The opinion of the court was delivered by: DAWSON
This action, tried by the Court without a jury, is one where plaintiff seeks a permanent injunction against the defendants Jack Gold (hereinafter called 'Gold') and I. W. Page & Co. (hereinafter called 'Page'), to enjoin them from violating the registration provisions
and the antifraud provisions
of the Securities Act of 1933, as amended. See 15 U.S.C.A. § 77t(b). The action against the other defendants, Franklin Atlas Corporation, John L. deLyra and Walter Elmatti, for the same relief, was brought to a conclusion on December 15, 1958, by the entry of a final injunction, consented to by these defendants, enjoining them from further violation of the registration and anti-fraud provisions of the Act.
The defendants Page and Gold, in a commendable effort to aid in the prompt disposition of the action against them, entered into a stipulation of facts, dated December 23, 1958, and this action against these two remaining defendants is to be determined on this stipulation of facts, the pleadings and all other proceedings in this action.
The complaint was filed in May, 1957, and on the same day a temporary restraining order was signed. At the same time the plaintiff applied for a preliminary injunction against all the defendants. On August 16, 1957, Judge Levet granted the preliminary injunction against defendants Franklin Atlas Corporation, John L. deLyra and Walter Elmatti, but denied a preliminary injunction against the defendants Page and Gold. D.C.S.D.N.Y.1957, 154 F.Supp. 395. The denial of the injunction against the defendants Page and Gold was on the ground that 'there is no indication that either Page or Gold contemplates selling any of the Franklin stock. They appear to have readily obeyed all mandates of the Commission.'
Prior to the time of the trial of this action a pre-trial conference was held at which the issues to be tried by this Court were defined as follows:
(1) Whether the defendants have been, and whether they are selling securities, namely shares of the Class A common stock of Franklin Atlas Corporation, and in connection therewith using the mails and means and instruments of transportation and communication in interstate commerce;
(2) Whether any sales of securities of Franklin Atlas by the defendants or any of them, to the public, were made pursuant to exemption of the registration requirements of the Securities Act of 1933;
(3) Whether the defendants in the sales of Class A common stock of Franklin Atlas Corporation, if such sales were made by them, did make and have been making untrue statements of material facts and omitting to state the material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, such statements being those statements listed in the subdivisions of Paragraph 12 of the complaint and none other.
The Court, after having received the stipulation of facts, and having tried the issues, finds the facts on the disputed issues to be as follows:
(1) Defendant Page was and is a New York corporation doing business as a broker and dealer in securities in New York City, and was and is, since September 6, 1956, registered as a broker-dealer in securities pursuant to § 15(b) of the Securities Exchange Act of 1934 (15 U.S.C.A. § 78o(b); Page has not engaged in any securities transactions since September 15, 1957.
(2) Defendant Gold is and was president, treasurer, director and sole stockholder of Page and in full control of said firm.
(3) Franklin Atlas Corporation was a New York corporation organized in 1954 for the purpose of engaging in real estate transactions, with offices at 80 Wall Street, New York City; John L. deLyra was at all times manager and administrator of Franklin Atlas ...