This article examines how the proportionality standard under Rule 26 can be used to limit deposition discovery of the government in enforcement proceedings brought by the U.S. Securities and Exchange Commission.

The SEC has long enjoyed the ability to conduct ex parte investigations into potential violations of the federal securities law with practically no limitation on the scope or duration of their inquiries.[1] Over these long investigations, the staff of the Enforcement Division can obtain vast amounts of data and—backed by national subpoena power—compel testimony under oath. In taking investigation testimony, the SEC staff faces none of the limits found in the Federal Rules of Civil Procedure as to the length of the testimony it takes or even the number of times the same individual can be compelled to testify. When these investigations lead to enforcement actions in federal court, attorneys for the SEC often see the cases as hitting a “reset button” and seek to begin the entire discovery process anew—including compelling testimony from the very persons who had already testified (sometimes for multiple days) in the investigation. This ability to conduct ex parte investigations while suffering no consequences from the length of its investigations or the efficiency with which they are conducted places great power in the hands of the SEC staff—and places a disproportionate burden on the parties responding to those inquiries. But some relief from this burden may be available when the actions move to federal court.