Securities & Exchange Commission v. Federal Shopping Way, Inc., a Washington Corporation, and J. R. Cissna

On September 13, 1967, two months prior to the filing of the involuntary Chapter X proceedings involved in Federal Shopping Way, Inc., 433 F.2d 144 (9th Cir., September 28, 1970), the Securities and Exchange Commission filed a complaint charging appellants, Federal Shopping Way, Inc. and its chief executive officer, J. R. Cissna, with violating the antifraud provisions of the Securities Act of 1933. The charges grew out of the sale of fractional undivided interests in land known as “Recre-Plex,” located adjacent to the shopping center in Federal Way, Washington. The complaint sought a temporary restraining order, a preliminary and permanent injunction, and the appointment of a receiver pendente lite.

A temporary restraining order was issued on the following day. On October 13, 1967, after seven days of hearings, an order was entered granting a preliminary injunction and appointing a receiver. A decree of permanent injunction was granted on August 6, 1969, following a nine-day trial on the merits. It is this decree which is the subject matter of this appeal.

Appellants contend: (1) that fractional undivided interests in real estate are not securities as defined in § 2(1) of the…