Anspach

MEMORANDUM AND ORDER

Plaintiff brings this securities fraud action against defendants for alleged violations of Securities Exchange Commission Rule 1 Ob-5, 17 C.F.R. § 240 .10b-5, promulgated under Section 10 of the Securities Exchange Act of 1934, 15 U.S.C. § 78j (b). Specifically, plaintiff charges that defendants made certain misrepresentations of material facts in order to induce plaintiff to enter into two overlapping franchise agreements which licensed plaintiff (as franchisee) to manufacture and sell certain products which were originally developed and marketed by defendants (the franchisor). Plaintiff seeks restitution in the sum of $43,000 and consequential damages in the sum of $200,000.

Plaintiff seeks to invoke this court’s jurisdiction pursuant to Section 27 of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa.

Defendant William Bailey now moves for an order dismissing the action on the ground that this court lacks subject matter jurisdiction and on the ground that the complaint fails to state a claim upon which relief can be granted. Defendant argues that the complaint (1) does not allege facts concerning the purchase or sale of a “security” as defined by the…