Richard F. CARROTT, Appellant, v. SHEARSON HAYDEN STONE, INC., a Corporation, and Leslie B. Simpson, Appellees

Carrott sued in district court to recover losses he says he sustained in stock transactions entered into between May and October 1978 with Shearson Hayden Stone through its employee, Simpson. In each of his complaint’s five counts Carrott claims that Simpson solicited his purchase by giving him false and misleading information. Following these transactions Carrott sold at a loss of about $87,000 to cover margin calls. He pleaded various amounts, but his total loss on all transactions did not exceed the figure submitted to the jury on the count for violation of § 10(b) of the Securities Act of 1934, 15 U.S.C. § 78j. The jury found no liability under that section. Regarding the remaining counts, the trial court dismissed two pendent state law counts and granted summary judgment on the two federal counts presently on appeal.

The first count on appeal is for liability under § 12(2) of the Securities Act of 1933, 15 U.S.C. § 777 (2). For liability to be found under that section, defendants must make “an untrue statement of material fact or [omit] to state a material fact necessary in order make the statements . .. not misleading .... ” In rejecting the § 10(b) claim, the jury found…