Court denies James L. Koutoulas’ petition to quash SEC subpoena
On May 23, 2024, the U.S. District Court for the Southern District of Florida granted the Securities and Exchange Commission’s (the “SEC“) application to enforce a subpoena for the production of documents to James L. Koutoulas (“Koutoulas ”) and denied Koutoulas’s petition to quash that subpoena.
If a person or entity refuses to comply with a subpoena issued by SEC enforcement staff pursuant to a formal order of investigation, the Commission may file a subpoena enforcement action in federal district court seeking an order compelling compliance.
According to the SEC’s filing, the SEC is investigating whether Koutoulas or the entities he controlled violated the federal securities laws in connection with the offer and sale of the “Let’s Go Brandon” Coin (“LGBCoin”). As part of the investigation, the SEC issued an administrative subpoena to Koutoulas seeking documents and communications relevant to determining whether LGBCoin was offered and sold as a security.
Rather than complying with the subpoena, Koutoulas filed a petition to quash, arguing that the SEC lacked jurisdiction because LGBCoin is not a security. In making his case, Koutoulas claimed that LGBCoin started as a “joke” based on the popular “Let’s Go Brandon” meme and compared LBGCoin to baseball cards, beanie babies and Air Jordan sneakers, which are not securities regulated by the SEC. The SEC opposed the petition and cross-petitioned for an order compelling obedience to the subpoena.
On May 23, 2024, the Court denied Koutoulas’s petition and ordered him to comply with the subpoena. The Court opined that the SEC may investigate whether certain conduct falls within its regulatory purview and found that “the information sought by the subpoena is exactly the type of evidence that would be needed in order to make the legal determination of whether LGBCoin was part of a transaction in securities.”
The SEC is continuing its fact-finding investigation and has not concluded that any individual or entity has violated the federal securities laws to date.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Park Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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