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SIRNA v. PRUDENTIAL SECS.

June 3, 1997

A. RONALD SIRNA, JR., P.C. PROFIT SHARING PLAN and EDITH ROCK, etc., Plaintiffs, against PRUDENTIAL SECURITIES, INC., Defendant.


The opinion of the court was delivered by: KAPLAN

 LEWIS A. KAPLAN, District Judge.

 This purported class action complaint contends that Prudential Securities, Inc. ("PSI") was a fiduciary under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA"), and that it breached its fiduciary duty by failing to "sweep" unencumbered cash in the principal plaintiff's brokerage account into a money market fund as quickly as it was technologically capable of doing so, thereby depriving the plaintiff of the opportunity to earn interest and enabling PSI to benefit from the "float." A second plaintiff seeks leave to join in the second amended complaint solely to assert a state law cause of action. PSI moves to dismiss the claim of the principal plaintiff and opposes the motion of the second plaintiff for leave to join. As the Court concludes that PSI was not a fiduciary in any respect relevant to the claim asserted in this case, the action is dismissed. The motion of the second plaintiff for leave to join in the second amended complaint is denied.

 Facts

 The Sirna Plan

 The principal plaintiff in the action is the A. Ronald Sirna, Jr., P.C. Profit Sharing Plan, which is a pension plan as defined by ERISA, 29 U.S.C. § 1002 et seq. A. Ronald Sirna, Jr., who appears to be an attorney, is the trustee of the plan, and A. Ronald Sirna, Jr., P.C. is its administrator.

 The Sirna plan opened a brokerage account with PSI in December 1994. At the time it did so, it declined to select a so-called "Command Account," which would have provided a daily sweep of unencumbered cash into a money market mutual fund, *fn1" choosing instead a "non-Command Account," which provided less frequent sweeps. It selected Prudential Securities MoneyMart Assets Inc., doing business as Prudential MoneyMart Assets ("MoneyMart"), as the money market mutual fund for the sweep of free credits from the account.

 The sweep procedure that PSI employed throughout the duration of the Sirna plan's account was disclosed fully and accurately in the MoneyMart prospectus. Briefly stated, it provided that PSI would make automatic sweeps of free credit balances of $ 1,000 or more from the brokerage account to the MoneyMart account of proceeds from securities transactions on the business day following settlement and of all other eligible balances twice each month. The Sirna plan remained free at all times to invest as it saw fit any free credit balances remaining unswept in its brokerage account.

 Edith Rock

 Plaintiff Edith Rock allegedly is a participant in an individual retirement account managed by PSI. She seeks to assert a common law breach of fiduciary duty claim under the law of New York on the same theory as the Sirna plan.

 Prior Proceedings

 The complaint now before the Court represents plaintiffs' sixth attempt to state a legally sufficient claim. The Sirna plan and Rock originally brought separate actions as did a third plaintiff. After the three cases all were assigned to the undersigned, the Court directed the filing of a consolidated amended complaint. On February 7, 1997, the Court granted defendant's motion to dismiss the consolidated amended complaint. Sirna v. Prudential Securities, Inc., 1997 U.S. Dist. LEXIS 1226, 1997 WL 53194 (S.D.N.Y. 1997). The Court, however, granted the Sirna plan alone leave to amend in an effort to allege facts showing that PSI was a fiduciary within the meaning of ERISA.

 Discussion

 The Sirna ...


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