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Securities and Exchange Commission v. Harman Wright Group, LLC

United States Court of Appeals, Tenth Circuit

June 14, 2019

SECURITIES AND EXCHANGE COMMISSION, Petitioner - Appellee,
v.
HARMAN WRIGHT GROUP, LLC, Respondent, and TYTUS W. HARKINS; JASON M. WHITE, Respondents - Appellants.

          D.C. No. 1:18-MC-00190-CMA D. Colo.

          Before HOLMES, BACHARACH, and McHUGH, Circuit Judges.

          ORDER AND JUDGMENT [*]

          Carolyn B. McHugh Circuit Judge.

         Tytus W. Harkins and Jason M. White (together, Appellants), proceeding pro se, appeal from the district court's order compelling them to comply with subpoenas issued by the Securities and Exchange Commission (SEC). The district court's order is a final decision that affords us jurisdiction under 28 U.S.C. § 1291. E.E.O.C. v. Dillon Cos., 310 F.3d 1271, 1272 (10th Cir. 2002). We affirm.

         BACKGROUND

         Appellants are founding principals and officers of Hartman Wright Group, LLC (HWG). They, as well as HWG, are the subjects of an SEC investigation. Appellants failed to comply with testimonial subpoenas issued by the SEC, causing the SEC to file in the district court an application to compel compliance.[1]

         The district court set a show-cause hearing and directed Appellants to respond to the SEC's application within seven days after receiving notice. The order further stated that "[i]f a response is not filed within the prescribed time, the Court may treat the Application as conceded." R., Vol. II at 6. The district court then granted Appellants' motion for an extension, setting a November 13, 2018, deadline for the response. On November 13, Appellants mailed their documents, which the district court received and filed on November 15. The SEC filed a reply on November 20.

         The day after the SEC filed its reply, the district court issued its order compelling Appellants to comply with the subpoenas. It held that the SEC had satisfied the four requirements for a court to enforce an administrative agency investigative subpoena. See R., Vol. II at 215-16 (citing United States v. Powell, 379 U.S. 48, 57-58 (1964)). The district court further stated:

Moreover, in this Court's order granting the SEC's application for an order to show cause, the Court indicated that Respondents were required to file a timely response to the SEC's motion. Additionally, the Court advised that if a response is not filed within the prescribed time, the Court may treat the Application as conceded. After this Court granted Respondents an extension of time to respond, Respondents still failed to enter a timely submission. Respondent[s'] response was due on 11/13/2018. However, Respondents did not submit any filings until 11/15/2018. Therefore, in light of Respondents' untimely response and the evidence submitted by the SEC, this Court finds that Respondents should be compelled to comply with the administrative subpoenas.

Id. at 217-18 (record citations and internal quotation marks omitted). It later summarily denied Appellants' motion for reconsideration.

         DISCUSSION

         We review for abuse of discretion both the order compelling compliance and the order denying reconsideration. Walters v. Wal-Mart Stores, Inc., 703 F.3d 1167, 1172 (10th Cir. 2013) (Fed. R. Civ. P. 59(e) and 60(b) motions); Dillon Cos., 310 F.3d at 1274 (order regarding administrative subpoenas). "An abuse of discretion occurs when the district court bases its ruling on an erroneous conclusion of law or relies on clearly erroneous fact findings." Walters, 703 F.3d at 1172 (internal quotation marks omitted).

         Before this court, Appellants do not challenge the requirements for enforcement that the district court identified or the court's reasons for determining that the SEC satisfied those requirements. Instead, they reiterate the arguments they made in their motion for reconsideration-that the district court erroneously disregarded their response as untimely and issued its order prematurely because they did not have time to file a sur-reply. Appellants also request an award of costs.

         In asserting that their filings were timely, Appellants rely on Fed.R.Civ.P. 6(d), which provides, "[w]hen a party may or must act within a specified time after being served and service is made under Rule 5(b)(2)(C) (mail), (D) (leaving with the clerk), or (F) (other means consented to), 3 days are added after the period would otherwise expire under Rule 6(a)." Appellants were not permitted to use the court's electronic filing system and were served by mail. Apparently this ...


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