2021 Colorado Code
Title 11 - Financial Institutions
Article 51 - Securities
Part 6 - Enforcement and Civil Liability
§ 11-51-601. Investigations - Subpoenas

1. The securities commissioner may make such public or private investigations within or outside of this state as the securities commissioner deems necessary to determine whether any person has violated or is about to violate any provision of this article or any rule or order under this article or to aid in the enforcement of this article or in the prescribing of rules and forms under this article, may require or permit any person to file a statement as to all the facts and circumstances concerning the matter to be investigated, and may publish information concerning any violation of this article or any rule or order under this article.
2. For the purpose of any investigation or proceeding under this article, the securities commissioner or any officer designated by the securities commissioner may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the securities commissioner deems relevant or material to the inquiry.
3. In case of contumacy by, or refusal to obey a subpoena issued to, any person, the district court of the city and county of Denver, upon application by the securities commissioner, may issue to the person an order requiring that person to appear before the securities commissioner, or the officer designated by the securities commissioner, to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt of court.
4. No person is excused from attending and testifying or from producing any document or record before the securities commissioner, or in obedience to the subpoena of the securities commissioner or any officer designated by the securities commissioner, or in any proceeding instituted by the securities commissioner on the ground that the testimony or evidence, documentary or otherwise, required of that person may tend to incriminate that person or subject that person to a penalty or forfeiture; but no document, evidence, or other information compelled under order of the district court of the city and county of Denver, or any information directly or indirectly derived from such document, evidence, or other information, may be used against an individual so compelled in any criminal case; except that the individual testifying is not exempt from prosecution and punishment for perjury in the first or second degree or contempt committed in testifying.
5. 1. Information in the possession of, filed with, or obtained by the securities commissioner in connection with a private investigation under this section shall be confidential. No such information may be disclosed by the securities commissioner or any of the officers or employees of the division of securities unless necessary or appropriate in connection with a particular investigation or proceeding under this article or for any law enforcement purpose.
   2. As it relates solely to the preservation of the confidentiality of documents and other information obtained by the securities commissioner or any officer or employee of the division of securities pursuant to this section, the division of securities shall be construed as a criminal justice agency as defined in section 24-72-302 (3), C.R.S., and such documents and other information shall be treated as criminal justice records as defined in section 24-72-302 (4), C.R.S.
   3. Except as set forth in this subsection (5), no provision of this article either creates or derogates from any privilege which exists at common law or otherwise when documentary or other evidence is sought under a subpoena directed to the securities commissioner or any of the officers or employees of the division of securities.

History. Source: L. 90: Entire article R&RE, p. 729, § 1, effective July 1. L. 94: (5) amended, p. 1840, § 5, effective July 1.

This section is similar to former § 11-51-119 as it existed prior to 1990.

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

Proceedings may be instituted by order. Proceedings need not be commenced by a complaint, but may be instituted by the issuance of an order setting forth the facts and conduct warranting a “show cause” order. Raymond Lee Org., Inc. v. Sec. Comm'n, 36 Colo. App. 417, 543 P.2d 75 (1975), rev'd on other grounds, 192 Colo. 112 , 556 P.2d 1209 (1976).

As to the extent of the order for production of documents which requested information from appellant regarding activities, contracts, and clients, whether occurring within or outside the state, such order was admittedly broad, but the commission's power to enforce the securities act is equally broad. Raymond Lee Org., Inc. v. Sec. Comm'n, 36 Colo. App. 417, 543 P.2d 75 (1975), rev'd on other grounds, 192 Colo. 112 , 556 P.2d 1209 (1976).

Information on out-of-state activities allowed. When only at the investigatory stage did the commission seek information about the out-of-state activities of appellant over which it could not regulate, such an investigative procedure is permitted. Raymond Lee Org., Inc. v. Sec. Comm'n, 36 Colo. App. 417, 543 P.2d 75 (1975), rev'd on other grounds, 192 Colo. 112 , 556 P.2d 1209 (1976).

Individual defendant has standing to challenge failure of the commissioner of securities to give defendant notice of the issuance of administrative subpoenas for corporate bank account records during investigation into securities law violations which was directed at both the defendant and the corporation. People v. Lamb, 732 P.2d 1216 (Colo. 1987).

Failure to provide individual defendant with notice prior to execution of administrative subpoenas for production of corporate bank records during investigation into securities law violations did not require suppression of such bank records because the defendant was not prejudiced as the subpoenas were issued in full compliance with statutory and constitutional requirements except for notice. People v. Lamb, 732 P.2d 1216 (Colo. 1987).

Transactional immunity provided in this section is not self-executing upon notification to the commissioner that a witness intends to claim a privilege against self-incrimination, but instead requires both a determination of the likelihood of self-incrimination and a court order compelling the revelation of the subpoenaed evidence. Feigin v. Zinn, 789 P.2d 478 (Colo. App. 1990).

To receive immunity from criminal prosecution as set forth in subsection (4), an individual subpoenaed to testify or to produce documents before the securities commissioner must first invoke the protections of the fifth amendment. Then the securities commissioner must apply to the district court for an order compelling evidence or other information pursuant to subsections (3) and (4). Only after such an order has been issued does the immunity provided in subsection (4) apply to the testimony so compelled. People v. District Court of Arapahoe County, 894 P.2d 739 (Colo. 1995).

Trial court's order granting commissioner's motion for leave to take expedited discovery did not compel witness to testify at his deposition. The order entered was simply a general order regarding the time at which civil discovery could be commenced; the trial court did not direct the witness to answer particular questions, nor was it requested to do so. People v. District Court of Arapahoe County, 894 P.2d 739 (Colo. 1995).

Colorado rules of civil procedure are not directly applicable to enforcement proceedings under the Securities Act. However, a court may consider the policies underlying C.R.C.P. 45(b) in ruling on a motion for the advancement of costs incurred in complying with an administrative subpoena. Feigin v. Colo. Nat'l Bank, 897 P.2d 814 (Colo. 1995).

In the exercise of their equitable authority, district courts may quash an administrative subpoena found to be unreasonable or oppressive. Feigin v. Colo. Nat'l Bank, 897 P.2d 814 (Colo. 1995).

As a general rule, recipients of subpoenas in criminal proceedings must assume the cost of compliance as a matter of civic responsibility. However, an individualized determination is called for when it is claimed that the cost of compliance with a subpoena renders the subpoena itself unreasonable and oppressive. The person seeking to quash an administrative subpoena on such grounds has the burden of establishing the precise amount of the cost and that such amount exceeds the amount the recipient would reasonably be expected to incur as a civic responsibility. Feigin v. Colo. Nat'l Bank, 897 P.2d 814 (Colo. 1995).