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10 Berkeley Bus. L.J. 1 (2013-2014)
The (Too) Long Arm of the S.E.C.: When a Foreign Employee of a U.S.-Based Multinational Financial Services Client Is Threatened with a Subpoena

handle is hein.journals/berkbusj10 and id is 7 raw text is: The (Too) Long Arm of the S.E.C.: When a Foreign Employee of a U.S.-Based Multinational Financial Services Client Is Threatened With a Subpoena Ronald S. Betman' and Jonathan R. Law2 As businesses and financial institutions engage in transactions with increasingly international scope, U.S. regulatory agencies are responsible for investigating potential violations of the securities and exchange laws. One of the Securities and Exchange Commission's most powerful tools is the ability to issue administrative subpoenas. What is troubling, however, is the SEC's recent foray into investigating possible misconduct across US. borders by subpoenaing foreign employees conducting business overseas. This article argues that in a broad spectrum of circumstances, the SEC does not have the authority to issue or enforce an extraterritorial administrative subpoena. In other situations, while the SEC may clearly exercise its subpoena power, there are certain precautions that may be implemented to minimize a financial services firm's risk profile. I. Introduction ..............2............. .................2 II. Administrative Investigative Power ............................3 III. Administrative Subpoena Enforced by Judicial Order ...............6 Subject-Matter Jurisdiction .................................6 Personal Jurisdiction.................................................8 Location of Service ...................................8 Minimum Contacts .....................................9 IV. Judicial Subpoena issued to U.S. National or Resident outside the U.S................................................10 V. Alternatives to Formal Enforcement Proceedings ........ .........12 VI. Conclusion ..............................................13 VII. Practice Tips............................................14 1. Partner, Winston & Strawn LLP. Mr. Betman focuses his practice on major class action and complex litigation, with an emphasis on securities litigation and regulatory investigations, involving the SEC and the CFTC. 2. Law Clerk, United States District Court for the Central District of Illinois (currently); Associate, Winston & Strawn LLP (during the authorship of this paper). While at Winston & Strawn, Mr. Law focused his practice on complex securities litigation and appellate litigation. The authors also acknowledge Chris Letkewicz for his useful insight. 1

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