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January 28, 1975

RUTH KORN, Individually and as executrix of the Estate of Ben Korn, Deceased, on behalf of herself and all other Purchasers and Holders of Limited Partnership Interests in 63 Wall Associates similarly situated, Plaintiff,

The opinion of the court was delivered by: CONNER



 In 1961 plaintiff and her husband, since deceased, purchased two units of limited partnership in a real estate syndication known as 63 Wall Associates for $10,000.00. Six years later, plaintiff initiated this action against the general partners and others alleging that the prospectus dated September 6, 1961 was contaminated by well over one hundred misrepresentations and omissions of material fact in violation of various provisions of state and federal law.

 On February 10, 1968, following the sale of partnership property and while this lawsuit was pending, a distribution of $4,570.00 for each $5,000.00 unit of original investment was made. The reverse side of the distribution check contained a general release of all claims against defendants Franchard Corporation, Louis A. Siegel ("Siegel") and Seymour Young ("Young"). By an accompanying letter, each distributee was given the option of 1) executing the release by endorsing the check or 2) requesting a substitute check in an identical amount but without a release. Of the one thousand and fifty units of partnership interests for which checks were sent to investors, owners of only seventy units requested the substitute check. All the other limited partners endorsed the back of the original check and thereby executed the release contained thereon. See Korn v. Franchard Corp., 456 F.2d 1026 (2d Cir. 1972).

 Presently before the Court is a motion, brought on by defendants pursuant to Rule 23 F.R.Civ.P., for an order declaring the releases to be valid and limiting the class to those members who did not endorse the initial check. *fn1" This would eliminate over 90% of the class.

 Plaintiff makes two arguments in opposition. First, it is contended that the releases are a nullity as a matter of law under Section 29(a) of the Securities Exchange Act of 1934 ("Section 29(a)"), 15 U.S.C. § 78cc(a) *fn2" which prohibits, as against public policy, any agreement, settlement, stipulation or release waiving compliance with the provisions of that Act. *fn3" Second, plaintiff asserts that even if Section 29(a) does not forbid the release of a claim under the securities laws, there are triable questions of fact bearing on the following issues:

 1) did the investors act with full knowledge of their rights and thereby execute the releases intelligently and voluntarily;

 2) did Siegel and Young breach the fiduciary duty owed by general partners of real estate ventures to their investing co-partners by seeking the releases in question;

 3) did the requirement that the investors request a new check in order to avoid the release constitute duress and coercion thereby voiding the releases; and

 4) did the fraud which allegedly contaminates the original transaction vitiate the releases as well?

 In arguing that the releases are invalid as a matter of law, plaintiff places principal reliance upon In re Cohen's Will, 51 F.R.D. 167 (S.D.N.Y. 1970). In that case, Judge Tenney, relying primarily upon Pearlstein v. Scudder & German, 429 F.2d 1136 (2d Cir. 1970) and Cohen v. Tenney Corp., 318 F. Supp. 280 (S.D.N.Y. 1970), ruled "that agreements, settlements and stipulations and releases affecting a party's liability under the federal securities laws are void as against public policy." 51 F.R.D. at 172. The Court went on to state that Section 29(a) and a parallel provision embodied in Section 14 of the Securities Act of 1933, 15 U.S.C. § 77n, were apparently intended to make void, short of litigation, any final settlement of actions charging securities law violations. A review of the text and legislative history of the statutes, their interpretation by other courts and the subsequent history of the cases relied upon by Judge Tenney compel this Court respectfully to disagree with the conclusion in In re Cohen's Will and accordingly to reject plaintiff's argument herein.

 Section 29(a) and its counterparts, which can be found in all six federal securities acts, prevent professional broker-dealers from circumventing the provisions of those acts by invalidating any attempt to obtain anticipatory waivers of compliance with the provisions of the Securities Exchange Act of 1934, Wilko v. Swan, 346 U.S. 427, 98 L. Ed. 168, 74 S. Ct. 182 (1953); Junker v. Midterra Ass. Inc., 49 F.R.D. 310, 313 (S.D.N.Y. 1970), and should not be construed to apply to the release of matured claims. To rule otherwise would foreclose the parties from settling matured claims and force every claimant to pursue the litigation to its costly conclusion. Many small but otherwise settleable cases would have to be dropped and many large but otherwise settleable cases would clog the dockets of the federal courts. This would not only constitute a blow to judicial economy, but to justice and common sense as well. See Mittendorf v. J. R. Williston & Beane, 372 F. Supp. 821, 835 (S.D.N.Y. 1974). The cases relied upon in In re Cohen's Will, supra, do not rule to the contrary but, to the extent to which they are relevant here, support this position.

 In Pearlstein v. Scudder & German, supra, the plaintiff had purchased bonds on credit and was obligated under Regulation T of the Federal Reserve System, 12 C.F.R. § 220.4(c)(2) promulgated pursuant to Section 7(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78g(a), to pay for them within seven business days after the date of purchase. The plaintiff defaulted and the defendant broker instituted a lawsuit to recover the balance due. A settlement was agreed upon under which the plaintiff was given an extension of time to pay for the bonds. Once more, however, payment was not forthcoming and eventually the bonds were sold at a loss. The plaintiff sued, charging that the defendant violated the provisions of Section 7(c) of the Securities Exchange Act of 1934, 15 U.S.C. § 78g(c), by illegally extending credit to the plaintiff, and of Regulation T for failure to demand full payment from the plaintiff within the statutory time period. The Court of Appeals ruled that the settlement was invalid under Section 29(a) as a stipulation waiving compliance with the provisions of the Securities Exchange Act of 1934. Pearlstein v. Scudder & German, supra at 1143.

 The distinction between this case and Pearlstein is that there the settlement itself authorized a continuing violation of federal law by granting an illegal extension of credit to pay for the bonds. The settlement in effect attempted to legalize the very acts which the federal securities laws were enacted to prevent and therefore constituted a waiver of compliance with the provisions of those laws. Here, by contrast, the releases merely compromised matured claims and constituted nothing more than a waiver of the right to litigate those claims. By endorsing the checks, the limited partners in no way excused compliance with any provision of federal law. *fn4" See Zapach v. Elkins, Morris, Stroud & Co., 375 F. Supp. 669 (M.D.Pa.). Furthermore, the Pearlstein Court seemed to recognize that after an active controversy has arisen the remedial right of access to the courts can be waived under proper circumstances. Pearlstein v. Scudder & German, supra at 1143.

 In Cohen v. Tenney Corp., supra, Judge Tyler initially construed Pearlstein as holding Section 29(a) to be "an in terrorem provision" voiding any settlement of a securities case short of litigation. It was upon this analysis that Judge Tenney relied in deciding In re Cohen's Will, supra. Subsequently, however, Judge Tyler granted a motion for reargument and recognized that he had "read more into . . ...

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