## Facts

- Lines Overseas Management, Ltd. (LOM) was a Bermuda financial-services corporation that conducted business connected to United States securities markets.
- LOM had no offices in the United States, but it maintained brokerage accounts with U.S. brokerage firms and placed trades through those firms and performed other functions related to those trades.
- Scott Lines, a Bermuda citizen and resident, was an officer of LOM.
- The Securities and Exchange Commission (SEC) issued administrative investigative subpoenas requiring LOM and Lines to produce documents and appear for testimony in connection with SEC investigations into possible securities-law violations involving their securities-related conduct.
- The SEC personally served the subpoenas on Lines while he was at Miami International Airport, traveling back to Bermuda after obtaining medical care in Boston.
- Neither LOM nor Lines complied with the subpoenas.
- The SEC filed an application in the U.S. District Court for the District of Columbia seeking an order to show cause and an order compelling compliance with the subpoenas.
- In support of enforcement, the SEC submitted records reflecting LOM’s and Lines’s communications (telephone, email, and mail) with persons and entities in the United States regarding securities, as well as evidence of buying and selling thousands of U.S. securities—conduct connected to the SEC’s investigation.
- LOM and Lines argued the court lacked personal jurisdiction because they had no minimum contacts with the District of Columbia, and Lines offered a blanket denial that he or LOM conducted business in the United States or maintained purposeful U.S. contacts.
- After a hearing and review of the record, the magistrate judge ordered compliance; LOM and Lines objected to that order.

## Issues

1. Whether the District of Columbia federal court could exercise personal jurisdiction over LOM and Lines in an SEC subpoena-enforcement proceeding based on their U.S.-market activity and U.S.-directed communications, even though they lacked contacts with the District of Columbia.
2. Whether the SEC satisfied the requirements for judicial enforcement of its administrative investigative subpoenas compelling documents and testimony.

## Decision

- The district court rejected LOM’s and Lines’s objections and enforced the SEC’s subpoenas.
- The court determined it had personal jurisdiction over LOM and Lines because the SEC’s evidentiary showing tied them to purposeful, repeated contacts with the United States securities markets and U.S.-based persons.
- The court concluded that Lines’s generalized denial of U.S. business did not defeat jurisdiction where the SEC submitted specific records of U.S.-connected trading and communications.
- The court ordered LOM and Lines to comply with the subpoenas for documents and testimony.

## Legal Principles

- A court will enforce an administrative investigative subpoena when the agency shows the subpoena is issued under lawful authority, seeks information reasonably related to a lawful investigation, and is not shown to be unduly burdensome or issued for an improper purpose.
- In subpoena-enforcement proceedings arising under federal law with nationwide service authority, due process for personal jurisdiction is evaluated by the respondent’s contacts with the United States as a whole, not only with the forum district.
- Purposeful participation in U.S. securities markets—such as maintaining accounts with U.S. broker-dealers, placing trades in U.S. securities, and directing communications to U.S. persons about securities transactions—can establish sufficient minimum contacts for personal jurisdiction.
- Conclusory or blanket denials of U.S. contacts do not overcome documentary evidence showing repeated U.S.-connected securities activity.

## Conclusion

The District Court for the District of Columbia enforced the SEC’s investigative subpoenas against a Bermuda financial-services firm and its Bermuda-resident officer, holding that the SEC’s evidence of extensive U.S.-connected trading and communications established personal jurisdiction and that the subpoenas met the standard for administrative subpoena enforcement.


U.S. Sec. & Exch. Comm. v. Lines Overseas Mgmt., Ltd., 2007 WL 581909 (2007)