these; she is a borrower of funds from a bank. Accordingly, there is no authority for her to bring a private action pursuant to the Glass-Steagall Act and the claim is thus dismissed.
C. Claim III: Section 11
Plaintiff's third claim for relief alleges that defendants extended, maintained, and arranged for the extension of credit for securities that were part of a new issue in which they participated as members of a selling group within thirty days prior to such transactions. Such actions, plaintiff states, violated the Securities and Exchange Act's section 11(d), 15 U.S.C. § 78k(d), which prohibits broker-dealers from extending credit in certain circumstances. In defense, Citibank once again argues that no private right of action exists for plaintiff to maintain this action. This Court agrees with Citibank.
Section 11(d) does not expressly provide for a private right of action. However, in certain situations courts have found implied remedies in favor of private parties within the class of persons intended to be protected by the statute. See Russell, 479 F.2d at 133 (providing examples). The inquiry is governed by the test set forth in Cort v. Ash, 422 U.S. 66, 78, 45 L. Ed. 2d 26, 95 S. Ct. 2080 (1975), which directs courts to ask: first, is the plaintiff "one of the class for whose especial benefit the statute was enacted," that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent to create or deny a remedy? Third, would implication of a private remedy be consistent with the underlying purpose of the statute? And lastly, is the cause of action one traditionally relegated to state law, in an area basically the concern of the states, so that it would be inappropriate to infer a cause of action based solely on federal law? 422 U.S. at 78. The Supreme Court has stated that the second factor, legislative intent, is entitled to the greatest weight in the calculus. Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 61 L. Ed. 2d 82, 99 S. Ct. 2479 (1979). Indeed, a lack of evidence of legislative intent to create a private right of action can signify that a private right of action should not be implied. Id. at 571-76 ("Implying a private right of action on the basis of congressional silence is a hazardous enterprise, at best.").
Applying these principles, I adopt the analysis outlined in Sennett v. Oppenheimer & Co., Inc., 502 F. Supp. 939 (N.D.Ill. 1980), and find that the balance of factors counsels against implying a private right of action under Section 11. First, the legislative history of the provision is completely devoid of Congress' intent to provide a private remedy under the section. Second, the regulatory framework of the securities laws makes it unnecessary to imply the right of action urged. Indeed, an investor in securities is not damaged by an act in contravention of Section 11 unless the security decreases in value, which would result regardless of the violation. Lastly, implying the right of action urged by plaintiff would be, at least in part, redundant, as Congress has already provided for a private right of action for willful violations of Section 11 in Section 32, 15 U.S.C. § 78ff, of the 1934 Act.
D. Claim V: Section 9(a)
Plaintiff's fifth cause of action asserts that for the purpose of creating a false or misleading appearance to the marketing and trading of the Blech Securities, Blech and DBC effected transactions in registered Blech securities in violation of the 1934 Act's Section 9(a), 15 U.S.C. 78i(a), which prohibits certain transactions meant to manipulate securities' prices. For these reasons, Cohen states, Citibank may not enforce any obligation against her in connection with the 1992 Advance. Citibank, however, again demonstrates that plaintiff may not assert the private right of action claimed.
Unlike Section 11, Section 9 provides for a private right of action in certain circumstances. 15 U.S.C. 78i(e). Such circumstances, however, are not present here. Rather, a private right of action under Section 9 accrues only to purchasers or sellers of securities at prices affected by acts or transactions in violation of section 9. Id. ; see Liberty National Ins. Holding Co. v. Charter Co., et al., Fed. Sec. L. Rep. (CCH) P98,797, 1982 WL 1329 (N.D.Ala. 1982) ("the court is firm in its opinion that Congress neither expressly nor impliedly intended to create a private right of action under Section 9 for damages or injunctive relief other than that expressly created in Section 9(e) for the especial benefit of a purchaser or seller"). Plaintiff, however, does not allege that she, herself, is a buyer or seller of securities affected by acts committed in violation of Section 9. Accordingly, I find that she is without standing to assert a cause of action under Section 9
E. Claims VI and VII: Sections 20(a) and (b) of the 1934 Act
In her sixth and seventh causes of action, plaintiff alleges that Citibank is liable as a control person under Sections 20(a) and (b) of the 1934 Act, 15 U.S.C. §§ 78t(a) and (b). Specifically, plaintiff claims that Citibank directly and indirectly controlled Blech and DBC, both actually engaging in, and in bad faith inducing Blech and DBC to engage in, the alleged unlawful acts that are the gravamen of her complaint. Citibank disagrees.
Section 20(a) states:
Every person who, directly or indirectly, controls any person liable under any provision of [the 1934 Act] ... shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.
15 U.S.C. § 78t(a). Thus, the section provides for liability of persons who "control" those who violate the 1934 Act. See Marbury Management, Inc. v. Kohn, 629 F.2d 705, 716 (2d Cir.) (suggesting that scienter is not an element of a Section 20(a) violation), cert. denied, 449 U.S. 1011, 66 L. Ed. 2d 469, 101 S. Ct. 566 (1980); Morse v. Weingarten, 777 F. Supp. 312, 318 (S.D.N.Y. 1991) (requiring scienter). In order to plead a Section 20(a) claim, a plaintiff must allege at least "control status." Food & Allied Serv. Trades v. Millfeld Trading, 841 F. Supp. 1386, 1390-91 (S.D.N.Y. 1994). The Securities and Exchange Commission has defined the term as "the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a [violator], whether through the ownership of voting securities, by contract, or otherwise." 17 C.F.R. § 240.12(b)-2f. In this connection, a bare allegation that a person is a corporate officer, director, or shareholder is insufficient to allege "control." See In re Par Pharmaceutical, Inc. Securities Litigation, 733 F. Supp. 668, 679 (S.D.N.Y. 1990); Hemming v. Alfin Fragrances, Inc., 690 F. Supp. 239, 245 (S.D.N.Y. 1988). Rather, the allegations must support a reasonable inference that the alleged violator had the potential power to influence and direct the activities of the primary violator. Food & Allied Serv. Trades, 841 F. Supp. at 1391.
Absent conclusory statements, there is no allegation here supporting an inference that Citibank controlled or had the power to control Blech and DBC. Rather, plaintiff merely alleges that the 1992 Advance was used to finance the purchase of Blech Securities, suggesting that Citibank acted in concert with Blech and DBC in violating the 1934 Act. Thus, the complaint fails to plead sufficient facts to make out a Section 20(a) claim.
Plaintiff similarly fails to plead adequately a Section 20(b) violation. That section provides:
It shall be unlawful for any person, directly or indirectly, to do any act or thing which it would be unlawful for such person to do under the provisions of this title or any rule or regulation thereunder through or by means of any other person.