487 F.Supp. 829 (E.D.Pa. 1980), Civ. A. 79-758, Biggans v. Bache Halsey Stuart Shields, Inc.

Docket NºCiv. A. 79-758
Citation487 F.Supp. 829
Party NameBiggans v. Bache Halsey Stuart Shields, Inc.
Case DateJanuary 14, 1980
CourtUnited States District Courts, 3th Circuit, Eastern District of Pennsylvania

Page 829

487 F.Supp. 829 (E.D.Pa. 1980)



BACHE HALSEY STUART SHIELDS, INC. f/t/a Bache Halsey Stuart, Inc.

Civ. A. No. 79-758.

United States District Court, E.D. Pennsylvania.

Jan. 14, 1980

Paul Breen, Philadelphia, Pa., for plaintiff.

Abraham C. Reich, Charles M. Solomon, Fox, Rothschild, O'Brien & Frankel, Philadelphia, Pa., for defendant.


CAHN, District Judge.

Before the court is defendant's motion for summary judgment. Plaintiff brings this action for securities fraud, alleging that defendant's registered representative engaged in excessive trading or "churning" of plaintiff's account in the purchase and sale of "call" options between June of 1975 through October of 1976. 1 The claims are based upon s 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. s 78j(b), and Rule 10b-5, 17 C.F.R. s 240.10b-5, promulgated thereunder by the Securities Exchange Commission, as well as s 17(a) of the Securities Act of 1933, 15 U.S.C. s 77q(a). Jurisdiction is invoked under s 27 of the Securities Exchange Act, 15 U.S.C. s 78aa.

Plaintiff filed his complaint on February 28, 1979. In June of 1975, plaintiff owned various amounts of two stocks which were turned over to defendant's agent for the

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purpose of liquidating and reinvesting. The sale of stock generated approximately $6,500 which was initially reinvested in stock and later reinvested in various call options. Plaintiff claims that the defendant by failing to control its agent and failing to learn or to understand the investment needs of the plaintiff aided and abetted the agent who in bad faith "churned" customer's account with the fraudulent purpose of deriving a profit for himself and defendant. 2 He claims that this deception was in violation of the aforementioned statutes and rules.

Defendant argues that plaintiff's claims are time barred. The federal statute provides no statute of limitations for an action under 10b-5. Therefore I must look to state law for an analogous statute of limitations. Ernst and Ernst v. Hochfelder, 425 U.S. 185, 210 n. 29, 96 S.Ct. 1375, 1389 n. 29, 47 L.Ed.2d 668 (1976). A legal issue before the court is whether to apply the three year statute of limitations under the Pennsylvania "Blue Sky" Law or the six year statute of limitations applicable to common law fraud in Pennsylvania.

In Frankel v. Schmertz, No. 74-1695 (E.D.Pa...

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