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March 20, 1980


The opinion of the court was delivered by: BRODERICK



 The amended complaint in this action ("complaint") charges violations of the Commodity Exchange Act of 1936 as amended by the Commodity Futures Trading Commission Act of 1974 (collectively "the commodities acts"), 7 U.S.C. § 1 et seq. It also purports to charge violations of the securities acts, and charges violations of fiduciary obligations under the laws of New York State.

 The plaintiffs are Navigator Group Funds ("Navigator"), a limited partnership engaged in pooled commodities investment, and four of its limited partners. Defendants are Shearson Hayden Stone Inc. ("Shearson"), a corporation with principal place of business in New York, and Joel Margolies and Joseph I. Szoecs, two employees of Shearson.

 Defendants have moved to dismiss the complaint. For the reasons which follow, the motion is denied as to the claims on behalf of Navigator; it is granted on the basis set forth in Section IV, infra, with respect to the securities claims on behalf of Navigator's limited partners. *fn1"


 The factual allegations of the complaint are accepted as true for purposes of considering defendants' motions. The facts as distilled from the complaint follow.

 In 1976 Shearson "embarked on a course of conduct designed to increase its corporate profits" by generating large amounts of commission income "through the purchase and sale of investments in commodity futures contracts." Thus it encouraged the establishment of pooled investment accounts with Shearson.

 To induce Navigator to open a limited discretionary account at Shearson, Shearson and its employees made various misrepresentations. Thus they represented that at least 40% of Navigator's account would be kept in reserve at all times, that no more than 20% of the account would be committed to a single investment position, and that the Navigator account would be reviewed daily by a Shearson officer. On July 7, 1976 Navigator opened a pooled account for investment in commodities with Shearson, and Szoecs began to function as broker for Navigator under the supervision of Margolies. With the full knowledge, consent, advice and encouragement of Shearson, monies were solicited from Navigator's limited partners to be invested in the pooled account maintained by Navigator at Shearson. In or about April, 1977 Shearson held for the account of Navigator the sum of $ 404,000, and it accepted an additional $ 95,000 capital investment in the pool in or about May, 1977.

 Defendants failed to hold the stated percentages of Navigator's account in reserve; they invested an excessive percentage of the account in single commodity contracts; they failed to place stop orders on futures contracts; and they refused to follow Navigator's specific directions as to investments in commodity futures. $ 464,000 of the total of $ 499,000 invested through Navigator in the account at Shearson was dissipated and lost.


 Commodities Acts Claim

 The first count of the complaint alleges, on behalf of Navigator, violations by the defendants of the antifraud provisions of the commodities acts applicable to members of contract markets, 7 U.S.C. § 6b. *fn2" The gist of the first cause of action is that Shearson and its employees induced Navigator to open a limited discretionary account at Shearson by various misrepresentations. The defendants' motion to dismiss the first count is predicated on the ground that there is no implied private right of action under the commodities acts. On the basis of the analysis which follows, I hold that there is such a right of action.

 Analysis of this issue must begin with the Supreme Court decisions in Touche Ross v. Redington, 442 U.S. 560, 99 S. Ct. 2479, 61 L. Ed. 2d 82 (1979), and Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 100 S. Ct. 242, 62 L. Ed. 2d 146 (1979). *fn3" The goal of the analysis, according to these cases, is to determine what Congress actually intended.

 In determining intent, the court may look to two sources: the language of the statute and the legislative history. If those sources indicate an intent not to create a right of action, the court's inquiry is at an end. Other factors for the court's consideration, enumerated in Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975), *fn4" need not be reached if the language of the statute and its history clearly indicate that creation of a private right of action was not intended.

 The statute itself does not explicitly provide for a private right of action for violation of its antifraud (or any other) provisions, nor does it explicitly confer jurisdiction on the courts over private actions brought under it. It does provide a number of other remedies for violation of the commodities acts, including a reparations procedure to be administered by the Commodities Futures Trading Commission ("CFTC") and open to any injured investor, 7 U.S.C. § 18; disciplinary proceedings to be conducted by the CFTC with respect to members of commodities exchanges found violating the Act, 7 U.S.C. § 12c; authority in the CFTC to sue in federal court for injunctions against unlawful commodities futures practices, 7 U.S.C. § 13a-1; and authority in the CFTC to issue cease and desist orders, 7 U.S.C. § 13b. It also provides criminal penalties for knowing violation of various sections of the commodities acts, 7 U.S.C. § 13.

 If the statute itself were the only source, the availability of these remedies would, under Transamerica, be dispositive of the question of legislative intent. In Transamerica the Court refused to imply a private right of action for violation of the anti-fraud section of the Investment Advisers Act, suggesting that the postulation of specific remedies by Congress inhibited the implication of others:

Unlike § 215, § 206 simply proscribes certain conduct, and does not in terms create or alter any civil liabilities. If monetary liability to a private plaintiff is to be found, it (sic the court?) must read it into the Act. Yet it is an elemental canon of statutory construction that where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it. When a statute limits a thing to be done in a particular mode, it includes the negative of any other mode. (citations omitted) Congress expressly provided both judicial and administrative means for enforcing compliance with § 206. First, under § 217 willful violations of the Act are criminal offenses, punishable by fine or imprisonment, or both. Second, § 209 authorizes the Commission to bring civil actions in federal courts to enjoin compliance with the Act, including, of course, § 206. Third, the Commission is authorized by § 203 to impose various administrative sanctions on persons who violate the Act, including § 206. In view of these express provisions ...

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