Fed. Sec. L. Rep. P 95,410 Harry Hayden v. Walston & Co., Inc.

This is an appeal from the dismissal with prejudice of appellants’ second amended complaint.

Appellants were solicited by and purchased stock through a salesman employed by the defendant Walston & Co., who at the time was unlicensed to sell securities and was not registered as a “representative” with the National Association of Securities Dealers, as required by NASD rules applicable to member associations such as Walston & Co. See Article XV, § 2 Bylaws, National Assn, of Securities Dealers, Inc., CCH NASD Manual If 1622. On the basis of this fact alone, appellants seek to state a federal claim to recover their losses on the stock, their state law claim now being barred by limitations. We agree with the district court that no federal claim is presented, and affirm the dismissal.

Appellants’ Rule 10b-5 claim is unavailing. The rule proscribes omissions of those material facts “necessary . to make the statements made, in the light of the circumstances under which they were made, not misleading . .” Absent any allegations in the complaint of circumstances which might have caused the salesman’s failure to reveal his unlicensed status to render his other statements…