Henricksen v. Henricksen
| Citation | 486 F. Supp. 622 |
| Decision Date | 10 March 1980 |
| Docket Number | No. 78-C-208.,78-C-208. |
| Parties | Wendee HENRICKSEN, Plaintiff, v. George HENRICKSEN and Smith, Barney, Harris, Upham & Co., Inc., Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
COPYRIGHT MATERIAL OMITTED
Fox, Carpenter, O'Neill & Shannon by Bruce C. O'Neill, Milwaukee, Wis., for plaintiff.
Thomas P. Doherty, Atty., Milwaukee, Wis., for Geo. Henricksen.
Quarles & Brady by W. Stuart Parsons, Milwaukee, Wis., for defendants.
DECISION and ORDER
The plaintiff Wendee Henricksen seeks to recover in this action the approximate sum of one hundred and twenty thousand dollars from her former husband, George Henricksen, and his former employer, Smith, Barney, Harris, Upham & Co., Inc. (Smith Barney). The complaint states eight claims and alternative claims for relief, based on provisions of the federal securities laws, state common law, and certain rules of the New York Stock Exchange and the National Association of Securities Dealers. A two day bench trial was held in early January 1980, and the parties have submitted post-trial briefs. This opinion constitutes the court's findings of fact and conclusions of law pursuant to Rule 52, Federal Rules of Civil Procedure.
The plaintiff and George Henricksen were married in August 1969. In January 1970, Mrs. Henricksen received a bachelor of arts degree. The Henricksens moved to New York where George Henricksen underwent a six month training program with Smith Barney to become a stockbroker. The Henricksens then moved to Milwaukee, and Mr. Henricksen worked for Smith Barney as a registered representative from 1970 through 1977, the time period covering the events pertinent to this case.
On June 19, 1972, the plaintiff opened a customer account at Smith Barney. The mailing address listed on the permanent account record was the Henricksen's home address. At that time, Mrs. Henricksen's investment objectives were recorded on Smith Barney's new account form. This document sets forth five possible investment objectives, ranging in five steps from "conservation of capital with stable income," the most conservative investment plan, to "speculative capital gains," the most speculative investment plan. The investment objective indicated for the plaintiff's account was step two, "long-term growth of capital—income secondary." The account was opened as a discretionary account, which meant that the plaintiff gave George Henricksen a power of attorney over the account. This power of attorney was formally evidenced by a written memorandum signed by the plaintiff, dated August 23, 1972.
The first transaction occurred in the account in June 1974, when Mrs. Henricksen deposited 17 shares of duPont stock. These shares were sold in June 1975, and 100 shares of J. D. Searle were purchased with the proceeds.
On July 2, 1975, Mrs. Henricksen signed a customer's option agreement which, she testified, she did not read before signing. The agreement states that the person signing it has "been furnished with the current Prospectus of The Options Clearing Corporation," and has "read it and particularly noted those buy and sell sections pertaining to Risk Factors, Suitability and Limitations on Position and Exercise, . . ." The plaintiff testified that she was not furnished a copy of the prospectus before signing the option agreement and that she would not have understood it had it been furnished. The option agreement further states that the plaintiff agreed:
The instrument also stated:
At this time, two Smith Barney records were prepared and maintained with regard to the plaintiff's option account: an option client information sheet and an option client approval sheet. The information sheet stated that the account was a single, not a joint, account, that the plaintiff's estimated net worth was between $100,000 and $250,000, that her annual income was $5,000 and her husband's was $30,000, and that her assets totaled $123,000. Her investment objectives were stated to be "growth," rather than "income" or "speculation." The possible types of anticipated option transactions were listed as:
The only type of transaction checked for the plaintiff's option account was "covered writing." The option client information sheet was signed by George Henricksen.
The option client approval sheet indicated that the account was a discretionary account and that the client's husband held a power of attorney over the account. This record then reflects, opposite the same categories listed on the information sheet, that the plaintiff's account was "Approved for Covered Writing Transactions Only." This document was signed by the branch manager of Smith Barney's Milwaukee office, Smith Barney's registered options principal, and by a member of its compliance review section.
Richard Vermillion, the Milwaukee branch manager from June 1975 through October 1976, testified that copies of both of these Smith Barney records were on file in his office, but Leonard Walsh, Mr. Vermillion's successor, testified that he was unaware of the existence of these records. George Howard, a member of Smith Barney's compliance section, testified that a copy of the client option approval sheet for the plaintiff's account is still on file in his office. Mr. Howard also testified that sometime between April and October, 1976, a "yellow card" was sent to every registered representative for him to designate his option clients' investment objectives and that the plaintiff's account was thereafter programmed into Smith Barney's new computer system as approved for call purchasing transactions. However, Mr. Howard stated that the yellow card for the plaintiff's account could not be located, and no such card was ever produced at trial.
On November 3, 1975, Mrs. Henricksen executed another document giving her husband a power of attorney over her account at Smith Barney. This document, which the plaintiff testified she did not read before signing, provides:
On January 20, 1976, Mrs. Henricksen signed a margin contract with Smith Barney. This agreement provided that, in connection with any indebtedness incurred as a result of transactions in the plaintiff's account, Smith Barney "may charge monthly, as interest or otherwise, such sums to compensate Smith Barney for advances made on my account as Smith Barney may determine to be reasonable in view of the current cost of money." Although the plaintiff also did not read this document before she signed it, she testified that she had Mr. Henricksen explain it to her.
Also in January 1976, the plaintiff deposited into her Smith Barney account six so-called "blue-chip stocks," $8,000 in cash, and 822 shares of Badger Meter stock in the form of non-saleable voting trust certificates all of which she had received from a trust. As of January 26, 1976, the plaintiff's Smith Barney account, including the 100 shares of J. D. Searle stock and excluding the 822 shares of Badger Meter stock, had a fair market value of $105,814. After the cash was used on January 28th to purchase stock in Kennecott Copper Corporation, the plaintiff's account, at the end of January 1976, consisted of the eight "blue-chip" stocks and the non-saleable Badger Meter certificates. The plaintiff testified that she and her husband had an express understanding that these stocks and the capital they represented were to be conserved and ultimately dedicated to the education and other needs of the couple's daughter, Heather.
In February 1976, George Henricksen arranged to have the address on the plaintiff's account changed from the couple's home to the Smith Barney office. Henceforth, the monthly statements, confirmation slips, and any checks issued out of the account were received by Mr. Henricksen at his office. With regard to changes of address, Smith Barney's compliance manual provides:
"Customer requests for change of address should be carefully reviewed and a letter sent to customer's old address acknowledging receipt of customer's request to change the address to a new address."
Although Smith Barney was unable...
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Securities & Exchange Comm'n
...has violated the federal securities laws, and that decision provides no analysis to support its holding. See Henricksen v. Henricksen, 486 F. Supp. 622, 629 (E.D. Wis. 1980). The SEC relies instead on United States v. O'Hagan, 521 U.S. 642 (1997), to support its broad interpretation of the ......
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...as the actions of the Altschuls themselves and cannot be held liable under the theory of respondeat superior. See Henricksen v. Henricksen, 486 F.Supp. 622 (E.D.Wis.1980). In short, it was the Altschuls' own agent who took the actions about which they We also agree with Paine Webber that th......
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Securities & Exchange Comm'n v. Zandford
...has violated the federal securities laws, and that decision provides no analysis to support its holding. See Henricksen v. Henricksen, 486 F. Supp. 622, 629 (E.D. Wis. 1980). The SEC relies instead on United States v. O'Hagan, 521 U.S. 642 (1997), to support its broad interpretation of the ......