## Facts

- The Securities and Exchange Commission (SEC) opened a nonpublic investigation into possible federal securities-law violations involving Jerry T. O’Brien, Inc., Harry Magnuson, and related entities.
- During the investigation, the SEC issued subpoenas seeking financial and business records.
- Some subpoenas were directed to the investigated parties; later subpoenas sought records from third parties such as brokerage firms and other entities that dealt with the investigated parties.
- The investigated parties sued in federal district court to enjoin the investigation, prevent compliance with certain subpoenas, and obtain advance notice of subpoenas served on third parties.
- The district court denied injunctive relief and denied a notice requirement as to third-party subpoenas.
- The Ninth Circuit reversed in part, requiring the SEC to provide targets notice when it issued subpoenas to third parties during nonpublic investigations.
- The Supreme Court granted certiorari.

## Issues

1. Whether the Constitution requires the SEC to notify targets of a nonpublic investigation when the SEC issues subpoenas to third parties seeking information about those targets.
2. Whether the securities statutes governing SEC investigations and subpoenas require notice to targets of third-party subpoenas.

## Decision

- The Supreme Court unanimously reversed the Ninth Circuit.
- The Court held the SEC is not required—by the Constitution or by statute—to notify investigation targets when it subpoenas third parties in a nonpublic investigation.
- The Court reinstated the district court’s denial of relief and left any notice decision to SEC discretion.

## Legal Principles

- Administrative investigations that gather evidence do not adjudicate legal rights; therefore, due process does not require pre-subpoena notice to an investigation target when records are sought from third parties.
- The Sixth Amendment Confrontation Clause is not implicated at the investigatory stage before the initiation of criminal proceedings.
- The Fifth Amendment privilege against self-incrimination does not provide a basis to block subpoenas to third parties because the subpoena compels only the recipient, not the target, to testify or produce records.
- A target generally cannot invoke the Fourth Amendment to require notice or to prevent production of information held by third parties, particularly where the target voluntarily conveyed information to those third parties.
- The Securities Act of 1933 and the Securities Exchange Act of 1934 grant the SEC broad investigatory and subpoena authority and do not impose an express or implied duty to notify targets of third-party subpoenas; any notice is an agency choice.

## Conclusion

The Court held that targets of SEC nonpublic investigations have no constitutional or statutory right to notice when the SEC subpoenas third-party records, and that decisions about providing notice remain within the SEC’s discretion.


Securities & Exchange Comm’n v. Jerry T. O’Brien, Inc., 467 U.S. 735 (1984)