Fed. Sec. L. Rep. P 96,058 Lawrence Rosenbloom v. Adams, Scott & Conway, Inc.

Rosenbloom appeals from a judgment dismissing his action against appellees entered after the district court granted appellees’ motion to dismiss for want of subject matter jurisdiction and for failure to state a claim for relief. Rosenbloom asserted jurisdiction based upon alleged violations of the Federal Securities Laws (15 U.S.C. § 78aa (1971), Rule 10b-5 ( 17 C.F.R. § 240 .10b-5 (1976))), diversity of citizenship, and pendant jurisdiction over state claims concerning breach of contract and common law fraud. In substance, Rosenbloom contends that appellees’ misrepresentations and conduct induced him to part with certain securities and to enter into an employment agreement to his detriment. Appellees’ motions were accompanied by affidavits. The district court concluded that appellant’s status as an insider foreclosed his 10b-5 claim, that complete diversity was lacking, and that the pendant state claims should not be retained. We reverse because the pleadings, although inartfully drawn, were sufficient to withstand a jurisdictional attack as well as a motion to dismiss for failure to state a claim.

The background for this drama is a series of corporate mergers and…