Establishing Protocols of Handling Subpoenas

By Jim Martin and Larry K. Harris, Polsinelli PC

Because of the key role that community banks play in the financial lives of their customers, it is not surprising that community banks often become enmeshed in the legal travails of those customers. Whether it is a governmental agency seeking financial records, such as the Internal Revenue Service, or a more intimate situation, such as a spouse during a divorce, banks often find themselves the innocent holder of much sought-after information. It is important that a community bank develop protocols for handling subpoenas and other requests for information, and then train staff accordingly. Three federal statutes touch on the responsibilities of banks

to customers with respect to the handling of personal information: the Right to Financial Privacy Act (“RFPA”); the Gramm-Leach-Bliley Act (“GLBA”); and the Patriot Act. Subpoenas and other informa- tion requests must be reviewed promptly by experienced bank personnel to determine whether any of these statutes requires special response by the bank to the request for documents or testimony. The RFPA generally applies to subpoenas by federal agencies

respecting the records of customers of a financial institution. The basic rule is that the financial institution may not provide the subpoenaed records until it has given notice to its customer of the subpoena and allowed for the passage of a waiting period (during which time the customer may seek to quash or limit the subpoena’s coverage). The RFPA provides a number of exceptions to its customer

notification requirements. For instance, in the context of a criminal investigation, a subpoena from the U.S. Attorney or the FBI generally will not be subject to the notification requirements. Other U.S. agencies may also use provisions in the RFPA to avoid notice to a bank customer where the agency believes that such notice will allow the bank customer to hide information or money. The GLBA requires that financial institutions establish policies

respecting the security, integrity, and confidentiality of customer information. More particularly, financial institutions must disclose to consumers what types of information it shares with third parties

Jim Martin ( is a Shareholder at Polsinelli PC. Mr. Martin is in the Financial and Securities Litigation Practice Group, concentrating his practice in the area of commercial and business litigation, with an emphasis on financial and fiduciary matters. Jim can be reached at 314-552-6802.

and what uses those third parties may make of that information. Consumers are permitted to opt-out of the sharing of certain types of nonpublic personal information under some circumstances, but those opt-out provisions do not apply to all sharing situations. The Patriot Act encompasses the filing of Suspicious Activity

Reports as well as currency transaction reports. Importantly, financial institutions are severely restricted in providing to others information regarding the filing of SARs. A sound subpoena response policy should inform all bank

personnel as to the procedures to follow in the event a subpoena is received by the bank. Generally speaking, it would be appropriate to forward subpoenas to a senior officer of the bank. That officer can, working with counsel, consider what statutory obligations apply to the bank’s response to the subpoena, and what options the bank may have in handling its obligations to its customer and to the party for whom the subpoena was delivered. Among other issues, they can determine:

    or others

  documents, or testimony, or both

 or conversely, an obligation to not inform its customer, of the receipt of the subpoena

 has an interest in objecting to the subpoena, and requesting that the subpoena be quashed or modified

  to the issuing party, rather than the bank’s customer or the bank itself

Only once senior staff and counsel have considered these and related issues can the bank plan out an appropriate response to a subpoena.

Larry K. Harris ( is a Shareholder at Polsinelli PC. Mr. Harris in the Financial Institutions Practice Group as well as the Financial and Securities Litigation Practice Group, and concentrates his practice to working with community banks with respect to regulatory, corporate, transactional, and capital formation matters. Larry can be reached at 314-889-7063.



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