Percipient LogoPercipient LogoPercipient LogoPercipient Logo
  • About
  • Services
  • Articles & Resources
  • Contact
✕

Can Your Client Claim the Fifth to Avoid a Document Subpoena?

January 19, 2016
Image of Gavel

As detailed by a recent report from the New York University Pollack Center for Law and Business, the Securities and Exchange Commission is stepping up enforcement activity against corporate defendants. One tool often used by the SEC in its enforcement and investigative activities is the document subpoena. Although the SEC enjoys broad subpoena power, there are limits, including the Fifth Amendment right against self-incrimination. As explained in a recent case from a New York federal court, persons may refuse to respond to document subpoenas under the Fifth Amendment to the Constitution if responding to the subpoena requires the person to use “extensive use of [the] mind to identify responsive documents.”

 

Learn More About Our Subpoena Compliance Services
 

 

In Securities & Exch. Comm. v. Forster, Case No. 15-mc-246 (S.D.N.Y. Dec. 10, 2015), the SEC, investigating a “pump and dump” stock scheme, subpoenaed documents from a stock promoter. The promoter invoked the Fifth Amendment and refused to produce documents. In turn, the SEC moved the court to compel production of the records but the court refused because the broad nature of the document requests required the promoter to use his mental processes to interpret and respond to the subpoena. The court believed this to be akin to a testimonial act and because the promoter invoked his right against self-incrimination, the Fifth Amendment precluded production of the documents.

 

The Fifth Amendment “Act-of-Production” Privilege May Prevent Subpoena Compliance

To invoke his Fifth Amendment privilege, the stock promoter relied on the “act-of-production” privilege which applies when document production is: 1) compelled; 2) testimonial; and 3) incriminating. In re Three Grand Jury Subpoenas Duces Tecum Dated January 29, 1999, 191 F.3d 173, 178 (2d Cir. 1999).

 

Although the Fifth Amendment does not protect against the production of pre-existing records, if the act of producing documents involves communicative aspects, compelling compliance with such a subpoena may be contrary to the “act-of-production” protection of the Fifth Amendment. This is so because responding to a subpoena may incriminate the respondent by “tacitly conced[ing] the existence of the papers demanded and their possession or control by the [person subpoenaed].” Fisher v. United States, 425 U.S. 391, 410 (1976).

 

Persons responding to subpoenas may invoke the “act-of-production” privilege if responding “requires the respondent to make extensive use of ‘the contents of his own mind'” to identify documents responsive to the subpoena. United States v. Hubbell, 530 U.S. 27, 43. As observed by the Supreme Court, requiring subpoena respondents to respond to broad document requests could be “the functional equivalent of preparation of an answer to either a detailed written interrogatory or a series of oral questions at a discovery deposition.” Hubbell, 530 U.S. at 41-42.

 

“Act-of-Production” Privilege Unavailable if Government Identifies Existence and Location of Documents

There is an exception to the “act-of-production” privilege: If the government demonstrates that it knows requested documents exist and identifies their existence and location with “reasonable particularity.” Fisher, 425 U.S. at 411.

 

However, that exception was unavailable to the SEC in Forster. The court upheld the privilege pointing out the SEC had not demonstrated with particularity it knew of the existence and location of the documents it sought and because the language of the subpoena was so broad, it would require “extensive use” of the stock promoter’s mind to identify documents responsive to the subpoena.

 

But, the court also pointed out that if the SEC could find other sources for the documents it sought, if the act of producing documents involves communicative aspects, compelling compliance with such a subpoena may be contrary to the “act-of-production” protection of the Fifth Amendment. the Fifth Amendment would not prevent the government from collecting them.

 

We have a lot to offer with subpoena response services and questions. Check out more here.

 

Share
Chad Main
Chad Main

Related posts

Your guide to eDiscovery Review Protocol
September 29, 2022

The Complete Guide to Drafting Legal Document Review Protocols


Read more
Image for article on ediscovery search in microsoft 365
July 21, 2022

What Version of Microsoft 365 Do We Need for eDiscovery?


Read more
Artificial Intelligence Defensibility
June 23, 2022

Artificial Intelligence and Legal Defensibility – Distinguishing AI Concepts and Explaining in Plain Language


Read more
Percipient Logo

Learn

Articles & Resources

Technically Legal Podcast

Company

About

Services

Contact

Talk to Us
(c) Percipient, LLC – not a law firm and
not licensed to practice law in any jurisdiction.
Privacy Policy
Website construction by WorkSite, LLC