Securities and Exchange Commission v. Virtu Financial Inc.

Opinion

BRIAN NRAW □□□ PAUL, WEISS, RIFKIND, WHARTON @& GARRISON LLP EOWARD T. ACKERMAN CAITH KUSHNER JACOR A. ADLERSTEIN DAVID K. LAKHOHIR JARRYD E. ANDERSON ae 1265 AVENUE OF THE AMERICAS UNIT 5201, FORTUNE FINANCIAL CENTER ALLAN J ARFFA mie BRIAN CLAVIN, NEW YORK, NEW YORK 10019-6064 3 DONGSANHUAN ZHONGLU JONATHAN H. ASHTOR MIAOYU GREG LIU See eae pene Vee See RSRESH SATASUBRAMANIAM* © LORETIA-E LYNCH TELEPHONE 373-3000 TELEPHONE (@6-10; 5826-6300 SCOTT A. BARSHAY JEFFREY 0. MARELL LYNN BAYARD DAVID Ww. MAYO. GARRISAN (19481991) SUITES 3601 ~ 3606 & 2610 JOSEPH J. BIAL ELIZABETH R. MCCOLM RANDOLPH €. PAUL (1946-1956) BRUCE SIRENSOIN JEAM M. MCLOUGHLIN 3@/F, GLOUCESTER TOWER H. CHRISTOPHER BOEHNING MARK © MENDELSOHN SIMON (1980-1695) rice eRheraet BRIAN BOLIN CLAUDINE MEREDITH-GOUJON LOUIS S. WEISS (1927-1950; ANGELO BONVINO . □□□ WHARTON (1927-1977 tS QUEEN'S ROAD. CENTRAL = ANDRES estea” SERRIAM Ste eruonewezseseasco 0 Bese BE? deere □□ ESS) mn WALTER F. SROWN* CATHERINE NYARADY Seesicas CAREY ZN SCONNOR™ NOBLE STREET —--BAVIDEABONA 20a fan WRITER'S DIRECT DIAL NUMBER LONDON EG2V 7JU, UNITED KINGDOM mintnihie tiNszay . □□□□□ 3 WILLIAM A. CLAREMAN AND M. □ (212) 373-3250 sete. DANIELLE □ □□□□□□□ ANASTASIA Y. PETERSON 335 MISSION STREET, 24TH FLOOR eee SecAne ANDREAS □□□□□□□□□□ IS san Francisco cAsaos EERE Eanes AUSTIN GeroLLET™ TELEPHONE 1628; 432-3100 TIMITINA DAGNEW RAVI PUROHIT THOMAS ¥V, DE LA BASTIDE fli VALERIE E, RADWANER RRR Guero | UERAY alan” PONS Snel Sean ALICE BELISLE EATON JEANNIE §. RHEE* WRITER'S DIRECT E-MAIL ADDRESS 2-2 UCHISAIWAICHO 2-CHOME □□□ aioe □□□ CHIYODA-KU, TOKYO 100-0011, JAPAN GREGORY. yO RAPHAEL M RUSSO lreisner@paulweiss.com TELEPHONE Fs) aS Rkpeew □□ rINGH™ ELIZABETH M SACKSTEDER BRIAN P FINNEGAN PAULL SANDLER ED I uTMEhY eeEbr Sure 0:0 Foren E risen □□□ □□ □□□□□□□ x —— 77 KING STREET WEST, SUITE 3100 = . FISCH □□ Se . SCHUMER AEPLIGATION GRANT romor 22s EATERNE S.ronteey SN Set SO ORD ERED ame RARRIS B, FREIDUS KYLE T SEIFRIED TELEPHONE (416: $04-0520 MANUEL ©, FREY, wannon Seas en MICHAEL E. GERTZMAN SUMAN SHIM / □□ 200! K STREET. NW ADAM M. GIVERTZ CULLEN L_ SINCLAIR WASHINGTON, DC 20006-1047 Sita re Mesane TELEPHONE (20a: 225-7300 -RASTHES Benes Subhh song shBaEW ct sSeSou™ WENA” John G Koeltl U S BD. S00 DELAWARE AVENUE. SUITE 200 BRIAN 5. GRIEVE ROBERT Y. SPERLING . 5 ae POST OFFICE BOX 42 UDI GROFMAN EYITAYO ST. MATTHEW-DANIEL MELINDA HAAG® SARAH STASNY WILMINGTON. DE 19399-0032 ALAN Se CL RTT 7 ) 3 TELEPHONE (302: 835-4410 anne RAZCETT ROBERT © TANANBAUM [ josnua Heese a RICHARD C. TARLOWE SRRRETT & NOFPMAN MONICA □□□□□□□□ RT HOL DANIEL J. TOAL ng ECs ToPRER worn AURA E □□□□ □□□□□□□ AMBAN HUSSEIN KRISHNA VEERARAGHAVAN LORETTA A. 1PPOLITO JEREMY M. VEIT JaREN SANGHORBANT Micuael voose □ COKE JENNINGS» Sen WEBER □□□ DROWN JIE C. JOHNSON THEODORE V WELLS, JR. GeInORE JONES SAMUEL WELT MATTHEW B. JORDAN LINDSEY L. WIERSMA VIA ECF SRUSsCeeus ROUTAN LiveNee't □□□□□□□□□□ PATRICK N. KARSNITZ ‘ MARK B WLAZLO JOHN C. KENNEDY STACI YABLON Batata St BEER "Menino Seegmnliey, meal! bea eres amet □□□ United States District Jud DANIEL J, KRAMER T. ROBERT ZOCHOWSKI, JR. ni cs s c Us ge ANDREW D. KRAUSE Southern District of New York tte United States Courthouse 500 Pearl Street New York, New York 10007-1312 Re: SEC v. Virtu Financial, Ine. and Virtu Americas LLC, No. 1:23-cv-08072 (JGK) Dear Judge Koeltl: : . . : Our firm represents Virtu Financial, Inc. (“VFT’) and Virtu Americas LLC ee 3 eOEys ” ee 2 2 (“VAL”) (collectively, “Virtu” or “Defendants”), in the above-referenced action. Pursuant □ a to Rules I.F and VI.A.2 of Your Honor’s Individual Practices, we ectfully request the a ane Court’s permission to file under seal four exhibits (the “Exhibits”) to the Declaration of Lorin L. Reisner in Support of Defendants’ Motion to Dismiss the Complaint, which is being filed today. Plaintiff Securities and Exchange Commission consents to this request. As described below, the Exhibits consist of confidential and proprietary information that is the proper subject of a sealing request.

PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP

Courts may seal records under their “inherent equitable powers . . . over their own process, to prevent abuses, oppression, and injustices.” Int’] Prods. Corp. v. Koons, 325 F.2d 403, 407-08 (2d Cir. 1963) (quotation marks omitted). While there is a “common law presumption of access” to judicial documents, Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 119 (2d Cir. 2006), the “weight of the presumption is a function of (1) “the role of the material at issue in the exercise of Article III judicial power’ and (2) ‘the resultant value of such information to those monitoring the federal courts,’ balanced against ‘competing considerations’ such as ‘the privacy interests of those resisting disclosure.” Bernstein v. Bernstein Litowitz Berger & Grossmann LLP, 814 F.3d 132, 142 (2d Cir. 2016) (quoting Lugosch, 828 F.2d at 119-20). Records may be sealed on a finding that doing so is “essential to preserve higher values and is narrowly tailored to serve that interest.” Lugosch, 435 F.3d at 120 (quoting Jn re N.Y. Times Co., 828 F.2d. 110, 116 (2d Cir. 1987)). The Exhibits that Defendants request to file under seal concern non-public, proprietary and commercially sensitive information contained in Virtu’s internal policies and training manuals. This Circuit has long recognized that a party’s interest in protecting confidential business information outweighs the presumption of access. See Standard Inv. Chartered, Inc. v. Fin. Indus. Reg. Auth., Ind., 347 Fed. App’x 615, 617 (2d Cir. 2009) (protecting confidential business information). Publicly filing the materials at issue would place Virtu at a competitive disadvantage by disclosing its training materials, which Virtu has spent significant time and effort to develop. It also would reveal confidential and proprietary information about Virtu’s business operations. Courts in this Circuit routinely find that the risk of revealing confidential business information that will place a party at a competitive disadvantage is a sufficient basis to overcome the presumption of access. See, e.g., JMG Improvements, Inc v. Arch Specialty Ins. Co., 2021 WL 3173022, at *3 (S.D.N.Y. July 26, 2021) (insurance company’s interest in “protecting itself from a competitor’s obtaining unfettered access to its processes regarding claim handling” outweighed presumption of access); Skyline Steel, LLC v. PilePro, LLC, 101 F. Supp. 3d 394, 412-13 (S.D.N.Y. 2015) (granting request to seal documents that would reveal confidential sales and pricing information, and details of the plaintiff's negotiations with clients); Hesse v. SunGard Systems Int’l, 2013 WL 174403, at *2-3 (S.D.N.Y. Jan. 14, 2013) (granting request to seal produced emails reflecting “sensitive client information and proprietary business information, including inter alia, the company’s billing rates and project pricing, as well as details of specific projects completed for several clients”). Additionally, the Exhibits contain extensive information concerning Virtu’s information security practices, another category of confidential business information warranting protection. See CBF Industria de Gusa S/A v. AMCI Holdings, Inc., 2021 WL 4135007, at *4 (S.D.N.Y. Sept. 10, 2021) (“protecting a company’s IT information fits comfortably within other ‘higher values’ consistently recognized by courts in this Circuit” that can prevail over the presumption of public access); see also Ramirez v. Temin & Co., Inc., 2020 WL 6781222, at *6—7 (S.D.N.Y. Nov. 18, 2020) (identifying “IT information” within the category of “business information” warranting protection). □

PAUL, WEISS, RIFKIND, WHARTON @& GARRISON LLP 3

Finally, Defendants’ request is narrowly tailored and will not impede the public’s access to information relevant to this litigation. The Complaint references and quotes from narrow portions of the policies and training manuals included in the Exhibits. Defendants’ Motion to Dismiss the Complaint similarly references and quotes from these same portions—and closely related portions—of these documents. Defendants are not seeking to redact any of these references and quotations in the briefing. And the vast majority of the information contained in the Exhibits has no bearing on Plaintiff's claims or Defendants’ motion. Because there is little to no public interest in disclosure of information not at issue in the case, see Alto v. Sun Pharm. Indus., Inc., 2021 WL 4480952, at *1 (S.D.N.Y. Sept. 30, 2021) (granting sealing motion where public interest in pages of lab notebooks that described “experiments and data on projects other than the products at issue in this case” was “low”), Defendants’ narrowly tailored motion should be granted. For the foregoing reasons, Defendants respectfully request that the Court grant Defendants’ unopposed motion and permit Defendants to file under seal the Exhibits to the Declaration of Lorin L. Reisner in Support of Defendants’ Motion to Dismiss. We appreciate the Court’s consideration and are available to address this request further if necessary at the Court’s convenience. Respectfully yours, f □ Lorin L. Reisner ce: All counsel (via ECF)