IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 13-11346

SECURITIES AND EXCHANGE COMMISSION,

Petitioner - Appellee

v.

ANDREW FARMER,

Respondent - Appellant

Appeal from the United States District Court

for the Northern District of Texas

USDC No. 4:13-MC-14

Before DAVIS, BARKSDALE, and ELROD, Circuit Judges.

PER CURIAM:*

For this enforcement action pursuant to 15 U.S.C. § 78u(c), and following 

an order granting the Securities and Exchange Commission’s (SEC) motion to 

compel production of documents responsive to its administrative subpoena, 

Andrew Farmer appeals the district court’s ruling he waived his Fifth 

Amendment act-of-production privilege by failing timely to assert it. Pursuant 

to agreement by the parties at oral argument here, that order is VACATED 

* Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5th Cir. 

R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

March 27, 2014

Lyle W. Cayce

Clerk

 

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and this matter REMANDED for in camera review of the documents to 

determine the applicability, vel non, of the privilege.

I.

As part of an investigation of possible market manipulation, the SEC, on 

5 December 2012, served Farmer with a subpoena duces tecum, seeking, inter 

alia, documentation of all transactions related to Chimera Energy Corporation

securities, and documents “sufficient to show” Farmer’s bank accounts, email 

accounts, and telephone numbers. Additionally, the subpoena demanded he 

testify before the SEC. The SEC also served a subpoena on Iridium Capital, 

Ltd., for which Farmer is the registered agent. (The enforcement orders 

regarding Farmer’s subpoena ad testificandum and Iridium’s subpoena were 

not appealed.)

The subpoena at issue requested document-production by 20 December 

2012. One day after that deadline, Farmer’s counsel contacted the SEC and 

requested an extension; the deadline was extended to 18 January 2013. On 22 

January, however, Farmer’s counsel contacted the SEC to advise Farmer 

would not respond to the subpoena; neither an explanation for non-compliance 

nor objections to the subpoena were provided. 

Over two months later, on 9 April, the SEC filed this enforcement action. 

On 29 April, both by letter from counsel and in his opposition brief, Farmer 

asserted, for the first time, his Fifth Amendment act-of-production privilege. 

The enforcement action was referred to a magistrate judge (MJ). The 

MJ ruled Farmer waived the privilege by failing either to assert it in a timely 

manner or to show good cause for his delay. Alternatively, in a footnote, the 

MJ ruled Farmer’s “assertion of the privilege would fail for lack of specificity”. 

Order Granting SEC’s Mot. to Compel at 7 n.3, SEC v. Farmer, No. 4:13-MC14 (N.D. Tex. 10 July 2013). In doing so, the MJ explained Farmer failed to 

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show “the act of producing particular documents or categories of documents 

. . . is both testimonial and self-incriminating”. Id. 

On review, the district court overruled Farmer’s objection regarding 

privilege-waiver and “decline[d] to address Farmer’s objection to [the MJ’s] 

discussion of specificity”. Order Affirming Mag. J.’s Order at 4, SEC v. Farmer, 

No. 4:13-MC-14 (N.D. Tex. 4 Dec. 2013). 

Farmer filed a timely notice of appeal from that order. In addition, he 

moved this court to stay the order’s requiring him to produce documents by 20 

December 2013. That motion was denied on 19 December. Accordingly, 

Farmer produced documents to the SEC—approximately 100–200 pages by his 

estimation. It sequestered the documents pending resolution of this appeal. 

II.

Pursuant to 15 U.S.C. § 78u(c), the district court had jurisdiction over 

the SEC’s motion to compel compliance with its subpoena. And, this court has 

jurisdiction over this appeal from the enforcement order, under 28 U.S.C. 

§ 1291 (final decisions of district courts). See, e.g., In re Kaiser Alum. & Chem. 

Co., 214 F.3d 586, 589 (5th Cir. 2000) (“An order enforcing an administrative 

subpoena is considered a final order.”) (citation omitted).

The Fifth Amendment protects against both self-incriminating 

testimony and production of documents where production implicitly 

communicates “the papers existed, were in [the custodian’s] possession or 

control, and were authentic”. United States v. Hubbell, 530 U.S. 27, 36 (2000) 

(citations omitted). Farmer contends the district court erred in ruling the 

recipient of an SEC subpoena waives his act-of-production privilege by failing

to assert it within the SEC’s discovery deadlines, prior to initiation of an

enforcement action.

First, Farmer contends the court failed to “indulge every reasonable 

presumption against waiver” of this fundamental, constitutional right. See 

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Emspak v. United States, 349 U.S. 190, 198 (1955) (citations omitted). Instead, 

he contends silence in response to the SEC’s subpoena was, at most, vague 

evidence of intent to waive the privilege, not a basis for waiver of the 

constitutional privilege, which should not be equated to less-fundamental 

privileges. 

Second, Farmer contends a recipient of an SEC subpoena has no duty to 

comply with it until the SEC pursues an enforcement action. See SEC v. Jerry 

T. O’Brien, Inc., 467 U.S. 735, 741 (1984); SEC v. ESM Gov’t Sec., Inc., 645 

F.2d 310, 313–14 (5th Cir. Unit B 1981) (citing, inter alia, Reisman v. Caplin, 

375 U.S. 440, 449 (1964)) (stating “the fifth amendment privilege against selfincrimination is an appropriate ground” to challenge an SEC subpoena in an 

enforcement action). Because, according to Farmer, he was not required to 

assert the privilege prior to the enforcement proceeding, his assertion was 

timely. 

On the other hand, the SEC contends Farmer lost the privilege by failing 

to assert it when obtaining the extension to respond or, later, by communicating, without explanation or objection, that he would not produce documents. 

Instead, the SEC maintains Farmer engaged in “tactical gamesmanship”, 

delaying its decision to bring this enforcement action and, potentially, its 

investigation. Finally, the SEC disputes Farmer’s assertion that a recipient of 

an SEC subpoena is under no duty to comply until an enforcement proceeding. 

In particular, the SEC notes 15 U.S.C. § 78u(c) makes failure to comply, 

“without just cause”, a criminal offense, even if the SEC does not bring an 

enforcement action. 

On appeal, neither Farmer nor the SEC addressed whether he failed to 

assert the privilege with sufficient specificity. At oral argument here, the SEC 

explained: it had abandoned, in briefing before the district court, the position 

that Farmer’s privilege-assertion should be denied for lack of specificity; 

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instead, it requested the district court conduct an in camera review of the 

documents to determine whether the act-of-production privilege applied to 

particular documents or categories of documents; and, for that reason, it did 

not brief the specificity issue to this court. Similarly, Farmer explained at oral 

argument that he focused on waiver, in the district court and here, because 

that issue was the focus of the district court’s decision, not specificity, which 

the court declined to address. 

At oral argument, counsel for the SEC agreed with this court’s suggested 

approach: not ruling on waiver, vel non, of Farmer’s constitutional privilege 

and, instead, remanding to district court for in camera review of the 

documents. The SEC stated this was an “appropriate” way to resolve this issue

and an “adequate substitute”, even though it would moot the waiver issue. 

Likewise, Farmer agreed this approach was appropriate. His agreement 

included requesting leave to file, in district court, an ex parte submission to 

discuss the incriminating nature, which could be facially unclear, of specific 

documents. 

No citation is required for the long-established prudential rule not to 

decide a constitutional question if another ground is dispositive. Therefore, we 

pretermit ruling on the constitutional question regarding the timeliness of 

Farmer’s assertion of his Fifth Amendment act-of-production privilege and 

remand to district court for it, following Farmer’s ex parte submission, to 

review in camera the documents produced by Farmer, and sequestered 

currently by the SEC, and determine those documents, if any, for which the 

act-of-production privilege applies. 

III.

For the foregoing reasons, the district court’s 4 December 2013 order is 

VACATED and this matter is REMANDED for further proceedings consistent 

with this opinion. 

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