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  • Baker, John
    The Kansas Supreme Court recently ruled in a case of first impression that the state Securities Commissioner can obtain bank customer records and prohibit the
    Message 1 of 1 , Oct 7, 2001
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      The Kansas Supreme Court recently ruled in a case of first
      impression that the state Securities Commissioner can obtain bank customer
      records and prohibit the bank from informing its customers of the
      investigation. State ex rel. Brant v. Bank of America, No. 86,280 (Kan.
      Sept. 28, 2001). The Kansas Securities Commissioner, as part of a law
      enforcement investigation of unspecified nature, served subpoenas on the
      bank seeking various customer records (signature cards, monthly statements,
      specified checks, etc.) and stating that the existence of the subpoenas was
      not to be disclosed. The bank's privacy policy stated that it would attempt
      to inform customers of subpoenas or similar legal process, unless it
      believed it were prohibited from doing so, and the bank believed it was
      obligated under the privacy policy to inform its customers of the subpoenas.
      The Securities Commissioner brought suit to prevent the disclosure of the
      subpoenas to the bank customers.

      In a split decision, the Kansas Supreme Court ruled that the
      Securities Commissioner's authority in section 407 of the Uniform Securities
      Act 1956 to make "private investigations" gave it the authority to obtain
      the bank customer information without disclosure to the bank customers. The
      Uniform Securities Act 1956 has been enacted in a majority of states, so the
      Kansas precedent may be important outside Kansas. However, the Kansas court
      also ruled that the bank customers had no reasonable expectation of privacy
      in their bank records, in contrast to the laws of many other states. The
      opinion is available online at

      http://www.kscourts.org/kscases/supct/2001/20010928/86280.htm


      John M. Baker <JBaker@...>
      Stradley, Ronon, Stevens & Young, LLP Http://www.stradley.com
      1220 19th Street, N.W., Suite 700, Washington, DC 20036
      (202) 822-9611 Fax (202) 822-0140
      FundLaw Listowner Http://groups.yahoo.com/group/fundlaw
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