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Matter of Application of New Jersey Bureau of Securities for an Open Commission Under R. 4 11-5 to Examine Under Oath Robert G. Berkson

March 20, 1995

I/M/O THE APPLICATION OF THE NEW JERSEY BUREAU OF SECURITIES FOR AN OPEN COMMISSION UNDER R. 4:11-5(B) TO EXAMINE UNDER OATH ROBERT G. BERKSON, A RESIDENT OF THE STATE OF NEW YORK. I/M/O THE APPLICATION OF THE NEW JERSEY BUREAU OF SECURITIES FOR AN OPEN COMMISSION UNDER R. 4:11-5(B) TO EXAMINE UNDER OATH PETER F. HIBBARD, A RESIDENT OF THE STATE OF MARYLAND.


On appeal from the Superior Court of New Jersey, Chancery Division, Essex County.

Approved for Publication March 20, 1995.

Before Judges Brody, Long and A. M. Stein. The opinion of the court was delivered by A.m. Stein, J.A.D.

The opinion of the court was delivered by: Stein

A.M. STEIN, J.A.D.

We reverse the orders of the Chancery Division issuing commissions pursuant to R. 4:11-5 for the taking of the out-of-state depositions by the New Jersey Bureau of Securities of appellants Robert Gary Berkson, a New York state resident, and Peter F. Hibbard, a Maryland resident.

On December 1, 1992, the Bureau issued an investigative subpoena requiring Berkson, a broker-dealer for First Jersey Securities, Inc., to appear and provide testimony at the Bureau's offices in New Jersey as part of a three-year investigation into the activities of several individuals and entities to determine whether they violated the Uniform Securities Law, N.J.S.A. 49:3-47 to -76. The Bureau personally served Berkson at his home in New York on December 2, 1992.

When Berkson refused to comply with the subpoena, the Bureau filed a verified complaint and application for order to show cause seeking its enforcement. Berkson cross-moved to dismiss the complaint, discharge the order to show cause and quash the subpoena. On August 25, 1993, the Chancery Judge signed an order enforcing the subpoena. Berkson appealed.

On June 7, 1994, the Bureau issued a similar investigative subpoena requiring the appearance and testimony in New Jersey of Peter F. Hibbard, a Maryland resident, one of the original owners of Hibbard, Brown & Co., Inc. Hibbard's attorney accepted service of the subpoena reserving all rights to contest its validity. Neither the Bureau nor Hibbard took any action with respect to the subpoena pending Disposition of Berkson's appeal.

We held that the Bureau did not have the authority to issue and serve subpoenas in another state compelling non-resident witnesses to testify in New Jersey. Silverman v. Berkson, 276 N.J. Super. 6, 10, 647 A.2d 160 (App. Div. 1994). We reversed the order of the Chancery Division, quashed the subpoena and dismissed the enforcement action. Ibid. The New Jersey Supreme Court granted the Bureau's petition for certification. 138 N.J. 268 (1994). The matter is pending before the Supreme Court.

In Silverman, we rejected the Bureau's contention that its authority to issue out-of-state subpoenas to non-resident witnesses compelling their testimony in New Jersey derived from reading together N.J.S.A. 49:3-68(a), which empowers the Bureau to conduct an investigation "within or outside of this state," and N.J.S.A. 49:3-68(b), which authorizes the Bureau "to subpoena witnesses, compel their attendance [and] take evidence." Silverman, supra, 276 N.J. Super. at 8. We said that "the authority granted by N.J.S.A. 49:3-68 anticipates enforcement of subpoenas in the courts of the foreign state where the investigation takes place and where the witness resides." Ibid. (emphasis added).

We also said:

Under authority of R. 4:11-5, non-party witnesses may be compelled to testify at a deposition in another state and the deposition may be used in an action here. However that procedure is only available:

"if the sister state has a procedure, by rule or statute, similar to R. 4:11-4, which authorizes the foreign court to issue a deposition subpoena on petition in aid of foreign litigation. If it does not and if the witness is not a party, witness attendance at an out-of-state deposition can be ...


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