Fed. Sec. L. Rep. P 99,468 Wedbush, Noble, Cooke, Inc. v. Securities and Exchange Commission

FACTS

Appellant Securities and Exchange Commission (SEC) is conducting a formal, administrative investigation of Wedbush, Noble, Cooke, Inc. (Wedbush), a registered securities brokerage firm with offices in Los Angeles and other western cities. The investigation concerns suspected violations of the anti-fraud and anti-manipulation provi sions of the securities laws by Wedbush and its customers.

The SEC had issued subpoenas to numerous witnesses whose testimony was sought in connection with its investigation. No notice of these subpoenas was given directly to Wedbush, the target of the investigation. The SEC contends that some of the third-party witnesses had requested confidentiality and that disclosure of these witnesses to the target would impair the effectiveness of the investigation.

Wedbush brought an action in the district court seeking an injunction against continuation of the investigation without notification to them of the third-parties subpoenaed by the SEC. The district court, relying primarily on the decision of this court in Jerry T. O'Brien, Inc. v. S.E.C., 704 F.2d 1065 (9th Cir.1983), granted the injunctive relief requested. The court specifically found that…