HonorableJno. '4.McBdama,                    opinion Ho. o-5134
comiss ioner
Dapertmqmtof Banking                         Re:   Whether or not reports,docu-
Austin, Texaa                                      ments, instruments,or infor-
                                                   mation in possessionof ,tbe:~,~
                                                   BankingCommissionerof TV&&
                                                   with respectto loan and bro-
                                                   kerage companiesdoing busf?,:::
                                                   ness in Texas are privileged
Dear ?kr.&Adams:                                   matters.

              Yom request   for,an opinionupon the above-captioned   subject
matter     is as follows:

          “A suit has baen instituted>y the Securitiesand Exchange
CommissionagainstInvestorsSyndicateof America,Inc., and Investors
Mutual, Inc., in the FederalCourt at Mime&3lbs, Minnesota. The
exact nature of the chargescontainedin the complainthave not been
communicatedto this Department. Representatives  of the Securitiesand
ExchangeConamission have presentedthemselvesto this officerequesting
certain informationrelatingto the businessof these concernswithin
this State. These Representatives have requestedamwers to the following:

"1. Number of Investorsin Texas holdingdebenturesissuedby Investors
    Syndicate.

"2. The amount of oUtstandi<&certificatesIn Texas.

“3.      The amount if any, of depositsmade by the Invest&a Syndicate
         within this State to secure certific&es issued i&Texas.

"4. The type of certificatessold in Texas or authorizedto be sold.

          #The informationwhich this Departmenthas in its file is COIlI-
posed of annual statementsfiled by this condarqpursuantto the pro-
visionsof the statutesof this State, monthlystatementssubmittedto
the Departmentpursuantto the provisionscontainedin a trust agreement
entered into by and betweenthe Investors,Z,yn$icate.ind
                                                      the ,Guardian
Trust Company,and the examinationreports,which have been epared
by examinersrepresentingthis Departmentmaking periodicexaminations
ss are requiredby law. A copy of such trust agreementis also on file
in this officepursuantto the provisionsof the statuteand copies of
the kinds of debenturesissuedare attachedto and a part of this trust
agreement.
HonorableJno. Q. &Adams, page 2 (o-5134)



         "In view of the requestvhich has been made and the facts above
recitedwe desireto have your answersto the followingquestions:

          "1. Is the informationcontainedin the foregoingdocuments
on file in this departmentprivilegedor confidentail?

          "2. Would the BankingCommissionerbe authorizedunder the
law~to discloseto the representatives
                                    of the Securitiesand Exchange
Commissionanawerato the questionswhich they have propounded,the
anawersto be compiledfrom the%uments and papersabove described?

          "3. In the event that the Departmentshoulddeterminethat the
interestof the Securitiesand ExchangeCommissionand those of Texas
investorsare aonflictingwould the Departmentbe authorizedto deny the
representativesof the Securitiesand ExchangsCommissionsuch information
as it may desire?"

         "Th<questionof the right of public inspectionof the documants,
papers,files, recordsand instrumentswhatsoever,constitutingthe files
and archivesof a State departmentis a const@&y recurringone, and
ardses under a multiplicityof fact situations. In many iwtancer the
Legislaturehas prescribeda privilegeor qualifiedprivilegewith respect
to such mattars,and in others it has not done ao. In all oases,however,
there is presentas a consideration the public interestinvolvedin a
disclosurewith respectto such matters.

          InvestorsSyndicateof America,Inc. is a loan and brokerage
companf, organiaedunder tha laws of Minnesota,and doing business in
Texas, under Article l52ka,Vernon’s Civil Statutesof Texas. This
Article providesfor examinationof such corporationsby the Banking
Commission,(Sec.>), the publicationby the corporationof certain
statements,(Sec.&), a submleaionby the corporationto the Banking
Commissionerfor apqoval certaindepositsof securitiesfor its bonds,
notes, certificates,debentures,and other obligations,and shall sub-
mit to the bankingCommissionerfor his approvalspecimencopies of such
bonds, notes, certificates,debentures,or other obligations,to be
offeredfor sale to the public, (Sec.7), and requiresthe corporation's
officers,,directors,employeesand agents to executecertainfidelity
bon&, (Sec. 3).

         The variousprovisionaof the Act are made to apply to foreign
corporationshaving permissionto do businessin Texas, (Sec.,10).

          Wow, the statute,vhile authorizingthe bankingCommissioner
to exam&e or cause to be examinedsuch corporations,  doas not in any-
wise deal with the questionof the privilegeof such examiner'sreports.
There is no statute,so far as we have been able to discover,that
bears upon the privilegeof examiner'sreports,or upon the other state-
mants, instrumentsor informationmentionedby you. So that, the matter
HonorableJno. 8. McAdams,page 3 (o-5134)



must be determinedaccordingto generallaw, and in the light of public
policy.

          In the absenceof statute--theauthoritativepublic policyof
the State--nopublic officershouldat any time do any act that would be
harmfulto the public interests. Such officer,therefore,is always
clothedwith a certaindiscretionin such mattersas we are considering.
Where no statutesupervenes,and where no public interestcould be pre-
judiciallyaffected,there is no reason for denyingthe right of the
public to inspectthe records,files, documents,and the like archives
of publicofficesor departments.Where there is reasonableprobability
of injuryor hurt to the public interests,however,the custodianof such
archivesshould deny the right of public inspection.

         We discussedthese generalprinciplesin OpinionNo. 0-4610,
addressedto you, concerninga State bank in liquidation.

         We also discussedthe principlesapplicableto situations
where therewere not pertinentstatutesin OpinionsNos. o-2044,
O-3755 and 0-3987,copiesof which opinionswe are handingyou herewith.

          Article 3722 of the RevisedCivil Statutesmakas it the duty
of certainpublic officers,includingthe BankingCommissioner,to 'fur-
nish any person applyingfor the same with a copy of any paper, document
or record in their offices,and with certificatesunder seal, certifying
to any fact containedin the papers,documentsor recordsof their
office-.? This Article,however,is to be consideredin the light of what
wa have said with respectto privilegedinstrumentsor information.In
other words, the statutoryand other --tablishedrules of privilega,and
this statuteof evidence(Art. 3722) must be consideredtogetherand not
as being in anywisecontradictory  or inconsistent;each must be respected.

         In consideringthe questionof the public interestsinvolvedin
your presentsituation,.youwill of coursebear in mind that the inquiry
and requestcome from a departmentof the Governmentitself.

         You are theseforerespectfullyadvisedthat it is entirely
within your officialdisbretionto supply the informationrequasted,or,
if in that disoretionyou th'nk it would be inimitableto the public
interests;to deny such request. If you should exerciseyour discretion
againstgrantingthe inspection,the matterwould be subjectto judicial
review for any abuse of such discretion.

                                           Very truly yours
APPROVEDJCL 20, 1943                   All'ORWEY
                                               cTEmRALOF TEXAS

CrooverSellers                          BY     /s/ Ocie Speer
                                                 @ie Speer
&lET ASSISTANT                                   Assistant
AlTORNEYCWERAL
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