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December 4, 1975;

In the Matter of FRANK J. CRIMMINS, Bankrupt-Appellant, VICTOR J. DeROBERTIS and VALDA E. DeROBERTIS, Plaintiffs-Respondents,
FRANK J. CRIMMINS, Defendant-Appellant

The opinion of the court was delivered by: CONNER



 This appeal by the bankrupt, Frank J. Crimmins (Crimmins), is from an order of Bankruptcy Judge Howard Schwartzberg dated May 12, 1975 granting the motion of the creditors Victor J. and Valda E. DeRobertis (the DeRobertises) for a declaration that their claims for securities fraud, as asserted in Civil Action 72 Civ. 3226 filed in this Court and transferred to the U.S. District Court for the Western District of Oklahoma as Civil Action 73-644-T, are not "provable debts" within the intent of Section 63 of the Bankruptcy Act, 11 U.S.C. § 103, and thus were not discharged by the order entered November 20, 1974. The issue involved -- whether a claim under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78J(b) and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, is a "provable debt" and therefore dischargeable in bankruptcy -- is apparently one of first impression. Judge Schwartzberg ruled that such a claim is not a "provable debt," that it accordingly was not discharged, and that the DeRobertises may continue to prosecute their 10b-5 action.

 The claim against Crimmins

 In that action, brought in July 1973 against the now defunct brokerage firm of Walston & Co., Inc. (Walston) and a number of its officers, directors and voting stockholders, the DeRobertises charged that the defendants, including Crimmins, a Vice-President of Walston, had conspired to induce the DeRobertises to purchase common stock of Four Seasons Nursing Centers of America, Inc. (Four Seasons) by misrepresentation and non-disclosure of material facts, with a resulting loss by the DeRobertises of at least $250,000. The claims against all the defendants except Walston and Crimmins were settled for $100,000.

 The cause of action alleged against Crimmins is that, as the customer's man in charge of the DeRobertises' account, he recommended the purchase of Four Seasons stock, representing that the Company was financially sound and would continue to show significant earnings growth, that its stock was underpriced on the American Stock Exchange (Amex) and that he (Crimmins) personally had a position of several thousand shares in the stock which he had purchased in the open market, whereas Crimmins "knew, or should have known" that some or all of these representations were false, and further that Crimmins failed to disclose the material facts that he had sold out all of the Four Seasons stock he had purchased on the open market, but held an additional 30,000 shares of unregistered, restricted stock, for which he was indebted to insiders in Four Seasons for some half a million dollars; that he was under investigation by the Amex for his failure to disclose the latter holdings to customers; and that he had been ordered by Walston's compliance department to cease soliciting purchase orders for Four Seasons stock.

 The applicable statutes

 Section 17(a) of the Bankruptcy Act, 11 U.S.C. 35(a) provides in pertinent part that

"A discharge in bankruptcy shall release a bankrupt from all his provable debts * * * except such as * * * (2) are liabilities for obtaining money or property by false pretenses or false representations * * * or for willful and malicious conversion of the property of another; * * * (4) were created by his fraud * * * while acting as an officer or in any fiduciary capacity * * * or (8) are liabilities for willful and malicious injuries to the person or property of another other than conversion as excepted under clause (2) of this subdivision."

 As amended in 1970, Section 17 provides in subsection (c) that any creditor may file an application with the court for the determination of the dischargeability of any debt, and that, after hearing upon notice, the court may make such determination.

 Section 63(a) of the Bankruptcy Act, 11 U.S.C. § 103(a), defines the term "provable debts" as used in Section 17. Generally speaking, it lists all types of fixed and contingent liabilities based upon judgments or contracts, express or implied, including claims for anticipatory breach of contract; however, the list also includes

"(7) the right to recover damages in any action for negligence instituted prior to and pending at the time of the filing of the petition in bankruptcy; * * *."

 The proceedings below

 Crimmins filed his voluntary petition in bankruptcy on August 27, 1974 and was duly adjudicated a bankrupt. On November 20, 1974, the court entered an order discharging Crimmins of all his debts other than those excepted ...

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