The opinion of the court was delivered by: Campbell, Chief Judge.
Plaintiff, the owner of some 25% of the stock in the defendant
corporation, is before the court seeking to enjoin the defendant
corporation from selling the plaintiff's stock to discharge an
indebtedness secured by a pledge of the stock in question.
The last five Counts of the Complaint do not allege an
independent basis for predicating federal jurisdiction. They are,
to the extent that they allege any claim against the defendant,
dependent upon the first two Counts and an "ancillary
The first two Counts attempt to bottom jurisdiction on the
Securities Act of 1933 (15 U.S.C.A. at § 77a) and following,
and/or the Securities Exchange Act of 1934 (15 U.S.C.A. § 78a)
Count I alleges that the Corporation's intended pledgee sale of
the stock will violate Section 5 of the Securities Act
(15 U.S.C.A. § 77e). Although not specifically spelled out in the
Complaint, assumingly the alleged violation is the failure to
file the Section's required registration statement and
Count II alleges a violation by the Corporation of Section 10
of the Securities Exchange Act, entitled "Regulation of the Use
of Manipulative and Deceptive Devices." (15 U.S.C.A. § 78j (b)).
The Regulation more specifically alleged to have been violated,
Regulation 240, 10 b-5, and is quoted in the Complaint as
"It shall be unlawful for any person directly or
indirectly, by use of any means or instrumentality of
interstate commerce, or of the mails, or of any
facility of any national securities exchange,
"(a) to employ any device, scheme, or artifice to
"(b) to make any untrue statement of a material
fact or to omit to state a material fact necessary in
order to make the statements made, in the light of
the circumstances under which they were made, not
"(c) to engage in any act, practice, or course of
business which operates or would operate as a fraud
or deceit upon any person, in connection with the
purchase or sale of any security."
The right of a private party affected by violations of the
Securities and Exchange Acts, or the Securities Exchange Act to
maintain an action premised upon such violations can no longer be
questioned. J.I. Case Company v. Borak, 377 U.S. 426, 84 S.Ct.
1555, 12 L.Ed.2d 423.
However, to properly invoke federal jurisdiction under the
Securities Acts the complaint must be one,
"* * * brought to enforce any liability or duty
created by * *" the appropriate Act (§§ 77v(a) and
78aa of Title 15.)
The applicability of the Acts, said the Supreme Court in
speaking about the § 77d exemptions to the Securities Act,
"* * * should turn on whether the particular class
of persons affected needs the protection of the Act."
S.E.C. v. Ralston Purina Company, 346 U.S. 119,
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