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Is this SEC Subpoena Unconstitutional Under the Fifth Amendment?

Posted on December 23rd, 2015

SEC v. Forster, Case No. 15-246 (S.D. N.Y., December 7, 2015) is a case involving an SEC investigation into Defendant’s alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. During the case, the SEC subpoenaed Defendant for various documents, including communications; the subpoena did not indicate any specific items for Defendant to produce. Defendant refused to comply with the subpoena, citing the Fifth and Sixth Amendments to the Constitution and calling the requests unduly burdensome. SEC filed a Motion to Compel, and at the hearing, the court pointed out that the subpoena was quite broad. SEC agreed to narrow its request and offered proposed revisions to Defendant, who insisted he would still invoke his constitutional privileges and not respond.

SEC cited several cases for the proposition that it was entitled to the subpoenaed documents, including United States v. Hatfield, Case No. 06-00550 (E.D.N.Y., April 7, 2010), and In re Boucher, Case No. 06-91 (D. Vt., February 19, 2009); but in these cases, the government had accessed metadata and a hard drive and the information sought was not unknown to the government. Here, the court said, the SEC was seeking documents based upon its “intuition”, which was not constitutional. The court looked at the SCOTUS opinion of U.S. v. Hubbell, 530 U.S. 27, 43 (2000), which stated that a subpoena violates a defendant’s Fifth Amendment rights if compliance would require the defendant to “make extensive use of ‘the contents of his own mind’” in identifying responsive documents. The court denied the Motion to Compel and quashed the subpoena.

ILS – Plaintiff eDiscovery Experts

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