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June 18, 1974

John W. DAVIDGE, Jr., as Trustee of Farrington Manufacturing Company, Plaintiff,
Norville E. WHITE, Defendant

Stewart, District Judge.

The opinion of the court was delivered by: STEWART


STEWART, District Judge.

 Plaintiff John W. Davidge, a District of Columbia resident and reorganization trustee of the Farrington Manufacturing Company ("FMC" or "the company"), brings this action seeking to recover for the company profits allegedly illegally made from the sale of FMC stock in the Fall of 1969 by the defendant Norville E. White, a resident of Connecticut. The complaint alleges, in separate counts based on the same facts, violations of federal *fn1" and state securities laws.

 The defendant has moved to dismiss the complaint, pursuant to Rule 12(b), Fed.R.Civ.P., for failing to state a claim upon which relief can be granted or for improper venue and, if complete dismissal is denied, for a more definite statement under Rule 12(e), Fed.R.Civ.P. For purposes of the motion to dismiss, the well-pleaded material allegations of the complaint must be taken as admitted. E.g. United States v. New Wrinkle, Inc., 342 U.S. 371, 376, 72 S. Ct. 350, 96 L. Ed. 417 (1952); Vine v. Beneficial Finance Co., 374 F.2d 627, 632-633 (2d Cir. 1967).

 The complaint alleges that the defendant was a director of FMC from August, 1961 through October 23, 1969 and an officer of the company during much of that time; that on October 23, 1969, the defendant retired as an officer and director of the company, but continued on as a paid consultant to FMC from that time through 1970; that from September 23, 1969 through November 12, 1969, the defendant knew, or should have known, certain specified material adverse financial information about FMC which was either not publicly disclosed at all or publicly disclosed in a misleading fashion, that is, in a manner which minimized or negated the adverse significance of such information; and that from September 23, 1969 through November 12, 1969, while in possession of this non-public material adverse information the defendant engaged in a number of private securities transactions involving FMC stock, including the sale of an aggregate of over 78,000 shares of stock for a consideration of almost $1.4 million. Count one charges that these facts constitute a violation of the federal securities statutes (n. 1 supra). Count two charges that the facts constitute a common law breach of the defendant's fiduciary duty to FMC to refrain from making a personal profit through the use of material inside information.

 Motion to Dismiss Count One (the "federal count")

 The defendant moves to dismiss the federal count on the grounds, inter alia, that the plaintiff does not allege facts sufficient to give him standing to sue for damages under any of the federal statutory provisions, (see n. 1. supra) in that neither the plaintiff nor the company he represents were alleged to be defrauded purchasers or sellers of the securities. The defendant cites to the statutes and a long and consistent series of cases in this Circuit for the proposition that a federal private cause of action for damages is impliedly granted only to defrauded purchasers under those provisions of the 1933 Act, and only to defrauded purchasers or sellers under § 10(b) of the 1934 Act. *fn2"

 The plaintiff does not dispute that neither he nor the company were defrauded purchasers or sellers of FMC stock in the transactions in question. The plaintiff also cannot dispute that if the purchaser-seller requirement of Birnbaum and the subsequent cases remains viable and applies to this case, the complaint must be found to fail to state a federal claim for relief.

 Plaintiff stakes his federal claims on the propositions that either the Birnbaum purchaser-seller requirement has been implicitly overruled by the Supreme Court in Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 92 S. Ct. 165, 30 L. Ed. 2d 128 (1971) or, alternatively, that the rationale of the Second Circuit in the Texas Gulf Sulphur litigation *fn3" makes application of the requirement inappropriate in this case. For the reasons stated hereafter, we are unpersuaded by either of these contentions, and thus, grant defendant's motion to dismiss the federal count.

 Despite some language in the opinion which might be read to liberalize the definition of a "sale", the "Supreme Court in Bankers Life, supra, did not overrule, implicitly or otherwise, the purchaser-seller requirement for a private cause of action for damages under § 10(b) of the 1934 Act. Subsequent to that case and to the Second Circuit's final word in Texas Gulf Sulphur, 446 F.2d 1301 (2d Cir. 1971), this Circuit has repeatedly recognized the continuing vitality of that requirement. International Controls Corp. v. Vesco, 490 F.2d 1334 (2d Cir. 1974) cert. denied 417 U.S. 932, 94 S. Ct. 2644, 41 L. Ed. 2d 236 (1974); Haberman v. Murchison, 468 F.2d 1305, 1311 n. 5 (2d Cir. 1972).

 Plaintiff argues that Texas Gulf Sulphur extended to an action under § 10(b) and Rule 10b-5 the remedy -- return to the corporation of illegally attained profits -- previously granted for violations of § 16(b) of the 1934 Act, *fn4" and that therefore a plaintiff representing the corporation ought to be able to maintain a cause of action under § 10(b), despite failure to meet the purchaser-seller requirement. This argument misses the point. The availability of a certain remedy under a specific statutory provision may or may not be relevant to an individual's standing to sue under that provision. In this case, the question of remedies under § 10(b) and § 16(b) is distinct from, and not directly relevant to the question of standing to bring suit under those provisions. As the Second Circuit said in Birnbaum :

"When Congress intended to protect the stockholders of a corporation against a breach of fiduciary duty by corporate insiders, it left no doubt as to its meaning. Thus Section 16(b) of the Act of 1934, 15 U.S.C.A. § 78p(b), expressly gave the corporate issuer or its stockholders a right of action against corporate insiders using their position to profit in the sale or exchange of corporate securities. The absence of a similar provision in Section 10(b) strengthens the conclusion that that section was directed solely at that type of misrepresentation or fraudulent practice usually associated with the sale or purchase of securities rather than at fraudulent mismanagement of corporate affairs, and that Rule X-10B-5 extended protection only to the defrauded purchaser or seller." 193 F.2d at 464.

 In short, we find that the purchaser-seller requirement of Birnbaum and its progeny remains "alive and well" as to private causes of action for damages under § 10(b) of the 1934 Act. As noted earlier, this requirement bars plaintiff Davidge, admittedly not a defrauded purchaser or seller, from maintaining an action under that provision.

 The requirement that a plaintiff bringing suit under §§ 5, 12(2) and 17(a) of the 1933 Act be a defrauded purchaser of securities is perhaps even more clearly established both by the terms of the statute, *fn5" and the case law. Schoenbaum v. Firstbrook, supra n. 2; Greater Iowa Corp. v. McLendon, 378 F.2d 783, 790-791 (8th Cir. 1967); See Surowitz v. Hilton Hotels Corp., 342 F.2d 596, 603 (7th Cir. 1965) rev'd on other ...

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