### UNITED STATES COURT OF APPEALS Filed 6/28/96 Tenth Circuit Byron White United States Courthouse

1823 Stout Street Denver, Colorado 80294 (303) 844-3157 Patrick J. Fisher, Jr. Elisabeth A. Shumaker Clerk Chief Deputy Clerk June 28, 1996

TO: ALL RECIPIENTS OF THE CAPTIONED OPINION
RE: 95-1425 SEC v. Knowles June 20, 1996 by The Honorable Michael R. M urphy
Please be advised of the following correction to th e captioned decision: Due to formatting problems, the previously filed op inion is withdrawn and the accompanying opinion substituted. The content of the opinion has not changed. Please discard existing copies of the opinion and s ubstitute the corrected version.

Very truly yours, Patrick Fisher, Clerk

Beth Morris Deputy Clerk encl.PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

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

Appeal from the United States District Court for the District of Colorado (D.C. No. 95-B-2036)

Raymond L. Robin, Olle, Macaulay & Zorrilla, Miami, Florida, (David W. Stark, Amy J. Griffin, Otten, Johnson, Robinson, Neff & Ra gonetti, P.C., Denver, Colorado, with him on the briefs), for Respondent-Appellant. Robert M. Fusfeld, Securities and Exchange Commissi on, Denver, Colorado, (Simon M. Lorne, General Counsel, Jacob H. Stillman , Associate General Counsel, Katherine B. Gresham, Assistant General Co unsel, Catherine A.-2-

Broderick, Counsel to the Assistant General Counsel , Securities and Exchange Commission, Washington, D.C., Paul Gonson, Solicito r, 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 dist rict court against the appellant, a foreign national, of two administrativ e subpoenas duces tecum issued by the Securities and Exchange Commission. The app ellant argues that the district court lacked personal jurisdiction to enfo rce the subpoenas. The district court held that it did not need personal jurisdicti on 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 o f personal jurisdiction over him. This court holds that he does and that the districtcourt properly enforced the subpoenas.
I. BACKGROUND AND PROCEDURAL SETTING On June 14, 1995, and again on June 30, 1995, the S ecurities and Exchange Commission (the “SEC”) issued administrative subpoe nas duces tecum in the name of the appellant, Gaye B. Knowles. The SEC se rved Knowles with the first subpoena by hand at LaGuardia Airport in New York C ity. It later served the1 The Formal Order of Investigation is not a part of the record in this case; the

SEC claims that it is a nonpublic document. The Fo rmal Order was available to the district court for in camera inspection, but its scope and contents are in no way related to the issues here on appeal.

2 Since that time, Knowles has been advised that his employment with Global Petrol Trading and Swiss EuroFund, Inc., has been t erminated. [App. at 66] -3- second on Knowles’s counsel in Miami, Florida. The se subpoenas were issued in connection with the Formal Order of Investigation i n the nonpublic investigation conducted by the SEC out of its Denver, Colorado, o ffice, In the Matter of the Rockies Fund, Inc., Redwood Microcap Fund, Inc., an d 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 residen t and has been so since 1951. He is an independent investment consultant a nd, at the times the subpoenas were served on him, was also the president of two B ahamian companies, Global Petrol Trading and Swiss EuroFund, Inc. 2In the investigation, the SEC sought to determine whether bank accounts in the names of the se two companies were used to bribe brokers in the United States to sell certa in stock of American companies in violation of federal securities laws. The firstsubpoena directed Knowles to appear at a deposition and to produce certain perso nal documents and documents relating to the bank accounts of Global Petrol Trad ing. The second subpoena directed the same and called for Knowles to produce documents relating to the-4-

bank accounts of Swiss EuroFund, Inc. In response to the subpoenas, Knowles appeared for deposition in Miami, Florida, on July 12, 1995. Knowles produced certai n 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. Therea fter, the SEC served Knowles with the Order to Show Cause outside his ho me in Nassau, Bahamas. Knowles responded to the Order to Show Cause and mo ved the district court to dismiss the SEC’s application for lack of personal jurisdiction over him. In an Amended Memorandum Order and Opinion, the dis trict court held that it did not need personal jurisdiction over Kno wles in order to enforce the subpoenas against him. It held, instead, that judi cial enforcement of an administrative subpoena may be had where the agency can show that: (1) the inquiry is conducted pursuant to a lawfully authori zed, legitimate purpose; (2) it-5-

is reasonably relevant to an investigation which th e agency has authority to conduct; and (3) all administrative prerequisites h ave been met. See United States v. Powell , 379 U.S. 48, 57-58 (1964); SEC v. Blackfoot Bituminous, Inc. , 622 F.2d 512, 514 (10th Cir.), cert. denied, 449 U.S. 955 (1980). The district court determined that the SEC met this three-pronged burd en and that Knowles had adduced no evidence to the contrary. It therefore ordered Knowles to comply with the subpoenas within ten days. This court sub sequently granted Knowles’s Motion to Stay the Amended Memorandum Order and Opi nion pending appeal. This appeal followed. On appeal, Knowles argues that the district court e rred when it determined it did not need personal jurisdiction over him in o rder to enforce the subpoenas. He also argues that the district court could not pr operly exercise jurisdiction over him because of his lack of personal contacts with t he United States. In response, the SEC maintains that the district court had perso nal jurisdiction over Knowles based upon sufficient minimum contacts with the Uni ted 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 persona l jurisdiction over Knowles based upon the SEC’s service of the subpoenas on Kn owles within the territorial limits of the United States. The SEC does not argu e that personal jurisdiction is3 Over the course of this enforcement action, Knowles has hinted at possible

problems or objections he may have with the scope o f the subpoenas. For instance, at his deposition, Knowles conceded that some of the documents requested in the subpoenas were in his possession, control, and custody and would be found at his residence, which also functioned as his office. But Knowles has also noted that since he was terminated as presiden t, he has been instructed to return all the documents belonging to Global Petrol Trading and Swiss EuroFund, -6- not required in order to enforce the subpoenas, as the district court held.
II. JURISDICTION This court has jurisdiction to review the Amended M emorandum Order and Opinion under 28 U.S.C. § 1291. The district court ’s ruling on personal jurisdiction involves a question of law that is rev iewed de novo

. Taylor v. Phelan , 912 F.2d 429, 431 (10th Cir. 1990), cert. denied, 498 U.S. 1068 (1991). The issue here is a narrow one: whether the distri ct court had personal jurisdiction over Knowles to enforce the administrative subpoenas duces tecum. The court notes at the outset that Knowles does notcontend the SEC lacked the authority to issue the subpoenas under the triparti te test set out in Powelland Blackfoot . He does not challenge the methods or places of s ervice of process employed in serving either the subpoenas or the Ord er to Show Cause. Moreover, Knowles does not seriously contend that he lacked c apacity to produce corporate records in his possession or that the SEC could onl y secure production of the documents through service of subpoenas on Knowles’s former corporate employers. 3 Therefore, we do not address these issues and lim it this opinion toInc. Furthermore, Knowles’s counsel stated at Know les’s deposition that the

objection to the request for corporate documents wa s based on the fact that these were “private documents in a corporation.” He expl ained the subpoenas reflected that the corporations were not under investigation and that he thus believed the corporations were “outside the scope of the subpoen a[s] issued by the SEC to compel documents from a Bahamian bank.” He therefo re asserted a general privacy interest in “proprietary private informatio n.” Knowles also indicated that he chose not to produce the requested documents bec ause he was not a signatory on the bank accounts requested in the subpoenas and thus had no control over them. Knowles, however, indicated in his testimony that s ome of the subpoenaed banking documents of which he was not the signatorywere in his possession. He did not produce these documents. In his appellate filings before this court, Knowles does not elaborate on either the documents that are still in his possession or the “privilege” asserted in his deposition collo quy. Instead, Knowles only employs the alleged differences between his persona l capacity and the corporate capacities of both Global Petrol Trading and Swiss EuroFund, Inc., in order to make the argument that the corporate contacts are n ot his own personal contacts. We discuss this issue below. Furthermore, the district court did not address the issue of what Knowles must produce or his general claims of corporate “pr ivilege.” Although Knowles’s “privilege” arguments are somewhat oblique, as we d iscern them they fail. We note that a corporation possesses no right to exerc ise a privilege against selfincrimination and that a corporate officer cannot r efuse to produce corporate documents on the ground of self-incrimination. United States v. Rice , 52 F.3d 843, 846 (10th Cir. 1995); United States v. Hansen Niederhauser Co. , 522 F.2d 1037, 1039 (10th Cir. 1975). To the extent that Kn owles asserts that the SEC lacks the power to require production of documents stored outside the territorial boundaries of the United States, this issue has als o been decided against his position. Commodity Futures Trading Comm’n v. Nahas , 738 F.2d 487, 492 & n.11 (D.C. Cir. 1984) (citing cases). -7- the question of the jurisdiction of the district co urt, based upon the extraterritorial service of the Order to Show Cause, to enforce the SEC’s subpoenas duces tecum4Nor do we consider the issue of whether the distric t court acquired personal

jurisdiction over Knowles as a result of his attend ance at the scheduled deposition pursuant to the subpoenas. The SEC does not conten d that Knowles’s attendance and production of some responsive documents waived his objections to the personal jurisdiction of the district court to enfo rce the subpoenas. Therefore, this court will not address the issue of waiver.

5 The SEC argues, in the alternative, that the minimu m contacts analysis of International Shoe is unnecessary because the SEC served the administ rative subpoenas on Knowles within the boundaries of the U nited States. See Burnham v. Superior Court , 495 U.S. 604 (1990). Although language in decisi ons of other circuits arguably provides some support for the SEC ’s theory, we have no need to consider the issue and whether Burnham , which involved service of a summons in the forum state, controls. See Mark Rich & Co. v. United States (In re Mark Rich & Co. ), 707 F.2d 663, 668 (2d Cir.), cert. denied, 463 U.S. 1215 (1983); FTC v. Compagnie de Saint-Gobain-Pont-a-Mousson , 636 F.2d 1300, 1324 (D.C. Cir. 1980). Therefore, we express no opinion on whetheran administrative agency, which must apply to a court in order to enforce its subpoenas, may itself secure personal jurisdiction over a person solely through service of subpoenas within the United States and then may rely upon that jurisdict ion to enforce compliance with those subpoenas in a district court. Rather, we ho ld that Knowles independently has sufficient minimum contacts with the United States to support the district court’s exercise of personal jurisdiction enforcing the subpoenas. -8- against Knowles. 4
A. Minimum Contacts Under the due process clause of the Fifth Amendment , personal jurisdiction over a party does not exist unless that party has s ufficient “minimum contacts” with the jurisdiction. International Shoe Co. v. Washington , 326 U.S. 310, 316 (1945). 5 The exercise of jurisdiction must not “offend ‘tr aditional notions of fair play and substantial justice.’” Id. (quoting Milliken v. Meyer , 311 U.S. 457, 463 (1940)). Furthermore, the party’s activities withi n the jurisdiction must render it-9-

foreseeable that the party should reasonably antici pate being haled into the forum

court. World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 297 (1980). Under Federal Rule of Civil Procedure 4(k)(2), the service of a summons with respect to a claim under federal law in which Congress has authorized worldwide service establishes personal jurisdictionover the defendant, subject to constitutional limits. The Securities Exchange Actpermits the exercise of personal jurisdiction to the limits of the Due Proc ess Clause of the Fifth Amendment. SEC v. Unifund SAL , 910 F.2d 1028, 1033 (2d Cir. 1990). Congress has provided for worldwide service of process in ca ses of the enforcement of subpoenas issued by the SEC. 15 U.S.C. § 77v(a). The language of § 77v(a) authorizes the service of process on a defendant in any district “of which the defendant is an inhabitant or wherever the defendan t may be found.” Id. ; see also 15 U.S.C. §§ 78u(c), 80a-41(c) (employing language to permit service “wherever [the defendant] may be found”); accord 15 U.S.C. § 78aa. Under § 80a-41(c), the SEC is entitled to invoke the aid of the district c ourt in which it is conducting its investigation. Knowles was served by the SEC with the Order to Sho w Cause outside his home in Nassau, Bahamas. When the personal jurisdi ction of a federal court is invoked based upon a federal statute providing for extraterritorial service, the relevant inquiry is whether the respondent has had sufficient minimum contacts6 The SEC’s affidavit evidence establishes that there is indeed only one

shareholder of Global Petrol Trading and Swiss Euro Fund, Inc. Knowles refers only to “the shareholder” of these corporations. E mploying the SEC’s term “sole” thus clarifies the issue and is not inconsistent wi th either the import or the phraseology of Knowles’s concession. -10- with the United States. See, e.g. , Busch v. Buchman, Buchman & O’Brien , 11 F.3d 1255, 1258 (5th Cir. 1994) (worldwide service under 15 U.S.C. § 78aa); accord United Liberty Life Ins. v. Ryan , 985 F.2d 1320, 1330 (6th Cir. 1993); cf. United Elec. Workers v. 163 Pleasant St. Corp. , 960 F.2d 1080, 1085 (1st Cir. 1992) (nationwide service under 29 U.S.C. § 1132(e) (2)); Go-Video, Inc. v. Akai Elec. Co. , 885 F.2d 1406, 1414-16 (9th Cir. 1989) (worldwide service under 15 U.S.C. § 22). Specific contacts with the district in which enforcement is sought, in this case Colorado, are unnecessary. The question then before this court is whether Know les has sufficient minimum contacts with the United States to enable t he district court to exercise personal jurisdiction over him consistent with the Due Process Clause of the Fifth Amendment. We thus look to the constitutional suff iciency of the contacts with the United States which Knowles concedes. Knowles acknowledges the following contacts: (1) that he visited the United States “o n a number of occasions” for purposes of meeting with investment clients; (2) th at during his visits to Florida to meet with the sole shareholder 6of Global Petrol Trading and Swiss EuroFund, Inc., “he signed a handful of letters and checks”; and (3) he opened a brokerage-11-

trading account for Global Petrol Trading during on e of his trips to Florida. Here the SEC has produced affidavits outlining more extensive contacts between Knowles and the United States, mainly in th e forms of active trading through additional American brokerage accounts and the wiring of proceeds from stock sales to Bahamian banks. Knowles, however, g enerally contests these alleged contacts. He argues that they are based on hearsay and expert opinions concerning securities industry practices and handwr iting identification which are without foundation. He contends that his actions o n behalf of Global Petrol Trading and Swiss EuroFund, Inc., are limited to th ose he has admitted. The district court did not resolve these disputed j urisdictional facts. As a result, this court is hesitant to consider the evid ence of contacts presented by the SEC. Based only on the contacts Knowles admits, ho wever, we hold that the district court does have personal jurisdiction overhim. B. Analysis The source of a federal district court’s jurisdicti on may be twofold: specific and general jurisdiction. Specific jurisd iction may be exercised where the defendant has “purposefully directed” its activ ities toward the forum jurisdiction and where the underlying action is bas ed upon activities that arise out of or relate to the defendant’s contacts with the f orum. Burger King , 471 U.S. at 472; Helicopteros Nacionales , 466 U.S. at 414 & n.8. A nonresident defendant-12-

may be subjected to the forum’s general jurisdictio n even where the alleged activities of the defendant upon which the claims a re based are unrelated to his contacts with the forum. Doe , 974 F.2d at 147. The forum court’s general jurisdiction may be invoked over the defendant on a ny matter if the defendant’s unrelated contacts are sufficiently “‘continuous an d systematic’” that the exercise of jurisdiction is “‘reasonable and just.’” Helicopteros Nacionales , 466 U.S. at 415 (quoting Perkins v. Benguet Consol. Mining Co. , 342 U.S. 437, 438, 445 (1952)). Our focus here is on specific jurisdictio n. In this case, all of Knowles’s admitted contacts wi th the United States concern his activities as the former president of G lobal Petrol Trading and Swiss EuroFund, Inc. Those contacts involve activities t hat are the very source of the SEC’s interest in the two corporations

. The underlying investigation and this subpoena enforcement action arise out of Knowles’s contacts with the United States and thus support the exercise of specific ju risdiction in order to secure enforcement. Knowles, however, contends that the contacts of the two corporations cannot be factored into the analysis of whether he has minimum contacts with the United States. His argument is that the jurisdicti on of the district court based upon these corporate contacts does not extend to hi m. Knowles is mistaken. As the Supreme Court held in Calder v. Jones , employees of a corporation that is-13-

subject to the personal jurisdiction of the courts of the forum may themselves be subject to jurisdiction if those employees were pri mary participants in the activities forming the basis of jurisdiction over t he corporation. Calder v. Jones , 465 U.S. 783, 790 (1984). That the subpoenas were served on Knowles without explicit reference to his former capacity as presid ent of the two corporations has no bearing on whether the district court has jurisd iction over him with regard to the corporate activities in which Knowles was a pri mary participant. Personal jurisdiction over him would extend at least as far as matters relating to the activities of the two corporations in the forum in which he was a primary participant. See Calder , 465 U.S. at 790; Perkins , 342 U.S. at 445-46. Knowles has purposefully directed his activities on behalf of Global Petrol Trading and Swiss EuroFund, Inc., toward the UnitedStates. See Burger King , 471 U.S. at 472. Moreover, those activities are di rectly related to matters in the underlying SEC investigation. As Knowles concedes, he was the individual who took the actions on behalf of the two corporations that are the basis of jurisdiction. Knowles was then a primary participa nt in these activities. See Calder , 465 U.S. at 789-90. Based upon his admitted cont acts, the exercise of specific jurisdiction over him is reasonable and ju st and satisfies traditional notions of fair play. See Perkins , 342 U.S. at 445; International Shoe , 326 U.S. at
316.-14-

Even a single purposeful contact may be sufficient to meet the minimum contacts standard when the underlying proceeding is directly related to that

contact. See McGee v. International Life Ins. Co. , 355 U.S. 220, 223 (1957). Those contacts admitted by Knowles involve an ongoi ng business relationship and a brokerage account. They are sufficient to support the exercise of specific personal jurisdiction because the underlying SEC in vestigation concerns these admitted contacts. See SEC v. Gilbert , 82 F.R.D. 723, 725-26 (S.D.N.Y. 1979) (exercising personal jurisdiction over a Swiss bankwhose only contacts with the United States were four brokerage accounts maintain ed at three securities dealers); see also Unifund SAL , 910 F.2d at 1033 (upholding personal jurisdiction over foreign investors alleged to have conducted in sider trading in purchasing securities of a United States corporation traded on a United States exchange); Perez-Rubio v. Wyckoff , 718 F. Supp. 217, 229-31 (S.D.N.Y. 1989) (upholdi ng personal jurisdiction over a foreign investment hou se and its individual officers because the purpose of the corporation was to purch ase United States securities on United States exchanges, in part for United Stat es citizens). Knowles’s contacts involve trading activities on be half of an American shareholder of the corporations that employed him a s president, through an American brokerage firm, that were “purposefully di rected” toward the United
States. See Burger King , 471 U.S. at 472. Moreover, they represent a deli berate-15-

affiliation with the forum that renders foreseeable the possibility of being haled into court in the United States at least as to thos e specific contacts. See id. at 478-82; World-Wide Volkswagen , 444 U.S. at 297. The actions Knowles took on behalf of Global Petrol Trading and Swiss EuroFund, Inc., indicate that Knowles, through the corporations, purposefully availed hims elf of the benefits and protections of the laws of the United States. See Hanson v. Denckla , 357 U.S. 235, 253 (1958). From these contacts, Knowles and the two corporatio ns enjoyed the privileges of conducting activities within the Unit ed States and he could reasonably anticipate being subject to the jurisdic tion of the United States. See World-Wide Volkswagen , 444 U.S. at 297. Knowles’s continuing investment contacts with United States citizens, companies, an d brokerage accounts were not random, fortuitous, or attenuated. See Keeton v. Hustler Magazine, Inc. , 465 U.S. 770, 774 (1984); World-Wide Volkswagen , 444 U.S. at 299. Rather, they were purposeful, continuous, and systematic. See Burger King , 471 U.S. at 472; Perkins , 342 U.S. at 446-48. The district court’s exercis e of specific personal jurisdiction over him thus comported with “‘traditi onal notions of fair play and substantial justice.’” See International Shoe , 326 U.S. at 316 (quoting Milliken , 311 U.S. at 463).-16-

For the foregoing reasons, the district court’s ord er to Knowles to comply with the SEC’s administrative subpoenas duces tecumis AFFIRMED.