Shortly after the plaintiffs in a securities class action case involving allegations of market manipulation via high frequency trading (HFT) accused the New York Stock Exchange LLC, NYSE Arca, Inc., and Chicago Stock Exchange, Inc. (n/k/a NYSE Chicago, Inc.) of withholding information, the defendants have responded to the accusations.

Let’s recall that this dispute concerns a list of documents that the NYSE defendants have designated as privileged. On February 18, 2021, the plaintiffs in this case challenged NYSE’s privilege log. In particular, the plaintiffs challenge 244 documents on the privilege log. These are documents where no lawyer is included in the communication, or, in one instance, where one lawyer was copied among a large group of recipients.

According to the plaintiffs, this privilege dispute is critical because the documents in question relate to upcoming witness depositions and because many of the documents likely implicate SEC preclusion.

The NYSE privilege log contains a total of 11,085 entries, spanning an 11-year time period from 2008 to 2019. The plaintiffs asked the Court to review the contested documents and determine whether NYSE’s designations are correct.

On February 23, 2021, NYSE responded to the accusations. The Exchange notes that its privilege log is the result of a careful and diligent process involving substantial attorney time to prepare and which ultimately resulted in privilege assertions over a tiny fraction—merely 5%—of NYSE’s document production.

“An 11,000 document privilege log is unremarkable in a case involving a complex regulatory framework and allegations spanning more than a decade”, NYSE says.

The defendants slam the plaintiff for not engaging with those facts or addressing documents individually, but instead demanding the Court to undertake time-consuming in camera review of hundreds of documents based on nothing more than counsel “finding it hard to believe” that documents described in facially valid log entries are privileged.

In particular, according to NYSE, the plaintiff’s blanket challenge to all communications between non-attorneys is not supported by fact or law.

It is hardly surprising, given the highly regulated and technical industry in which NYSE operates, that legal advice from in-house and outside lawyers is frequently sought by, forwarded to, and discussed by businesspeople, or that non-lawyers are involved in the collection of documents or information at the request of counsel. In accord with this reality, it is well settled that the discussion of legal advice by businesspeople within a corporation does not vitiate privilege, the Exchange argues.

NYSE is one of the many defendants in this lawsuit, which targets some of the major stock exchanges. The lawsuit was filed on behalf of investors that traded on a registered public stock exchange or a U.S.-based alternate trading venue, between April 18, 2009 and the present, and asserted claims against: (1) registered public stock exchanges located in the United States; (2) a class of brokerage firms; and (3) a class of HFT firms.

The plaintiffs claim, inter alia, that certain defendants allowed HFT firms to profit at the expense of the class and to manipulate securities markets in violation of federal securities laws.