Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

KHALID BIN ALWALEED FOUND. v. E.F. HUTTON & CO.

March 13, 1989

KHALID BIN ALWALEED FOUNDATION, a Trust under the laws of Liechtenstein, Plaintiff,
v.
E.F. HUTTON & COMPANY, INC., E.F. HUTTON & COMPANY (SECURITIES), LTD., SHARIF SERAGELDIN and SAMI BEYDOUN, Defendants


Harry D. Leinenweber, United States District Judge.


The opinion of the court was delivered by: LEINENWEBER

HARRY D. LEINENWEBER, UNITED STATES DISTRICT JUDGE

 This cause comes before the court on the motion of defendants to dismiss Counts 1 through 12. For the reasons herein stated, the motion is granted.

 FACTS

 In June of 1988 plaintiff, Khalid Bin Alwaleed Foundation ("Foundation"), filed suit against defendants seeking $ 21,959,000 in compensatory damages for alleged violation of Sections 4b and 4o of the Commodity Exchange Act ("CEA"), 7 U.S.C.A. §§ 6b, 6 o (West 1980) and Rules 1.55 and 166.3 of the Commodity Futures Trading Commission ("CFTC" or "Commission"), 17 C.F.R. §§ 1.55, 166.3. The Foundation also asserts pendent state claims of fraudulent concealment, fraudulent misrepresentation, constructive fraud, negligence, negligent misrepresentation, breach of contract and civil conspiracy, seeking $ 21,959,000 in actual damages and $ 50,000,000 in punitive damages. The Foundation also seeks rescission of its contract with defendant E.F. Hutton & Company, Ltd.

 DISCUSSION

 I. Capacity to Sue

 In its complaint the Foundation states that it is a "trust organized under the laws of the Principality of Liechtenstein" (cmplt., para. 4). Under Illinois law a trust cannot sue on its own behalf; instead the trustee is statutorily empowered to "compromise, contest, prosecute or abandon claims or other charges in favor of or against the trust estate." Ill.Rev.Stat., ch.17, para. 1665 (1981). Defendants argue that because under Fed.R.Civ.P. 17(b) the court is obliged to determine capacity to sue by the law of the state in which the district court is held (except in the case of certain individuals, corporations, partnerships and receivers) the court should apply Illinois law and find that the Foundation as a "trust" lacks the capacity to sue.

 Plaintiff replies that the Foundation, although created by a deed of trust, is actually a corporate form of association under Liechtenstein law. Under Fed.R.Civ.P. 17(b) the capacity to sue a corporation is determined by the law of the state under which it was organized. Plaintiff argues that because under Liechtenstein law a foundation, as a corporate entity, can sue and be sued the court should accord it the same right. It is true, as defendants contend, that the Foundation differs in several respects from a corporation as commonly defined in this country. Nevertheless, because the Foundation is a juridical entity under the laws where it was created, there is no reason to deny it access to the federal courts. Compare Joseph Muller Corp. Zurich v. Societe Avonyme de Gerance et D'Armement, 451 F.2d 727 (2nd Cir. 1971) (because corporations had capacity to sue where they were incorporated -- France and Switzerland, respectively -- they had capacity to sue in federal courts for purposes of Rule 17(b), despite Franco-Swiss treaty requiring suit to be brought in France), with Alosio v. Iranian Shipping Lines, S.A., 426 F. Supp. 687 (S.D.N.Y. 1976), aff'd, 573 F.2d 1287 (2nd Cir. 1977) (where corporation is dissolved under Iranian law it lacks capacity to sue in federal court).

 II. Counts 1 and 2

 A. Churning

 Plaintiff contends that these ratios are not useful criteria of churning and that the court ought to consider other factors such as the trader's rationale and the goals of the investor. While we note that the CFTC has stated that the turnover ratio "as applied in securities churning cases, [is] inherently inappropriate in determining whether excessive trading has been established in futures churning cases," Lincolnwood Commodities at p.28,247, it has also expressly endorsed the commission-to-equity ratio for this purpose, stating

 
"The amount of commissions directly reflects the volume of trades entered and liquidated in the market over a given period of time, which is highly relevant in determining whether trading was ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.