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Sloan v. Securities and Exchange Commission

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


decided as amended.: March 4, 1976.

SAMUEL H. SLOAN, SAMUEL H. SLOAN & CO., PLAINTIFFS-APPELLANTS,
v.
SECURITIES AND EXCHANGE COMMISSION, ET AL., DEFENDANTS-APPELLEES

Appeal from dismissal by United States District Court for the Southern District of New York, Thomas P. Griesa, J., of complaint charging SEC and various others with numerous violations of the Constitution, the antitrust laws and other provisions of law. Affirmed.

Feinberg, Oakes and Van Graafeiland, Circuit Judges.

Author: Per Curiam

Samuel H. Sloan appeals from a decision of the United States District Court for the Southern District of New York, Thomas P. Griesa, J., dismissing his pro se complaint, which charged appellees with various violations of the Constitution and the antitrust and securities laws, as well as with several common law torts.*fn1

Sloan, a securities broker-dealer, has had more than his share of litigation in this court. In January 1974, he was found to have violated rules of the Securities and Exchange Commission (SEC) relating to record-keeping and net capital, and was enjoined from further violations. SEC v. Sloan, 369 F. Supp. 996 (S.D.N.Y. 1974). His appeal from this order was dismissed by this court, SEC v. Sloan, Dkt. No. 74-1436 (2d Cir. Jan. 7, 1976), because Sloan was a fugitive from justice when the case came on to be heard,*fn1a having apparently fled the jurisdiction to escape sentencing for contempt of a preliminary injunction restraining still further violations of SEC rules and requiring Sloan to permit SEC examination of his books and records. An appeal from this injunction was dismissed on the same day and on the same ground. SEC v. Sloan, Dkt. No. 75-7056 (2d Cir. Jan. 7, 1976).*fn2 Sloan's registration as a broker-dealer has been revoked by the SEC and he has been barred from association with any broker or dealer, Samuel H. Sloan, Securities Exchange Act Release No. 11376 (April 28, 1975), appeal docketed, Sloan v. SEC, Dkt. No. 75-4087, 2d Cir., May 7, 1975.*fn3

In this action, Sloan mounts a massive though diffuse attack on the SEC and various private agencies in the securities industry. In effect, he challenges the legality of the entire structure of securities regulation in the United States. We agree with Judge Griesa that the attack is frivolous.

Count I of Sloan's lengthy complaint challenges the constitutionality of the Securities Exchange Act of 1934 and the rules and regulations promulgated under it. Sloan argues that the Act and rules constitute an unconstitutional delegation of legislative power; are overly vague; deprive him of liberty and property without due process of law; violate his right to contract; and exceed congressional power under the commerce clause. Some of these constitutional attacks on the authority of the SEC were raised by Sloan in this court on a previous occasion, and we then characterized his "blunderbuss attack" as "frivolous." Sloan v. SEC, 527 F.2d 11, 12 (2d Cir. 1975). We adhere to that view.

Count I also attacks a number of specific provisions of the regulatory scheme. For example, it charges that section 27 of the Act, 15 U.S.C. ยง 78aa, which vests in the federal courts exclusive jurisdiction of actions brought under the Act, is an unconstitutional interference with the jurisdiction of the state courts. But it has been established at least since The Moses Taylor, 71 U.S. (4 Wall.) 411, 428-30, 18 L. Ed. 397 (1867), that Congress has the power to make federal jurisdiction exclusive. The other provisions of the Act and rules challenged by Sloan*fn4 are valid and reasonable exercises of congressional power under the commerce clause and the SEC's delegated regulatory power, which infringe no constitutional rights of plaintiff.

The other main branch of Sloan's complaint is Count III, which charges the various non-governmental defendants with violations of the Sherman and Clayton Acts. But none of the actions charged constitute antitrust violations, essentially because they were taken pursuant to the scheme of securities regulation established by the Securities Exchange Act of 1934. See generally United States v. National Association of Securities Dealers, Inc., 422 U.S. 694, 45 L. Ed. 2d 486, 95 S. Ct. 2427 (1975); Gordon v. New York Stock Exchange, 422 U.S. 659, 45 L. Ed. 2d 463, 95 S. Ct. 2598 (1975).

We have also considered the other charges contained in the complaint and the various assignments of error made by Sloan on appeal,*fn5 and find no error in the dismissal of the complaint.

While we do not in this case invoke the provisions of Fed. R. App. P. 38 to assess penalties against appellant, we note that these are available, and may be appropriate if the same arguments which we have dismissed as frivolous are put before us again in the future.

The judgment of the district court is affirmed.

Disposition

The judgment of the district court is affirmed.


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