Grinsell

Grinsell v. Kidder, Peabody & Co., Inc.

Good Law

112 A.L.R. Fed. 801·744 F. Supp. 931·1990 WL 132127·1990 U.S. Dist. LEXIS 11943

United States District Court, Northern District of CaliforniaAugust 31, 1990C-90-1576 FMSCalifornia1,193 words

Opinion

Smith, J.

ORDER

Plaintiffs, Mr. and Ms. Grinsell, filed this securities fraud action against their investment broker, Laura Kent, and her employer, Kidder, Peabody, & Company. The complaint alleges eleven causes of action, including violation of §§ 17(a) and 12(2) of the Securities Act of 1933. Defendants move to (1) strike allegations regarding violation of § 17(a) from the tenth cause of action and (2) dismiss the eleventh cause of action, alleging violation of § 12(2), for failure to state a claim. Having carefully considered the submitted materials and heard argument on these motions, the Court grants the motions for the reasons set forth.

Motion to Strike Portions of the Tenth Cause of Action

Plaintiffs’ tenth cause of action, entitled “Damages&emdash;Violation of Federal Securities Law,” asserts that defendants violated § 17(a) of the Securities Act of 1933 and § 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Defendants move to strike all references to § 17(a) from the complaint on the grounds that no private cause of action exists under that statute.

Ninth Circuit precedent on this issue is clear. In 1987, a Ninth Circuit en banc panel reversed two earlier rulings…

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