Recent decisions by New York federal courts have reversed the long-standing practice of staying all discovery in civil enforcement actions during the pendency of parallel criminal proceedings. In a new trend, courts in the Eastern and Southern Districts have rejected U.S. Attorney’s office requests to stay all discovery in related civil litigation brought by the Securities and Exchange Commission. These courts have balanced the many factors and equities involving discovery stays and have near-uniformly adopted a “take it as I see it” approach, rejecting blanket stays and allowing civil discovery to proceed, but giving federal prosecutors an opportunity to object to specific requests that may prejudice the integrity of the criminal case.

Parallel proceedings occur when prosecutors charge individuals or companies with federal crimes while regulators, typically the SEC, file a civil complaint against the same or related parties. Until recently, there was no “issue:” After the U.S. Attorney’s office and the SEC filed contemporaneous criminal indictments and civil complaints (accompanied by press conferences and/or press releases), prosecutors would immediately seek, and be granted, the right to intervene and stay civil discovery in the SEC case pending resolution of the criminal case. Indeed, the government and white-collar defense bars in New York had become accustomed to their roles on this well-trodden stage.

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