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.
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.
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).
Defendants contend that plaintiff has failed to adequately allege its claims in Counts 1 and 2 that defendants are liable for excessive churning in violation of Sections 4b and 4o of the CEA, 7 U.S.C. §§ 6b, 6 o (West Supp.1988) (cmplt., paras. 32, 43, 47(C)). The court agrees. The CFTC has defined churning as the excessive trading of an account by a broker with control of the account for the purpose of generating commissions without regard for the investment or trading objectives of the customer. In re Lincolnwood Commodities, Inc. of Calif., (1982-84 Transfer Binder)Comm.Fut.L.Rep. (CCH) para. 21,986 at p.28,246 (CFTC 1984). Thus to state a claim for churning a customer must allege excessive trading and excessive billing. Proetz v. Dean Witter Reynolds, Inc., 2Comm.Fut.L.Rep. (CCH) para. 24,178 at p.34,915 (N.D. Ill. 1988). In order to establish excessive trading courts have generally held that the plaintiff must identify the commodity involved, the nature, amounts and dates of transactions at issue, as well as sufficient facts to allow for a determination of either the turnover ratio or the commission-to-equity ratio in the account. Proetz at p.34,915 (citing Bieganek v. Wilson, 642 F. Supp. 768, 771 (N.D.Ill.), vacated in part, 801 F.2d 879 (7th Cir. 1986)); Shelley v. Noffsinger, 511 F. Supp. 687, 692 (N.D. Ill. 1981). Because churning is a species of fraud these allegations must be made with specificity. Fed.R.Civ.P. 9(b).
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 ...