Fed. Sec. L. Rep. P 98,379 John D. Robuck v. Dean Witter & Co., Inc., a Corporation, John D. Robuck v. Dean Witter & Co., Inc., a Corporation

An investor disappointed by events that wiped out his margin account sued his investment advisor, Dean Witter, for damages. The district court held the action barred by California’s statute of limitations and not proved on the merits. This appeal challenges both rulings.

In October of 1968, Robuck, the investor, told Thompson, an account executive with Dean Witter, that he wanted to make a low-risk investment that would produce above-average returns. After conferring with the firm’s research department, Thompson recommended Ling-Temco-Vought (LTV) bonds, which were selling at a depressed price due to high interest rates. Robuck purchased, on a margin account, approximately 200 LTV $1,000 bonds (at about $680 per bond). In early November 1968, he purchased another 100 LTV bonds, again on margin (at about $650 per bond). Robuck’s purchases brought the account to a quoted value of approximately $287,000, with an equity position of about $145,000.

Thereafter, Robuck received monthly statements from Dean Witter showing the status of his various accounts, all transactions in them, and the amount of his margin debt. Robuck also had access to the daily newspapers, of course, in which…