Stephenson v. Paine Webber Jackson & Curtis, Inc. case brief

Stephenson v. Paine Webber Jackson & Curtis, Inc. case brief summary
839 F.2d 1095 (1988)

CASE SYNOPSIS

Plaintiff client appealed orders of the United States District Court for the Eastern District of Louisiana dismissing plaintiff's claims against defendant security brokers under the Securities Act of 1933, 15 U.S.C.S. § 77a et seq., the Securities Exchange Act of 1934, 15 U.S.C.S. § 78a et seq., the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.S. § 1961 et seq., and state law.

CASE FACTS
Plaintiff appealed orders dismissing his claims alleging a violation of federal securities laws and state unfair practices law by defendants.

DISCUSSION

• The court on appeal affirmed the dismissals. 
• The claim for unauthorized trading was correctly dismissed because plaintiff's lack of due diligence, together with the trial court's expressed doubt about plaintiff's credibility, were sufficient to support its finding of recklessness and bar recovery. 
• As a matter of law, plaintiff's claim under § 17(a) of the Securities Act of 1933 was properly dismissed because § 17(a) did not contain a private right of action. 
• Plaintiff failed to make the necessary distinction between a "person" and an "enterprise" to maintain a claim under federal racketeering law. 
• Plaintiff's state law claim was correctly dismissed because the unfair trade practices statute was inapplicable to securities fraud cases.

CONCLUSION

The court affirmed the dismissal of the claim for unauthorized trading because plaintiff's lack of due diligence, together with the trial court's expressed doubt about plaintiff's credibility, were sufficient to support its finding of recklessness and bar recovery. The court upheld the dismissal of the other claims as a matter of law.

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Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials