Smartphone passcodes are protected by the Fifth Amendment

In a new case decided Wednesday, SEC v. Huang, a federal trial court in Pennsylvania held that the government can’t force a person to give up his passcode to his smartphone. I think the decision misses the mark, and I hope it is appealed. Here’s a rundown. First, the facts. The Securities and Exchange Commission (SEC) is investigating Bonan and Nan Huang for insider trading. The two worked at the credit card company Capital One as data analysts. According to the complaint, the two allegedly used their jobs as data analysts to figure out sales trends at major U.S. companies and to trade stocks in those companies ahead of announced company earnings. According to the SEC, they turned a $150,000 investment into $2.8 million. Capital One let its employees use company-owned smartphones for work. Every employee picked his own passcode, and for security reasons did not share the passcode with Capital One. When Capital One fired the defendants, the defendants returned their phones. Later, as part of the investigation, Capital One turned over the phones to the SEC. The SEC now wants to access the phones because it believes evidence of insider trading is stored inside them. But here’s the problem: The SEC can’t get in. Only the defendants know the passcodes. And the defendants have refused to disclose them.