87 F.3d 413 (10th Cir. 1996), 95-1425, Application to Enforce Administrative Subpoenas Duces Tecum of S.E.C. v. Knowles

Docket Nº:95-1425.
Citation:87 F.3d 413
Party Name:In the Matter of an APPLICATION TO ENFORCE ADMINISTRATIVE SUBPOENAS DUCES TECUM OF the SECURITIES AND EXCHANGE COMMISSION, Applicant-Appellee, v. Gaye B. KNOWLES, Respondent-Appellant.
Case Date:June 20, 1996
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 413

87 F.3d 413 (10th Cir. 1996)

In the Matter of an APPLICATION TO ENFORCE ADMINISTRATIVE

SUBPOENAS DUCES TECUM OF the SECURITIES AND

EXCHANGE COMMISSION, Applicant-Appellee,

v.

Gaye B. KNOWLES, Respondent-Appellant.

No. 95-1425.

United States Court of Appeals, Tenth Circuit

June 20, 1996

Page 414

Raymond L. Robin, Olle, Macaulay & Zorrilla, Miami, Florida, (David W. Stark, Amy J. Griffin, Otten, Johnson, Robinson, Neff & Ragonetti, P.C., Denver, Colorado, with him on the briefs), for Respondent-Appellant.

Robert M. Fusfeld, Securities and Exchange Commission, Denver, Colorado, (Simon M. Lorne, General Counsel, Jacob H. Stillman, Associate General Counsel, Katharine B. Gresham, Assistant General Counsel, Catherine A. Broderick, Counsel to the Assistant General Counsel, Securities and Exchange Commission, Washington, D.C., Paul Gonson, Solicitor, of Counsel, on the brief), for Applicant-Appellee.

Before SEYMOUR, BRORBY, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

This case arises out of the enforcement by the district court against the appellant, a foreign national, of two administrative subpoenas duces tecum issued by the Securities and Exchange Commission. The appellant argues that the district court lacked personal jurisdiction to enforce the subpoenas. The district court held that it did not need personal jurisdiction over the appellant to do so.

The question presented is whether the appellant has the requisite minimum contacts to justify the district court's exercise of personal jurisdiction over him. This court holds that he does and that the district court properly enforced the subpoenas.

I. BACKGROUND AND PROCEDURAL SETTING

On June 14, 1995, and again on June 30, 1995, the Securities and Exchange Commission (the "SEC") issued administrative subpoenas duces tecum in the name of the appellant, Gaye B. Knowles. The SEC served Knowles with the first subpoena by hand at LaGuardia Airport in New York City. It later served the second on Knowles's counsel in Miami, Florida. These subpoenas were issued in connection with the Formal Order of Investigation in the nonpublic investigation conducted by the SEC out of its Denver, Colorado, office, In the Matter of the Rockies Fund, Inc., Redwood Microcap Fund, Inc., and Combined Penny Stock Fund, Inc., et al. 1 The SEC issued these subpoenas pursuant to its authority under 15 U.S.C. §§ 77s(b), 78u(b), and 80a-41(b).

Knowles is presently a Bahamian citizen and resident and has been so since 1951. He is an independent investment consultant and, at the times the subpoenas were served on

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him, was also the president of two Bahamian companies, Global Petrol Trading and Swiss EuroFund, Inc. 2 In the investigation, the SEC sought to determine whether bank accounts in the names of these two companies were used to bribe brokers in the United States to sell certain stock of American companies in violation of federal securities laws. The first subpoena directed Knowles to appear at a deposition and to produce certain personal documents and documents relating to the bank accounts of Global Petrol Trading. The second subpoena directed the same and called for Knowles to produce documents relating to the bank accounts of Swiss EuroFund, Inc.

In response to the subpoenas, Knowles appeared for deposition in Miami, Florida, on July 12, 1995. Knowles produced certain corporate documents pursuant to the subpoenas but objected to producing monthly banking statements and other banking documents of the two companies. In order to enforce the subpoenas, the SEC applied to the district court in the judicial district where it is conducting the investigation, as authorized in 15 U.S.C. §§ 77v(b), 78u(c), and 80a-41(c).

The SEC filed an Ex Parte Application for an Order to Show Cause and Application for an Order Compelling Compliance with Administrative Subpoenas Duces Tecum. The United States District Court for the District of Colorado subsequently issued an Order to Show Cause. Thereafter, the SEC served Knowles with the Order to Show Cause outside his home in Nassau, Bahamas. Knowles responded to the Order to Show Cause and moved the district court to dismiss the SEC's application for lack of personal jurisdiction over him.

In an Amended Memorandum Order and Opinion, the district court held that it did not need personal jurisdiction over Knowles in order to enforce the subpoenas against him. It held, instead, that judicial enforcement of an administrative subpoena may be had where the agency can show that: (1) the inquiry is conducted pursuant to a lawfully authorized, legitimate purpose; (2) it is reasonably relevant to an investigation which the agency has authority to conduct; and (3) all administrative prerequisites have been met. See United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-55, 13 L.Ed.2d 112 (1964); SEC v. Blackfoot Bituminous, Inc., 622 F.2d 512, 514 (10th Cir.), cert. denied, 449 U.S. 955, 101 S.Ct. 362, 66 L.Ed.2d 220 (1980). The district court determined that the SEC met this three-pronged burden and that Knowles had adduced no evidence to the contrary. It therefore ordered Knowles to comply with the subpoenas within ten days. This court subsequently granted Knowles's Motion to Stay the Amended Memorandum Order and Opinion pending appeal. This appeal followed.

On appeal, Knowles argues that the district court erred when it determined it did not need personal jurisdiction over him in order to enforce the subpoenas. He also argues that the district court could not properly exercise jurisdiction over him because of his lack of personal contacts with the United States. In response, the SEC maintains that the district court had personal jurisdiction over Knowles based upon sufficient minimum contacts with the United States in relation to: (1) the subpoenas; (2) the matters under investigation by the SEC; and (3) his general business. In the alternative, the SEC argues that the minimum contacts analysis is not required because the district court had personal jurisdiction over Knowles based upon the SEC's service of the subpoenas on Knowles within the territorial limits of the United States. The SEC does not argue that personal jurisdiction is not required in order to enforce the subpoenas, as the district court held.

II. JURISDICTION

This court has jurisdiction to review the Amended Memorandum Order and Opinion under 28 U.S.C. § 1291. The district court's ruling on personal jurisdiction involves a question of...

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