examinations of pending registration statements all do so with the reasonable expectation that the information they provide will be used by the Commission for its regulatory and enforcement purposes rather than disclosed indiscriminately to the public, competitors, or private litigants seeking to leverage the Commission's investigative file for their own purposes.

Rule 122 protects this expectation by establishing confidentiality as the default status of information obtained through Commission examinations and investigations, subject to disclosure only where the information has independently become a matter of public record or where the Commission or its General Counsel has made an affirmative determination that disclosure would not be contrary to the public interest.

This confidentiality framework serves multiple regulatory purposes simultaneously: it protects the integrity of ongoing investigations by preventing premature disclosure that could allow subjects to destroy evidence, coordinate testimony, or take other actions that would impair the Commission's ability to determine whether violations have occurred; it protects the reputational interests of persons under examination or investigation who have not been found to have violated any law, since the mere fact of being investigated by the Commission can carry significant reputational and market consequences regardless of the investigation's ultimate outcome; and it encourages candid cooperation with Commission examinations and investigations by assuring witnesses and document custodians that their cooperation will not result in indiscriminate public disclosure of sensitive business or personal information.

Statutory Authority and Rulemaking History

Rule 122 derives its statutory authority from Sections 8(e) and 20(a) of the Securities Act of 1933, the two provisions that authorise the specific categories of Commission activity to which the rule's confidentiality protection applies, together with Section 19(a)'s general grant of Commission rulemaking authority. 

Section 8(e) authorises the Commission to make an examination in order to determine whether a stop order should issue suspending the effectiveness of a registration statement — the examination authority that allows the Commission to investigate the accuracy and completeness of registration statement disclosure independently of its routine review process for registration statements proceeding toward effectiveness.

Section 20(a) authorises the Commission to make such investigations as it deems necessary to determine whether any person has violated or is about to violate any provision of the Act, any rule or regulation prescribed under the Act, or any order issued under the Act — the broad investigative authority that underlies the Commission's enforcement programme.

Rule 122 has existed in substantially its current form since the Commission's earliest codification of the General Rules and Regulations under the Securities Act, reflecting the Commission's longstanding institutional recognition that the confidentiality of investigative and examination materials is foundational to the effective exercise of its Section 8(e) and Section 20(a) authority.

The rule's text has remained substantively stable across subsequent decades, with its core confidentiality principle, disclosure authorisation framework, and subpoena response protocol persisting through the Commission's broader modernisation of its general administrative rules.

Key Provisions and Operative Requirements

Rule 122's operative text establishes three interlocking components: a default confidentiality rule, a disclosure prohibition with specified exceptions, and a subpoena response protocol.

The default confidentiality rule provides that information or documents obtained by officers or employees of the Commission in the course of any examination or investigation pursuant to Section 8(e) or Section 20(a) of the Securities Act shall, unless made a matter of public record, be deemed confidential.

This provision establishes confidentiality as the baseline status of all such information from the moment it is obtained, with the only automatic exit from confidential status being the information's independent transformation into a matter of public record — for example, where testimony or documents obtained in a Commission investigation are subsequently introduced into evidence in a public court proceeding, or where information initially obtained confidentially is later voluntarily disclosed by the person who provided it in a public filing or other public communication.

The disclosure prohibition establishes that, except as provided by 17 C.F.R. § 203.2, Commission officers and employees are prohibited from making such confidential information or documents, or any other non-public records of the Commission, available to anyone other than a member, officer, or employee of the Commission, unless the Commission or the General Counsel, pursuant to delegated authority, authorises the disclosure of such information or the production of such documents as not being contrary to the public interest.

This prohibition extends beyond Rule 122's own confidential information category to encompass any other non-public records of the Commission, reflecting the rule's function as a comprehensive confidentiality default for Commission internal records generally rather than a narrowly tailored protection limited solely to Section 8(e) and Section 20(a) examination and investigation materials.

The cross-reference to 17 C.F.R. § 203.2 connects Rule 122 to the Commission's broader Touhy regulations — the framework, named after the Supreme Court's decision in United States ex rel. 

Touhy v. Ragen (1951), governing the circumstances under which current and former federal employees may produce records or testimony in response to subpoenas or demands issued in litigation to which the federal government itself is not a party.

The disclosure authorisation mechanism establishes that the prohibition may be overcome only through an affirmative determination by the Commission itself or by the General Counsel acting pursuant to delegated authority that disclosure would not be contrary to the public interest. 

This authorisation requirement places the decision to disclose confidential examination or investigation materials in the hands of the Commission's senior leadership or its General Counsel rather than leaving that determination to the discretion of individual staff members who may have obtained the information in the course of a specific examination or investigation, ensuring institutional consistency and accountability in confidentiality determinations.

The subpoena response protocol addresses the specific circumstance in which a Commission officer or employee is personally served with a subpoena seeking disclosure of confidential information or documents — a scenario that arises with some regularity in private litigation where parties seek to obtain Commission investigative files through third-party discovery, or in other proceedings where litigants believe the Commission's records may contain information relevant to their case. 

Rule 122 directs that any officer or employee so served shall appear in court and, unless the authorisation described in the rule's disclosure provision has been given, shall respectfully decline to disclose the information or produce the documents called for, basing the refusal upon Rule 122 itself. 

The rule further directs that any officer or employee served with such a subpoena shall promptly advise the General Counsel of the subpoena's service, providing the Commission's senior legal staff with the opportunity to assess whether the Commission should seek to quash the subpoena, negotiate a more limited production, or determine that disclosure would not be contrary to the public interest and authorise a response.

Scope of Application

Rule 122 applies to all information and documents obtained by Commission officers and employees in connection with Section 8(e) examinations of registration statements and Section 20(a) investigations of potential securities law violations. 

The rule's broader prohibition extends to any other non-public records of the Commission, encompassing a wide range of internal Commission materials beyond the specific examination and investigation context, including internal deliberative materials, staff memoranda, and other records that the Commission has not made publicly available through its formal disclosure processes.

Rule 122's confidentiality framework applies regardless of the eventual outcome of the underlying examination or investigation — information remains confidential under the rule whether the examination ultimately results in a stop order proceeding under Section 8(d), whether the investigation results in an enforcement action, or whether the matter is closed without further action. 

The confidentiality protection is not contingent on a finding of wrongdoing; it applies equally to information obtained about persons who are ultimately cleared of any violation as it does to information obtained about persons against whom the Commission ultimately brings enforcement proceedings.

Relationship to Related Rules and Regulations

Rule 122 operates as the Securities Act-specific implementation of the Commission's broader Touhy framework, codified at 17 C.F.R. Part 203, which establishes the general procedures governing demands for testimony or production of Commission records in legal proceedings to which the Commission is not a party. 

The cross-reference within Rule 122 to 17 C.F.R. § 203.2 connects the rule's Securities Act-specific confidentiality protection to this general framework, ensuring that the procedures governing third-party demands for Commission records operate consistently whether the underlying records were obtained in the course of Securities Act examinations and investigations specifically or in connection with the Commission's broader regulatory and enforcement activities under the Exchange Act, the Investment Company Act, the Investment Advisers Act of 1940, and the other federal securities statutes the Commission administers.

Rule 122's confidentiality framework stands in deliberate contrast to Rule 120's public availability principle for registration statement content. 

The two rules together establish the Securities Act's complete disclosure architecture: information that an issuer voluntarily submits as part of its registration statement, subject only to the narrow confidential treatment exception of Rule 406, is presumptively public under Rule 120, while information the Commission independently obtains through its own examination and investigation authority under Section 8(e) and Section 20(a) is presumptively confidential under Rule 122. 

This distinction reflects the different regulatory functions the two categories of information serve — registration statement disclosure exists specifically to inform investors and the market, while examination and investigation materials exist to support the Commission's own regulatory and enforcement decision-making processes and were never intended for public consumption in the same manner as registration statement content.

Rule 122's confidentiality protection also interacts with Section 24 of the Securities Exchange Act of 1934 and the Freedom of Information Act, which together establish the framework governing public requests for access to Commission records generally. 

Rule 122's confidentiality designation for examination and investigation materials is relevant to the Commission's application of FOIA exemptions — particularly the exemptions protecting law enforcement records whose disclosure could interfere with enforcement proceedings or constitute an unwarranted invasion of personal privacy — when the Commission receives FOIA requests seeking access to materials obtained in the course of Section 8(e) examinations or Section 20(a) investigations.

Amendment History and Regulatory Evolution

Rule 122's core confidentiality framework has remained substantively stable since its original adoption, reflecting the Commission's sustained institutional commitment to protecting the confidentiality of examination and investigation materials as a structural prerequisite to the effective exercise of its Section 8(e) and Section 20(a) authority. 

The rule's stability across decades of broader regulatory modernisation throughout Part 230 reflects the durability of the underlying policy rationale — the protection of investigative integrity and witness cooperation incentives that confidentiality is designed to preserve has not diminished notwithstanding the Commission's broader transition to electronic filing and disclosure infrastructure that has transformed many other aspects of Securities Act compliance.

The Commission's general Touhy regulations at Part 203, to which Rule 122 cross-refers, have themselves been periodically updated to reflect evolving litigation practice and the Commission's experience administering third-party demands for its records and the testimony of its current and former employees, providing the operational detail that supplements Rule 122's foundational confidentiality principle without requiring corresponding amendments to Rule 122 itself.

Enforcement Context and SEC Action Patterns

Rule 122 itself does not generate enforcement actions against registrants or market participants in the manner of substantive disclosure rules, since its obligations run to Commission officers and employees rather than to regulated entities. 

The rule's practical significance arises primarily in the context of litigation where private parties seek to obtain Commission investigative files through subpoenas, motions to compel, or other discovery mechanisms, and Commission officers and employees invoke Rule 122 as the basis for declining to produce confidential examination or investigation materials absent Commission or General Counsel authorisation.

Courts have generally recognised the validity of Commission officers' reliance on Rule 122 and the broader Touhy framework as a basis for declining to comply with subpoenas without prior agency authorisation, consistent with the Supreme Court's recognition in Touhy itself that federal agencies may lawfully establish procedures requiring their employees to obtain agency authorisation before responding to subpoenas, and that an agency's refusal to authorise disclosure is itself subject to judicial review under the Administrative Procedure Act rather than through direct enforcement of the underlying subpoena against the individual employee. 

This framework allows the Commission to maintain centralised control over disclosure determinations involving its examination and investigation records while still providing an avenue for judicial review of the Commission's disclosure decisions in appropriate cases.

Examination Relevance and Key Takeaways

Rule 122 is examined at the Series 65 level as background context for understanding the confidentiality protections applicable to Commission examination and investigation materials, and the contrast between the public availability principle of Rule 120 applicable to registration statement disclosure and the confidentiality default applicable to the Commission's own investigative work product.

Candidates should understand the basic distinction between Section 8(e) examination authority — used to determine whether a stop order should issue suspending a registration statement's effectiveness — and Section 20(a) investigation authority — the Commission's broader power to investigate potential violations of the federal securities laws — and the confidentiality protection Rule 122 extends to information obtained through either category of Commission activity.

The subpoena response protocol established by Rule 122 — directing Commission personnel to decline disclosure absent prior authorisation and to promptly notify the General Counsel of any subpoena received — is useful examination context for understanding the procedural mechanics through which the Commission manages third-party demands for access to its confidential records, connecting Rule 122 to the broader Touhy framework that governs similar demands across the federal government.

The key points to retain are these. Rule 122 establishes that information and documents obtained by Commission officers and employees in the course of Section 8(e) examinations or Section 20(a) investigations are deemed confidential unless made a matter of public record. Commission personnel are prohibited from disclosing such confidential information, or any other non-public Commission records, to anyone outside the Commission absent authorisation from the Commission or the General Counsel acting pursuant to delegated authority, based on a determination that disclosure would not be contrary to the public interest.

Commission officers and employees served with subpoenas seeking such information must decline disclosure absent prior authorisation, must base that refusal on Rule 122, and must promptly notify the General Counsel of the subpoena's service. 

Rule 122 operates in coordination with the Commission's general Touhy regulations at 17 C.F.R. Part 203 and stands in deliberate contrast to Rule 120's public availability principle for registration statement disclosure. Rule 122's core confidentiality framework has remained substantively stable since its original adoption with no pending amendments through June 2026.