Find Court Cases > Go Back to List > A.G. Edwards Inc. v. Secretary of State

A.G. Edwards Inc. v. Secretary of State

Case Date: 06/27/2002
Court: 5th District Appellate
Docket No: 5-00-0525 Rel

Notice

Decision filed 06/27/02. The text of this decision may be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.

NO. 5-00-0525

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

 

A.G. EDWARDS, INC., ROBERT D. ) Appeal from the
MAURER, BRENT A. WILHELM, and ) Circuit Court of
GARY W. HENCY, ) St. Clair County.
)
          Petitioners-Appellees, )
)
v. ) No. 00-MR-117
)
THE SECRETARY OF STATE, THE )
DEPARTMENT OF SECURITIES OF THE )
STATE OF ILLINOIS, ) Honorable
) John M. Goodwin, Jr.,
          Respondent-Appellant. ) Judge, presiding.

 

 

PRESIDING JUSTICE MAAG delivered the opinion of the court:

A.G. Edwards, Inc. (A.G. Edwards), Robert D. Maurer, Brent A. Wilhelm, and GaryW. Hency (collectively petitioners) filed a motion to quash the subpoenas duces tecumdirected against them by the Secretary of State, the Department of Securities of the State ofIllinois (respondent). The subpoenas, issued May 5, 2000, as part of a routine audit of A.G.Edwards' Waterloo, Illinois, office, sought personal banking information from Maurer,Wilhelm, and Hency. Respondent filed a motion to enforce the subpoenas on June 1, 2000. The circuit court held a hearing and on July 25, 2000, sustained the motion to quash thesubpoenas. Respondent filed a timely notice of appeal.

The relevant facts are as follows. A.G. Edwards is the parent corporation of A.G.Edwards & Sons, Inc., a broker/dealer. A.G. Edwards maintains an office located inWaterloo, Illinois, for the purposes of conducting a securities business and providinginvestment services. The Waterloo office is a satellite office of A.G. Edwards' Bellevillebranch office. A.G. Edwards employs Maurer, Wilhelm, and Hency as salespersons.

On May 5, 2000, each petitioner received a subpoena duces tecum issued byrespondent pursuant to the Illinois Securities Law of 1953 (Securities Law) (815 ILCS 5/1et seq. (West 2000)), directing A.G. Edwards' Waterloo office to produce specified bankrecords for "any and all bank accounts in which A.G. Edwards & Sons, Inc.[,] commissionchecks are deposited" for Maurer, Wilhelm, and Hency (salespersons). Specifically,respondent sought copies of all bank statements, copies of all check registers, copies of allcanceled checks, and copies of all deposit slips for the salespersons for the previous twoyears, commencing May 4, 1998. The subpoenas required petitioners to produce personalfinancial information at respondent's office in Chicago, Illinois, within four days of theservice of the subpoenas. Respondent agreed that some of these accounts were held withthe individual salesperson's respective spouse. Additionally, respondent admitted that it hadno reason to believe that the individual salespersons had engaged in any improper conduct. The personal banking information that respondent had subpoenaed was requested as aroutine audit.

Petitioners filed a motion to quash the subpoenas. Petitioners alleged that thesubpoenas were so broad and invasive "as to constitute an invasion of the *** brokers'[salespersons'] fundamental rights of privacy." Additionally, petitioners claimed thatrespondent had not demonstrated any cause or justification for such a pervasive invasion ofprivacy.

On May 17, 2000, petitioners submitted the affidavit of Brian Underwood, directorof compliance for A.G. Edwards & Sons, Inc. Underwood's affidavit stated that he had beenemployed with A.G. Edwards & Sons, Inc., since 1984 and that his job responsibilities havebeen exclusively with respect to litigation and compliance functions. Underwood stated thatdue to his work experience, he had become familiar with the practices of the Securities andExchange Commission, the National Association of Securities Dealers Regulation, Inc., thevarious exchanges of which A.G. Edwards & Sons, Inc., is a member, and the stateregulatory agencies responsible for monitoring the activities of broker/dealers such as A.G.Edwards & Sons, Inc. Underwood claimed as follows: "During my 16