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June 27, 1974

David F. Bolger, et al., Plaintiffs
Laventhol, Krekstein, Horwath & Horwath, et al., Defendants

Metzner, District Judge.

The opinion of the court was delivered by: METZNER

METZNER, District Judge:

This is a motion to dismiss the complaint pursuant to Rules 12(b) (1) and (6), Fed. R. Civ. P., for lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted.

 Plaintiffs are nineteen limited partners of Takara Partners Limited (Takara), a New York limited partnership which was organized on July 16, 1969, for the purpose of investing and trading in securities. The moving defendants are Laventhol, Krekstein, Horwath & Horwath (Laventhol), an accounting firm which prepared certain financial statements for Takara; Landis & Landis, a New Jersey accounting firm which was part of Laventhol; Morris Landis and Morton Dear, partners in Laventhol and Landis & Landis; and Thomas Martino, an employee of Laventhol. The remaining defendants are Akiyoshi Yamada and John Galanis, two general partners of Takara who exercised exclusive control over its assets and securities transactions, and Robert Bier and Michael Weiner, two additional employees of Laventhol.

 The complaint alleges that Yamada and Galanis violated Section 17(a) of the Securities Act of 1933 (15 U.S.C. § 77q(a)) (1933 Act), Section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)) (1934 Act), and Section 206(1) and (2) of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-6(1) and (2)) (Advisers Act) by engaging in a series of illegal transactions on behalf of the partnership designed to defraud the limited partners of Takara. *fn1" These transactions included, inter alia, purchases of over $1 million in "unsuitable securities" for which they privately received cash inducements, misappropriation of Takara's assets, the manipulation of securities in Takara's portfolio for their own benefit, dissemination of false "monthly letters" to the limited partners concerning the value of Takara's assets, and the payment of cash to various accountants for the purpose of securing favorable opinions on Takara's financial condition.

 The movants are charged with aiding and abetting these securities law violations as a result of their dissemination in March 1970 of false and misleading certified financial statements (1969 Report), and in April 1971 of materially false and misleading information concerning the investment performance of Takara during 1970 (1970 Income Tax Report). It is unnecessary, for the purpose of deciding this motion, to refer to the specific allegations concerning the actions of the movants.

 It is further alleged that as a result of receiving and relying on the 1969 Report and the 1970 Income Tax Report, plaintiffs were prevented from learning the true facts about Takara's precarious financial condition. Because of this lack of knowledge they took no steps to recover their investments in Takara, or to prevent further deterioration of its financial status until late May 1971 when Laventhol first disclosed that it could not issue an opinion as to Takara's financial condition, as required by the partnership agreement, for the year ending 1970, because of serious irregularities in its financial records. At that point, plaintiffs acted to save their investments by obtaining an order dissolving Takara. On August 10, 1971, however, the partnership was adjudicated a bankrupt. Plaintiffs now seek damages in the sum of $2,417,641 representing their lost investments.

 In the course of these proceedings, plaintiffs have conceded that the Section 17(a) claim contained in Count Two is no longer viable. Consequently, Count Two is dismissed.

 We turn then to Count One of the complaint which charges the defendants with violations of Sections 206(1) and (2) of the Advisers Act. These sections provide:

"It shall be unlawful for any investment adviser, by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly --
(1) to employ any device, scheme, or artifice to defraud any client or prospective client;
(2) to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client . . ."

 It is admitted, for the purposes of this motion, that Yamada and Galanis were investment advisers as defined in Section 202(11) of the Act (15 U.S.C. § 80b-2(11)), and that the movants aided and abetted them in committing acts which were violative of these provisions.

 Defendants contend, however, that this count must be dismissed because the Advisers Act does not explicitly authorize -- nor should the court imply -- a private right of action for damages to redress violations of the Act. Although the Advisers Act has been on the legislative rolls for thirty-four years, this is the first time that a court has been called upon to specifically determine whether such a private action may be maintained. *fn2"

 It is undisputed that neither Section 206, nor any other section of the Advisers Act, contains any language which explicitly authorizes a private party to sue for damages for violations of the antifraud provisions of the Act. That factor alone, however, is not dispositive of the instant claim. The Supreme Court has repeatedly recognized that private rights of action may be implied in favor of the intended beneficiaries of an Act in order to enforce compliance with its provisions. See, e.g., J. I. Case Co. v. Borak, 377 U.S. 426, 12 L. Ed. 2d 423, 84 S. Ct. 1555 (1964); Tunstall v. Brotherhood of Locomotive Firemen and Enginemen, 323 U.S. 210, 89 L. Ed. 187, 65 S. Ct. 235 (1944); Texas & Pacific R.R. v. Rigsby, 241 U.S. 33, 60 L. Ed. 874, 36 S. Ct. 482 (1916); cf., Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971); Bell v. Hood, 327 U.S. 678, 90 L. Ed. 939, 66 S. Ct. 773 (1946). Securities legislation has proved to be no exception. See generally, III Loss, Securities Regulation, 932-956 (1961); J. I. Case v. Borak, supra at 432.

 By implying private damage actions in these cases, the courts have in effect legislated interstitially in order to effectuate the broad "remedial purposes" of the federal securities laws. Securities and Exchange Commission v. Capital Gains Research Bureau, 375 U.S. 180, 195, 11 L. Ed. 2d 237, 84 S. Ct. 275 (1964).

 In determining if a similar private right of action should be implied under the Advisers Act, we must ascertain whether such an implication would be "consistent with the evident legislative intent and, of course, with the effectuation of the purposes intended to be served by the Act." National Railroad Passenger Corp. v. National Association of Railroad Passengers, 414 U.S. 453, 94 S. Ct. 690, 38 L. Ed. 2d 646, 42 ...

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