SEC Can Force Lawyer to Reveal Client’s Records

     (CN) – A Nevada attorney must submit to the Securities and Exchange Commission’s subpoena of his bank records as it tries to collect on a $55 million judgment against one of the lawyer’s clients, the 9th Circuit ruled.



     Attorney Harold Gewerter filed a motion in the U.S. District Court of Nevada to quash the subpoena, which ordered him to show the SEC records for a trust account set up for his client, John Edwards. The SEC won a $55 million judgment against Edwards in 2009 for violating federal securities laws. Edwards neglected to pay, but the SEC found out that he had wired $25,000 to Gewerter’s client-trust account, held at Bank of the West. Bank of the West is based in San Francisco, so the SEC obtained its subpoena in California’s Northern District.
     Gewerter asked U.S. District Judge Larry Hicks in Nevada to cancel the subpoena, but Hicks refused, finding that he did not have the authority to reverse a California federal judge’s order.
     The federal appeals panel, which covers both districts, affirmed unanimously in a seven-page order Friday.
     The Federal Rules of Civil Procedure clearly prohibit District Courts from quashing each other’s subpoenas, the San Francisco-based panel found. The issue was one of first impression for the 9th Circuit; the court joined the 8th Circuit and District of Columbia Circuit with its interpretation of civil procedure.
     “The issuing court, and not the court where the underlying action is pending, has the authority to consider motions to quash or modify subpoenas under Rule 45 of the Federal Rules of Civil Procedure,” Judge Mary Schroeder wrote for the three-judge panel.
     “Because the District Court for the Northern District of California issued the subpoena, the District Court for the District of Nevada did not err in deciding that it lacked jurisdiction to consider Gewerter’s motion to quash,” she added. “We therefore affirm the district court’s denial without prejudice of Gewerter’s motion.”

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