Securities and Exchange Commission v. Virtu Financial Inc.

Opinion

D Tpaa TT 2 Cj > MATTHEW W. ABBOTT ROBERT A. KINDLER PAUL, WEISS, RIFKIND, WHARBT ON & GARRISON LLP EDWARD T ACKERMAN ALEXIA GO. □□□□□□□ JACOB A. ADLERSTEIN NINA KOVALENKG WILL AITKEN-DAYIES* DANIEL J. KRAMER 3285 AVENUE OF THE AM ERICAS UNIT 5201, FORTUNE FINANCIAL CENTER Zoeere cRNO LB SOULBY* AA anise □□ NEW YORK, NEW YORK 19019-6064 5 DONGSANHUAN ZHONGLU JONATHAN H. ASHTOR CAITH KUSHNER CHAOYANG DISSRICT. BEING 109020. CHINA RONEEN SALAGUBRAMANIAM? SREGORV □ LAUFER FELEPHONE 1212) 373-3600 FELEPHONE 186-10) 58286300 SCOTT A. BARSHAY BRIAN Cc. LAVIN, PONH BAYARY HaovureRs$ Liu LLOYD K GARRISON (1946-19911 BAYARO - OSEPH J. BIAL TIMOTHY LOWE* RANDOLPH E. PAUL (1946-1956) SUITES 3601 ~ 3606 & 36160 daver BIRENSOIM RANDY LUSKEY* SIMON RIFKING (1980-1995: ee en ee Lantonnnn BREN SOUIN TR NINS SOEFREY □□□□□□□ Lisayctorn isouesn's ROAD ceNTRAL «= SNonE UOexe ert □□□□□□□ " □ NORE G BOUCHARD* JOHN F WHARTON (1927-1977: HONG KONG Put 6. BRACHMAN ARNE McGiNAtis ROBERE A. BRITTON SEAN, MCLOUGHLIN TELEPHONE 1952} 2846-0300 BRAD SROWN MARK □□□ MENDELSSOHN WALTER F. BROWN* CLAUDINE MEREDITH 'GOUSON eased foe aerate LONDON W1B 54N, UNITED KINGDOM Bayig Beene ERIN Honea LL: WRITER'S DIAL NUMBER TELEPHONE (44 207 7367 1600 GEOFFREY A CHEFIGA GATHERINE HYARADY ELLEN N. CHING JANE &. OBRIEN (212) 373-3250 2029 CENTURY P 2 fewis's, clayton” Shap ReOnUN 3 ARK EAST, SUITE 2000 Le 2 S EAR’ iG LOS ANGELES, CALIFORNIA 90967-3006 ReBEScA Ss COCeARS SRVSTAL L. PARKER WRITER'S DIRECT FACSIMILE : - TAY COHEN LINDSAY B. PARKS TELEPHONE: (3101 982-4380 KELLEY A, COANISH ANDREW M. PARLEN TIMOTHY CRUICKSHANK JGHN PATTEN* (21 2) 492. 0250 CHRISTOPHER J. CUMMINGS DANIELLE □□□ PENHALL - nse meson ovmerr sara rion HUTA haacrior ms SASHA □□□□ SAN FRANGISCO, CA 94105 T AS Shi MERE. DEARBORN? ANDREAS □□□□□□□□□□ OLRECT E-MAIL ADDRESS TELEPHONE (6261 432-5100 MEREDITH ae RBOR JESSICA E. PHILLIPS* ALIGE SELISLE FATON AUSTIN S. POLLET* lrei lwei CAROLINE BL EPSTEIN VALERIE ©, □□□□□□□□ eisner@pau WeISS.COM FUKOKU SEIME! BUILDING CAROLINE BeOS VAGERIE □□□□□□ 2° UCHISAIWAIGH® 2°CHOMe RNoREW FinNce SORNMIE SREEES CHIYODA*KU, TOKYO 100-001 [, JAPAN BRAD J. FINKELSTEIN ANDREW N. ROSENBERG TELEPHONE 8473) 3597-8101 BRIAN P FINNEGAN JACQUELINE FP RUBIN ROBERTO FINZI RAPHAEL M. RUSSO BERN sert Hee CEN TORONTO-DOMINION CENTRE KATHERINE B. FORREST AAROM J. SCHLAPHOPE □ VICTORIA 5. FO eS E T □□ SCI 77 RING STREET WEST, SUITE 3100 HARRIS 5. FREIDUS KSBERT B. SCHUMER mio Wok toa DAVID FU FRIEDMAN BRIAN SCRIVARI Bi DP. =! BRIA CI TORONTO, ONTARIO 113 MATTHEW FRIEOMAN KYLE 7, SEIFRIED TELEPHONE 7416: 504-0529 KENNETH A. GALLO KANAON K. SHANMUGAM HEUVEN PF GARRETT SCOTT A, SHER* ADAM MOGIVERTZ MARISN &. SHIN B. = 2001 K STREET, MW ShiVATORe GOGLIORMELLA ANUSHA SIMHA WASHINGTON, DC 20006-1047 NEIL GOLDMAN CULLEN LESINCLAIR MATTHEW B. GOLOSTEIN MA a TELEPHONE (202; 223-7300 ROBERTO J, GONZALEZA KYLE SMITH BENJAMIN GOOPCHILD AUDRA J. SOLOWAY MARTHA L. GOODMAN SCOTT M. SONTAG 1313 NORTH MARKET STREET. SUITE 806 enarces SSOSE IR Toe □□□ A , POST GFFEGE BOX 32 SCE GRAHAM ROBERT Y¥. SPERLING VALMINGTON, DE 19849-0032 BRIAN S. GRIEVE EVITAYO, ST □□□□□□□ □□□□□□□□ fecernone son essanre BELSRSPUAR aun staan ALAN 5. HALPERIN AIDAN SYNNOTT □□ - eee ee ee OCCU HAMMERMAN ROBERT D. TANANBAGM TT IAN M. HAZLETT BRETTE TANNENBAUM out Bieasaa, □□□□ ruary MICHELE HIRSHMAN DANIEL J. TGAL Feb a 12, 2024 JARRETT HOFFMAN LAURA C. TURAND ROBERT BOLO CONRAD VAN LGGGERENBERGS CHRISTOPHER HOPKINS KRISHNA YER RARAGHAVAN DAYVIO S. HUNTINGTON JEREMY M. VEIT AMRAN HUSSEIN LIZA M. VELAZGUEZ LORETTA & FPPOLITO MICHAEL VOGEL WILLIAM A. ISAACSON? ANDREA WAHLQUIST BROWN VIA ECF SOMAIL TANI JOHN WEBER FAREN JANGHORBEANI ERIC WEDEL BRIAN M. JANSON JHEODORE V. WELLS, JR. LUKE JENNINGS SAMUEL J. WELT Jer aun, Lreey □□□□□ DEIRCRE JONES~ LAWRENCE i. WIFDORGHIC Honorable John G, Koeltl MATTHEW B, JORDAN HARK B WLAZLO ste Seurieppapes Wioureaws = eas Fon BRA United States District Judge JOHN G, KENNEDY TONG YU “str tare SER □□ □□□ Southern District of New York Role KIMPLER aR. United States Courthouse ANd ADMH TE TO [HE NEW YORK BAA 500 Pearl Street New York, New York 10007-1312 Re: SEC vy, Virtu Financial, Inc., No. 1:23-cv-08072 (JGK) Dear Judge Koeltl: : : ‘ “6 ” : : Our firm represents Virtu Financial, Inc. (““VFI”’) and Virtu Americas LLC 33 . t 7 33 te +F (“VAL”) (collectively, “Virtua” or “Defendants”), in the above-referenced action. Pursuant wos . : - to Rules LF and VI.A.2 of Your Honor’s Individual-Practices, we respectfully request the > Lo. aoe ‘i saoty oy . Court’s permission to again file under seal four exhibits (the “Exhibits”) to the Declaration : . 5 . +o . of Lorin L. Reisner in Support of Defendants’ Motion to Dismiss the Amended Complaint, which is being filed today. Plaintiff Securities and Exchange Commission consents to this motion. - : APPLICATION GRANIED x LO if John G. Koel, US... i fet or □

Virtu filed a substantively identical application to seal the same Exhibits in support of Virtu’s first Motion to Dismiss on December 4, 2023, ECF No. 21, which the Court granted on December 5, 2023 ECF No. 26. For the reasons discussed in Virtu’s first letter motion, and reiterated below, the Exhibits should be sealed because they consist of confidential and proprietary business information. Courts may seal records under their “inherent equitable powers . . . over their own process, to prevent abuses, oppression, and injustices.” Jnt’l 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 (Qd 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 In 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) Ginsurance 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 watranting 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). Finally, Defendants’ request is narrowly tailored and will not impede the public’s access to information relevant to this litigation. The Amended Complaint references and quotes from narrow portions of the policies and training manuals included in the Exhibits. Defendants’ Motion to Dismiss the Amended Complaint similarly references and quotes from these same portions--and closely related portions--of these documents. Defendants ate 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 again 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 the Amended Complaint. We appreciate the Court’s consideration and are available to address this request further if necessary at the Court’s convenience. Respectfully yours,

Lorin L. Reisner cc! All counsel (via ECF} .