Agora Inc. moves to quash subpoenas

Daily Record, The (Baltimore), Aug 25, 2004 by Peter Geier

A Baltimore-based financial publisher has asked the city circuit court to quash the Maryland Security Commissioner's subpoenas to brokerage firms seeking information about its subscribers.

Agora Inc. calls the commissioner's subpoenas of Fox Investments/ Man Securities Inc. and other brokerage firms nothing more than a back-door attempt to obtain lists of Agora's subscribers after the same court ruled last year that those lists are protected from disclosure.

The key issue here, said Agora General Counsel Matthew J. Turner, is that [the commissioner] was trying to get our subscriber lists; she lost that, and now she's trying to get in by a different way and we think she's wrong.

Agora's motion stems from word it got from an auto-trader who subscribes to us - Fox Investments/Man Securities - that Commissioner Melanie Senter Lubin was trying to subpoena subscribers for the records of brokerage firm clients who have identified themselves as Agora subscribers, Turner said.

An auto-trader is authorized by its client to trade stocks written about in certain publications, such as Agora's.

The commissioner's investigation purportedly involves allegations that Agora trades in the stocks it writes about, he said - a charge he flatly denies. Nor does the company have any relationship with auto-traders, not in any way, shape or form, Turner said.

In the first round, the commissioner had issued subpoenas duces tecum in June 2002 and March 2003 to Agora, purportedly related to her investigation into the possible offer or sales of securities in violation of the anti-fraud or registration provisions of the state securities act, the motion says.

Agora complied in every particular other than to provide the names of its subscribers, which it argued were protected by the First Amendment.

The securities commission wanted our subscriber lists. We said no. We gave them our account records and other information they needed to do their investigation, but we felt that to give them our subscriber lists would violate the associational First Amendment rights of our subscribers, Turner said.

In rejecting the securities commissioner's motion to enforce those administrative subpoenas last October, Baltimore City Circuit Visiting Judge Robert I.H. Hammerman agreed with Agora that the subpoenas for all the company's Maryland subscribers were a fishing expedition and a shot-gun approach, Turner said.

In his ruling from the bench, Hammerman said, I do believe what the commissioner is attempting to do here is, in its own relatively small way, an attempt to erode the First Amendment.

But Hammerman may have inspired the commissioner's next step.

I think there are other avenues that might well be available to the commissioner to obtain the identity of certain subscribers, be able to talk to certain subscribers, the judge said in his oral ruling from the bench.

There is no showing here at all that that would not be possible. There is no showing here at all that the commissioner has made any concentrated effort to speak to subscribers, locate them, get the information which the commissioner is seeking, Hammerman said.

The securities commissioner appealed the ruling, and the Court of Appeals heard argument in June, according to court documents.

Assistant Attorney General Julie L. Tewey, counsel to the securities commissioner, declined to comment on the matter.

The action falls within the larger context of litigation relating to Agora's battles with state and federal regulators over the nature of its business and the information it conveys.

Agora, its wholly-owned company Pirate Investor LLC, and Frank Porter Stansberry, editor of two Agora financial newsletters, are defendants in a pending civil fraud case filed last year by the U.S. Securities and Exchange Commission in Baltimore's federal court.