July 19, 1979
UNITED STATES OF AMERICA, ET AL.
Before: MOORE, SMITH and MANSFIELD, Circuit Judges.
SMITH, Circuit Judge: The appellee-trustees have filed a petition for rehearing in light of the Supreme Court's recent decision in International Brotherhood of Teamsters v. Daniel, 47 U.S.L.W. 4135 (Jan. 16, 1979). This case, however, does not involve the issues decided in Daniel, which held that an interest in a non-contributory, compulsory pension plan is not a security within the meaning of § 2(1) of the Securities Act of 1933, 15 U.S.C. § 77b(1), or § 3(a)(10) of the Securities Exchange Act of 1934, 15 U.S.C. § 78c(a)(10). Kirshner does not claim that his pension interest under the System is a security. He contends rather that fraud was perpetrated by the trustees in connection with the fund's purchase of MAC and NYC bonds, which the trustees cannot and do not contend are not securities. Thus Kirshner merely is suing derivatively as a trust beneficiary to attack the fraud allegedly perpetrated upon the fund by the trustees in connection with the purchase of these securities. See, Kirshner v. United States, F.2d . , slip op. 5327, 5249-50 (2d Cir. Nov. 30, 1978).
Daniel also has no effect on our conclusion that a private right of action exists under § 17a of the 1933 Act, 15 U.S.C. § 77q, since the Court found it unnecessary to reach that issue. 47 U.S.L.W. at 4136 n. 9.
The petition for rehearing is denied.
MOORE, Circuit Judge (Concurring): On January 16, 1979 we affirmed by order Judge Conner's opinion in Withers v. Teachers Retirement System, 447 F. Supp. 1248 (SDNY, 1978), aff'd by order, Dkt. 78-6059 (Jan. 16, 1979). Judge Conner considered at length all of the facts which underlie Kirshner's allegations. He found that the Teachers Retirement System Trustees had not breached their fiduciary duties to the TRS beneficiaries. It is unlikely that Kirshner will be able to prove that the Trustees have violated the securities laws.
Since Kirshner will have to establish at trial that the Trustees did breach their fiduciary duties, overcoming at least the stare decisis effect of Withers, I think that a rehearing at this time would be a waste of judicial energy.
© 1998 VersusLaw Inc.