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December 22, 1997

DONALD PRESS, on behalf of himself and all others similarly situated, Plaintiff,

The opinion of the court was delivered by: COTE


 DENISE COTE, District Judge:

 Plaintiff Donald Press ("Press") first filed this putative class action on November 6, 1996, and filed an Amended Complaint on February 24, 1997, alleging that the defendant securities brokerage firms (and their respective corporate parents) violated Section 10(b) of the Securities Exchange Act of 1934 ("the 1934 Act"), 15 U.S.C. § 78j(b); Rules 10b-5 and 10b-10 promulgated thereunder, 17 C.F.R. §§ 240.10b-5 and 240.10b-10; Section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a); and New York State common law of conversion, unjust enrichment, and breach of fiduciary duty. Press alleges that he and the members of the putative class purchased U.S. Treasury securities through the defendants and were injured in one or more of the following ways: (a) they were assessed undisclosed charges, commissions, or markups on their purchases; (b) they received trade confirmation forms that incorrectly stated the yield or maturity for the securities, or incorrectly described the defendants' capacity in effectuating the trade; and (c) they were denied prompt access to their trade proceeds by the defendants, who improperly retained the proceeds after maturity and profited from them.

 On December 11, 1996, the Court signed a stipulated order granting the defendants until January 9, 1997, to make a motion with respect to the original complaint, and at least one of the defendants served such a motion. At a conference on January 31, 1997, the Court expressly questioned Press as to whether in light of that motion he wished to amend the complaint to cure any defects; the Court directed that any such amendment be filed by a deadline that through mutual consent of the parties was set at February 24, 1997, on which date Press did in fact file the present, Amended Complaint.

 The defendants have now moved to dismiss the Amended Complaint (hereinafter "Complaint") for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6), Fed. R. Civ. P., and for failure to plead fraud with particularity, pursuant to Rule 9(b), Fed. R. Civ. P. For the reasons set forth below, the defendants' motion is granted in full, and Press's federal claims are dismissed with prejudice. The Court declines to exercise supplemental jurisdiction over Press's state law claims under 28 U.S.C. § 1367(c), and therefore dismisses those claims without prejudice.


 This Court may dismiss an action pursuant to Rule 12(b)(6) only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). In considering a motion to dismiss, the Court must take "as true the facts alleged in the complaint and draw[] all reasonable inferences in the plaintiff[s'] favor." Jackson Nat'l Life Ins. Co. v. Merrill Lynch & Co., 32 F.3d 697, 699-700 (2d Cir. 1994). In other words, the Court can dismiss Press's Complaint only if, assuming all facts as true, he still has failed to plead the basic elements of his causes of action.


 Press's action is based on a single transaction: on November 10, 1995, he purchased a six-month U.S. Treasury bill worth roughly $ 100,000 from defendant Chemical Investment Services Corp. ("Chemical"), a wholly-owned subsidiary of defendant Chase Manhattan Corporation ("Chase"). The trade was cleared through defendant Pershing, a corporate division of defendant Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), both of which are registered securities broker-dealers like Chemical. Press alleges that when he telephoned Chemical to place an order for a Treasury bill in the $ 100,000 range, he spoke to an employee of Chemical named Ira Green, "who had, on at least one prior occasion, facilitated [Press's] purchase of a Treasury bill through defendants." Green advised Press that for $ 99,488.42 he could purchase a Treasury bill that would mature in six months at $ 102,000; in other words, for $ 99,488.42 Press could buy the right to obtain $ 2,511.58 in six months' time. Press agreed to the transaction, met Green at Chemical's premises, wrote out a check in the appropriate amount to Pershing, and received an Investment Receipt from Chemical.

 A few days later, Press received a trade confirmation form issued jointly by Chemical and Pershing, whose names and addresses were listed at the top of the document. The form confirmed that on November 10, 1995, Press had purchased a six-month Treasury bill that was set to mature at $ 102,000 on May 9, 1996. The form also provided two different calculations of the yield on the transaction; what Press describes as the "discount yield" ("DISC") was listed as 4.980, and what he terms the "bond equivalent yield" ("YLD . . . TO MAT") was listed as 5.177. Ira Green was named on the form as Press's "Investment Consultant," and the form further indicated that the "Trade Date" and "Process Date" for the transaction were November 10, 1995, and that the "Settlement Date" was November 13, 1995. A bold-type message noted that the form was " AN ADVICE NOT AN INVOICE. REMITTANCE OR SECURITIES ARE DUE ON OR BEFORE SETTLEMENT DATE." (Emphasis added.) Finally, under a box marked "MKT/CPTY" -- for "Market" and "Capacity" -- the form listed "4/5" without further immediate explanation. But a legend printed in bold on the bottom of the form stated: " SEE REVERSE SIDE FOR TERMS AND CONDITIONS AND EXPLANATION OF CODED SYMBOLS RELATING TO THIS CONFIRMATION." The reverse side of the form indicated that a "Market" figure of "4" represented the "Over the Counter" market, and that a "Capacity" listing of "5" meant that the "Capacity in Which Your Introducing Firm Acted" was "as principal." *fn1" (Emphasis added.)

 In early May 1996, shortly before the maturity date for his Treasury bill, Press contacted Chemical and indicated his desire to receive the proceeds of the transaction on the maturity date, May 9. He was informed by Mr. Green and others that Chemical's standard operating procedures would not permit receipt of the proceeds on that date; rather, Chemical would either post a check to him on the maturity date by regular mail, send the check to him one day after maturity by overnight courier (for arrival two days after maturity), or wire the proceeds directly to him one day after maturity. Press was told that he could not pick up the check in person at Chemical's headquarters (or any other location in New York City) on the maturity date, and subsequently learned that receipt of the proceeds by wire or overnight courier would entail a charge of $ 15 to $ 20. Press eventually received a check for the matured proceeds four days -- which included a weekend -- after the maturity date, and in an amount $ 15 dollars less than the stated maturity value of $ 102,000. According to Press, he was advised by Chemical that this deficiency represents a Federal Express or similar courier charge.


 Press's claims fall into three broad categories corresponding to (a) the "markup" he paid in purchasing the security through the defendants, (b) the yield figures reported on his trade confirmation form, and (c) the delay he experienced in receiving the trade proceeds. It will be helpful to describe each in some detail before explaining why none presents a viable claim under federal securities law.

 First, as to the markup, Press's complaint is that the price he was charged for the Treasury bill was "significantly greater" than the price the defendants paid to obtain the bill in the first instance, and that he was never advised by the defendants -- either before entering into the trade or upon receipt of his post-trade confirmation -- that he was being assessed this "undisclosed commission and/or markup." Press essentially agrees that the amount of the "markup" was $ 158.86, *fn2" or the difference between the $ 99,329.56 price that the defendants paid for the Treasury bill and the $ 99,488.42 that they charged Press for the trade. He contends that this markup is "excessive," totaling more than 6% of the $ 2,511 yield realized on the transaction, and 1/6 of a percent of the bill's overall price, a figure that he describes as "approximately 5 times the industry standard of a spread of a 1/32 of a percentage point." Press concedes that brokers such as the defendants routinely charge higher markups when they act as "principals" in a transaction, i.e., for their own account, but he asserts that he was never told "prior to tendering payment" that the defendants were not "acting as his agents in this transaction," nor was he advised of the "material differences between defendants acting as agents or principals." (Emphasis added.)

 Second, although Press's yield claim is somewhat opaque, the crux of his allegation is that his trade confirmation form misrepresented the actual yield that he received on his Treasury bill transaction. Specifically, Press asserts that although 181 days elapsed between the November 10, 1995 "Trade Date " (when he purchased the security) and the May 9, 1996 maturity date, the 5.177 yield figure reported on his confirmation form was based on a 178 day time span, corresponding to the period between the November 13, 1995 "Settlement Date " and the maturity date. According to Press, because his security actually matured over 181 days, the form was incorrect in indicating that the $ 2,511 he received was based on a yield figure of 5.177; he contends that a lower figure should have been reported, *fn3" inasmuch as he was never informed that the yield calculations were "not from the date of his trade."

 Finally, with respect to his delayed access to the proceeds of the transaction, Press alleges that "at the time of the purchase, [he] expected and relied upon the fact that the bill would mature on May 9, 1996, and he would be able to receive the matured proceeds on that date." Such prompt receipt is necessary, he asserts, to enable investors to "obtain and reinvest the proceeds as soon as possible after maturity to maximize [their] profit"; conversely, a broker's "prolonged retention of the bill following maturity allows the broker to profit at the customer's expense," and "necessarily diminishes a customer's possible profit from the transaction." Despite the importance of early access to proceeds, Press claims that he never was informed, either upon entering into the transaction or receiving his confirmation form, that he would not receive the proceeds on the maturity date.

 While Press organizes these allegations into claims under Rule 10b-10 and under Section 10(b) and Rule 10b-5, the same three basic contentions remain. As to all three Press asserts that the defendants acted as "his fiduciaries with respect to [the Treasury bill] transaction," and that their conduct was "willful, wanton, and malicious." He also alleges fraud with respect to each claim, i.e., that the defendants "knowingly or recklessly" made "materially false and misleading statements" or "failed to disclose material facts" to himself and members of the putative class, and that the defendants "intended to deceive" the class and acted with "reckless disregard for the truth."

 A. Claims Under Rule 10b-10

 Rule 10b-10 prescribes the "specified information" that broker-dealers are required to disclose to customers in a written confirmation form "at or before completion of a transaction." See 17 C.F.R. § 240.10b-10, Preliminary Note. As the parties generally concur, the information relevant to Press's claims that must be provided includes:


(1) the date and time of the transaction, and the identity, price, and number of shares of the security that were purchased, id. § 240.10b-10(a)(1);


(2) whether the broker or dealer is acting "as agent" for the customer (and/or some other person), or "as principal for its own account"; and if the latter, whether the broker or dealer is a market maker in the security, id. § 240.10b-10(a)(2);


(3) the "dollar price at which the transaction was effected" and the "yield to maturity calculated from the dollar price," to the extent that the transaction was "effected exclusively on the basis of a dollar price," id. § 240.10b-10(a)(5); and,


(4) the "yield at which the transaction was effected, including the percentage amount and its characterization (e.g., current yield, yield to maturity, or yield to call)," along with the "dollar price calculated from the yield at which the transaction was effected," to the extent that the transaction was "effected on the basis of yield," id. § 240.10b-10(a)(6).

 Press alleges that the defendants violated these provisions of Rule 10b-10 by misstating or failing to disclose in their confirmation forms:


(a) the true capacity in which the defendants are acting; (b) the true yield figures; (c) the amount of the mark-up or other remuneration defendants receive in connection with class members' transactions; and (d) the date upon which the proceeds of the matured Treasury securities will be delivered to class members.

 None of these allegations has merit or states a claim under Rule 10b-10.

 First, Press is flatly incorrect that the confirmation fails to disclose the defendants' "capacity" in effecting his trade; to the contrary, the box on the front of the form indicating capacity ("CPTY") plainly lists the figure "5", and the reverse side of the form explains that such a designation means that Press's "Introducing Firm" was functioning as "principal" for purposes of that transaction. It is evident that Chemical is the introducing firm referenced in that notation because, in addition to the fact that Chemical was the only entity that Press dealt with in executing this retail transaction, the front of the form states (in part in bold) "Clearing Through PERSHING, Division of [DLJ]," thus making clear that Pershing -- the only other entity involved -- was the "clearing broker " for the transaction, a fact that Press in any event concedes in his Complaint. *fn4"

 Press appears to assert in the alternative, though his Complaint and opposing papers are not entirely clear, that the confirmation form misrepresented the defendants' capacity in his Treasury bill transaction. He alleges that Chemical in fact "acted as [his] agent" with respect to that transaction, "notwithstanding the conclusory coded notation on [his] confirmation" form to the contrary. Ostensibly, Press's theory of liability here is predicated on the requirement under Rule 10b-10 that brokers acting as agents disclose the amount of "any remuneration" received on a trade *fn5" -- which Press argues includes markups -- and the fact that the confirmation form in this case provided no such information as to the markup admittedly taken by the defendants. But Press's theory, on which his capacity and markup claims under Rule 10b-10 both depend, is fatally defective to the extent that it depends on the existence of an agency relationship.

 The Complaint contains only a conclusory assertion that Chemical acted "as agent," with no factual allegations to support that claim. Specifically, Press makes no allegation that any of the people he dealt with at Chemical (or anyone at Pershing) ever made an affirmative representation to the effect that they were acting as his agent, and not as principal, for purposes of his Treasury bill transaction. Instead, Press relies on the defendants' silence as to their roles, alleging that "at no time prior to tendering payment, was [he] informed . . . that defendants were purportedly not acting as his agents in this transaction." Nevertheless, given the Court's decision to consider the confirmation form in full on this motion to dismiss, see supra Note 1, the Court need not accept as true the conclusory allegations in the Complaint -- to the extent that they assert an agency relationship -- that are plainly contradicted by that form. See, e.g., Feick v. Fleener, 653 F.2d 69, 75 & n.4 (2d Cir. 1981) (affirming dismissal of claim based on powers of attorney that were attached to complaint and incorporated therein under Rule 10(c), Fed. R. Civ. P., where powers of attorney could not be construed as suggested in complaint and thus "showed on their face absence of any grounds for relief"). Thus, when the Complaint is read as a whole, including the confirmation form, the only fair construction of its allegations is that Chemical acted as a principal in this transaction, a conclusion that negates Press's capacity claim as well as his markup claim. *fn6"

 Press argues in opposing this motion that Chemical acted as his agent because it purchased the Treasury bill from a third party and resold the bill to him. But Press provides absolutely no authority for this novel interpretation of securities trading mechanics and nomenclature, and therefore this contention as to the defendants' capacity (and failure to disclose their markup) is likewise properly rejected.

 Press's claim regarding yield is meritless as well. It is undisputed that the confirmation form correctly states the yield figure, 5.177, corresponding to Press's expected return, $ 2,511, based on the 178 day period between the November 13, 1995 "Settlement Date" of the trade and the May 9, 1996 maturity date. Press is left with the claim that the yield reported on the form is incorrect, and overstated, because the figure should have been based on the 181 day period between the November 10, 1995 "Trade Date" and the maturity date. Once again, however, Press furnishes absolutely no support for the core proposition on which his claim depends, i.e., that the "Trade Date" governs in this situation and that the yield figure should have been based on that date as opposed to the "Settlement Date." More specifically, Press adduces no authority for the notion that yield in the securities industry is measured from any point other than the settlement date, which, as his confirmation form made clear, was the date that "REMITTANCE . . . [WAS] DUE" ultimately on his Treasury bill transaction. Given that Press was not required to pay for the bill prior to the settlement date, and therefore that settlement marked the last date by which he could make payment and still effect the transaction, his claim that yield should instead be tied to the trade date makes little sense. *fn7"

  As to Press's assertions that the confirmation form "did not explain how the yield calculations were made" or "that the yield calculations are based on the [November 13, 1995] date," the short answer is that the defendants had no obligation under Rule 10b-10 to provide such information on their form. Because the form accurately displayed the yield figure for the period from settlement to maturity, the Court cannot perceive a viable claim under Rule 10b-10 solely on the basis of Press's bald assertion that, "absent disclosure to the contrary, a reasonable person would likely assume that the 'trade date' controls." In sum, none of Press's allegations states a claim under Rule 10b-10 for misrepresentations or omissions on his confirmation form. *fn8"

 B. Claims Under Section 10(b) and Rule 10b-5

 Section 10(b) and Rule 10b-5 prohibit fraudulent activities in connection with the purchase or sale of securities. *fn9" In order to state a cause of action under Rule 10b-5, a plaintiff must allege that,


in connection with the purchase or sale of securities, the defendant, acting with scienter, made a false material representation or omitted to disclose material information and that plaintiff's reliance on defendant's action caused [plaintiff] injury.

 In re Time Warner Inc. Secs. Litig., 9 F.3d 259, 264 (2d Cir. 1993) (quoting Bloor v. Carro, Spanbock, Londin, Rodman & Fass, 754 F.2d 57, 61 (2d Cir. 1985)) (alteration in original); accord Feinman v. Dean Witter Reynolds, Inc., 84 F.3d 539, 540 (2d Cir. 1996); Acito v. IMCERA Group, Inc., 47 F.3d 47, 52 (2d Cir. 1995). Thus, in addition to the "in connection with" requirement, plaintiffs alleging a violation of Rule 10b-5 must also satisfy all of the elements of a traditional fraud claim, e.g., scienter, materiality, reliance (or "transaction causation"), damages, and causation (or "loss causation"). See Burke v. Jacoby, 981 F.2d 1372, 1378 (2d Cir. 1992). Those elements, moreover, must be "stated with particularity" in conformity with Rule 9(b), Fed. R. Civ. P.

 The defendants argue that none of Press's three broad categories of claims -- regarding markup, yield, and proceeds -- satisfies any of the elements necessary to state a claim under Rule 10b-5, and that all three must therefore be dismissed. *fn10" The Court agrees that, whether or not Press's allegations might fulfill some of the requisite elements under the lenient standard applicable here, none of his claims sets forth all of the elements that a securities plaintiff must plead in order to survive a motion to dismiss. See Acito, 47 F.3d at 52.

 1. Undisclosed "Markup"

 Press's first claim, that the defendants failed to disclose that they were charging him a markup (or the amount thereof) on his Treasury bill purchase -- i.e., that they were selling him the bill at a higher price than they had paid for it -- asserts in essence that the defendants omitted a material fact. *fn11" When a claim is based on a material omission,


positive proof of reliance is not a prerequisite to recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable investor might have considered them important in the making of this decision.

 Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 153-54, 92 S. Ct. 1456, 31 L. Ed. 2d 741 (1972); *fn12" accord Burke, 981 F.2d at 1379. In an omission case, therefore,


a defendant can avoid liability under Rule 10b-5 for nondisclosure of material information [only] by proving by a preponderance of the evidence that disclosure of that information would not have altered the plaintiff's investment decision.

 duPont v. Brady, 828 F.2d 75, 78 (2d Cir. 1987); accord Burke, 981 F.2d at 1379.

 While the plaintiff's ultimate burden in such a case is to demonstrate that the omitted facts were material, a plaintiff relying on an omission must in the first instance establish an affirmative duty of disclosure with respect to the information in question. As the Second Circuit has stated, "an omission is actionable under the securities laws only when the [defendant] is subject to a duty to disclose the omitted facts." Time Warner, 9 F.3d at 267 (citing Basic Inc. v. Levinson, 485 U.S. 224, 239 n.17, 99 L. Ed. 2d 194, 108 S. Ct. 978 (1988)). Moreover, in a case like this where the issue is whether an individual has a duty of disclosure based on his "relationship to information" -- and not his need to keep a prior statement from being misleading -- "the inquiry as to his duty is quite distinct from the inquiry as to the information's materiality." Id. In other words,


the materiality of the information claimed not to have been disclosed . . . is not enough to make out a sustainable claim of securities fraud. Even if information is material, there is no liability under Rule 10b-5 unless there is a duty to disclose it.

 Glazer v. Formica Corp., 964 F.2d 149, 156 (2d Cir. 1992) (emphasis added) (quoting Backman v. Polaroid Corp., 910 F.2d 10, 12 (1st Cir. 1990) (en banc) (quoting Roeder v. Alpha Indus., Inc., 814 F.2d 22, 26 (1st Cir. 1987))). Thus, even assuming that information regarding the defendants' markup was material to Press's investment decision, a critical preliminary question remains whether the defendants had an obligation to apprise him of that information. See San Leandro Emergency Med. Group Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 810 (2d Cir. 1996) ("Even if we assume in this case that the company's marketing plans constituted material information, the important question to resolve is whether [the defendant] was under a duty to disclose the [information at issue]."). The Court concludes, for the reasons set forth below, that the defendants had no such obligation in connection with the markup.

 Press advances two rationales for finding a duty of disclosure here: (i) that the markup charged on his Treasury bill transaction was "excessive," and (ii) that the defendants had a fiduciary relationship toward him with respect to that transaction. The parties wholly agree, and for purposes of this analysis the Court therefore assumes, that brokers, even when acting as principals, have an obligation under the federal securities laws to disclose markups that may be deemed "excessive." See, e.g., SEC v. Feminella, 947 F. Supp. 722, 729 (S.D.N.Y. 1996) (noting, without explicitly characterizing role of broker as either principal or agent, that "where a defendant exacts unreasonable profits resulting from a price which bears no reasonable relation to the prevailing price of the security, the anti-fraud provisions of the [securities laws] are violated") (internal quotations and citations omitted). The parties disagree, however, as to whether that rule applies to the markup in this case -- $ 158.86, or roughly 1/6 of a percent of the price that the defendants paid for the Treasury bill.

 Press alleges that the $ 158.86 amount is "approximately 5 times the industry standard of a spread of 1/32 of a percentage point" above market price. *fn13" The defendants counter by pointing to SEC releases which conclude that, in the context of "principal sales to customers" of debt securities, such as Press's Treasury bill purchase here, "common industry practice" is to charge a markup "of between 1/32% and 3-1/2% " over broker cost. See Zero-Coupon Securities, Exchange Act Release No. 34-24368, 1987 WL 112328, at *3 (S.E.C. April 21, 1987) (emphasis added). See also In re Lehman Bros. Inc., Exchange Act Release No. 34-37763, 1996 WL 519914, at *6 (S.E.C. Sept. 12, 1996).

 Although the determination as to whether a given markup is or is not excessive depends on a range of factors, see id. at *5 & n.9; Feminella, 947 F. Supp. at 728-29, the Court has no hesitation in finding that the defendants' markup here is as a matter of law not excessive. Simply put, the markup is indisputably at the extreme low end of what the SEC considers to be acceptable, and Press provides absolutely no authority for his contention that "the standard industry spread" for such a markup is five times less than what the defendants charged. More specifically, no authority of which this Court has been advised involves a markup even remotely as small as the 1/6 of a percent markup at issue in this case; indeed, from the Court's review, "excessiveness" appears not even to become a consideration in debt-security cases until markups reach the three to three and one-half percent range. See, e.g., In re Lehman Bros., 1996 WL 519914, at *3-7. In sum, because the amount of the markup charged here by the defendants was not excessive, Press cannot establish on that basis that the defendants were obliged to disclose it to him at any time during the course of his Treasury bill transaction.

 As for Press's alternate theory, he appears to argue that the defendants owed him a duty of disclosure based on his naked allegation in the Complaint that they "were his fiduciaries" for purposes of the Treasury bill transaction. This argument fails as well. Generally speaking, a fiduciary relationship exists under New York law "'when one [person] is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation.'" Flickinger v. Harold C. Brown & Co., 947 F.2d 595, 599 (2d Cir. 1991) (quoting Mandelblatt v. Devon Stores, Inc., 132 A.D.2d 162, 521 N.Y.S.2d 672, 676 (1st Dep't 1987) (quoting Restatement (Second) of Torts § 874 comment a (1977))) (alteration in Flickinger). Such a relationship may inhere as between securities brokers and purchasers. See, e.g., Scott v. Dime Sav. Bank of New York, FSB, 886 F. Supp. 1073, 1079 (S.D.N.Y. 1995) ("Under New York law, stockbrokers may owe fiduciary duties to their customers."), aff'd, 101 F.3d 107 (2d Cir. 1996), cert. denied, 137 L. Ed. 2d 339, 117 S. Ct. 1260 (1997); Schenck v. Bear, Stearns & Co., 484 F. Supp. 937, 946 (S.D.N.Y. 1979), overruled on other grounds by Conway v. Icahn & Co., Inc., 16 F.3d 504, 509 (2d Cir. 1994).

 Nevertheless, the "mere existence of a broker-customer relationship is not proof of its fiduciary character." Bissell v. Merrill Lynch & Co., 937 F. Supp. 237, 246 (S.D.N.Y. 1996) (quoting Rush v. Oppenheimer & Co., 681 F. Supp. 1045, 1055 (S.D.N.Y. 1988)). Indeed, "New York courts repeatedly have held that 'a broker does not, in the ordinary course of business, owe a fiduciary duty to a purchaser of securities.'" A. Ronald Sirna, Jr., P.C. Profit Sharing Plan v. Prudential Secs., Inc., 964 F. Supp. 147, 152 (S.D.N.Y. 1997) (quoting Fekety v. Gruntal & Co., 191 A.D.2d 370, 595 N.Y.S.2d 190, 190-91 (1st Dep't 1993)); accord Perl v. Smith Barney Inc., 230 A.D.2d 664, 646 N.Y.S.2d 678, 680 (1st Dep't 1996). This is because a broker's fiduciary obligation, if any, "is limited to affairs entrusted to the broker, and 'the scope of affairs entrusted to the broker is generally limited to the completion of a transaction.'" Bissell, 937 F. Supp. at 246 (quoting Schenck, 484 F. Supp. 937 at 947) (alteration in Bissell) (emphasis added). See also Rush, 681 F. Supp. at 1055.

 The crucial factor in determining whether a broker has been "entrusted" with particular matters such that a fiduciary obligation attaches, appears to be whether the broker exercises discretion over those matters. In other words, "in the absence of discretionary trading authority delegated by the customer to the broker . . . a broker does not owe a general fiduciary duty to his client." Bissell, 937 F. Supp. at 246 (emphasis added). *fn14" See Schenck, 484 F. Supp. at 947 (where defendant "had neither discretion nor responsibility over supervision of plaintiff's account" for certain matters, the "matters were not entrusted to [defendant], [and] there was no fiduciary obligation between [defendant] and plaintiff with respect to" those matters). See also Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 120 (2d Cir. 1991) ("Shearson owed no fiduciary duty to HMK other than to execute the trades requested because the accounts were non-discretionary."); Lowenbraun v. Rothschild, 685 F. Supp. 336, 343 (S.D.N.Y. 1988) ("A broker who has discretionary powers over an account owes his client fiduciary duties, and shares a principal-agent relationship with the client.") (citing Rolf v. Blyth Eastman Dillon & Co., 570 F.2d 38, 45 (2d Cir. 1978)). Cf., e.g., Howell v. Freifeld, 631 F. Supp. 1222, 1224 (S.D.N.Y. 1986) ("It is significant that plaintiff maintained a discretionary account with [defendant]. This imposed upon [defendant] 'broad' fiduciary duties to plaintiff with respect to the management of the account.").

 Under these standards, Press cannot establish that the defendants owed him a fiduciary duty -- thereby requiring them to disclose the markup -- because his Complaint contains absolutely no allegations indicating that they had any discretionary authority whatever with respect to the transaction they executed on his behalf. Indeed, his unequivocal and consistent allegations support precisely the opposite conclusion, i.e., that he entered into a single, arms-length transaction with the defendants, in which their sole function was to purchase and eventually pay over the proceeds of a single instrument specifically chosen by him.

 The Complaint recites that Press telephoned Chemical and inquired about buying a six-month Treasury bill worth approximately $ 100,000; he spoke to Chemical's employee Green, who informed him, inter alia, of the price he would have to pay and the return he would receive; he went to Chemical's premises and purchased the bill; he later communicated with Chemical about obtaining the proceeds on the maturity date; and he ultimately received from Chemical a check in the amount of the proceeds. These allegations "do not purport to assert a relationship different from that of an ordinary broker-client relationship," Perl, 646 N.Y.S.2d at 680, and consequently, the allegations are insufficient to establish that the defendants owed Press a fiduciary duty with respect to his Treasury bill transaction. See, e.g., Salzmann v. Prudential Secs. Inc., 1994 U.S. Dist. LEXIS 6377, 91 Civ. 4253 (KTD), 1994 WL 191855, at *7 (S.D.N.Y. May 16, 1994) (holding that because plaintiffs' "allegations suggest that the relationship [with defendants] was typical," inasmuch as plaintiffs' account was "non-discretionary" and they "pre-approved every trade," defendants "did not owe plaintiffs a fiduciary duty"). Cf., e.g., Flickinger, 947 F.2d at 599 (fiduciary relationship did exist where broker and customer "had a long-standing relationship during which [broker] provided investment advice and services"); Shahzad v. H.J. Meyers & Co., 1997 U.S. Dist. LEXIS 1128, 95 Civ. 6196 (DAB), 1997 WL 47817, at *11 (S.D.N.Y. Feb. 6, 1997) (unlike case where plaintiff "was simply a purchaser 'in the ordinary course of business,' who did not have an on-going relationship with the broker-defendant," here "Plaintiff entrusted Defendants to purchase securities on thirteen occasions . . . and acted upon the advice of the Defendants and did not simply put in orders of the stocks he wished to purchase").

 Given Press's inability to establish that the defendants were his fiduciaries for purposes of the transaction at issue, his claim that they owed him a duty of disclosure on the basis of a fiduciary relationship necessarily fails. Accordingly, because Press's allegation of a material omission with respect to the defendants' markup cannot succeed absent a showing that they had a duty to disclose such information, his markup claim must be dismissed.

 2. Misrepresentation of Yield

 Press's claim that the defendants misrepresented the yield on his transaction is equally deficient under Rule 10b-5. In the first place, it is difficult to see how Press relied in deciding whether to purchase the Treasury bill on the yield figure reported in his trade confirmation form, when he concedes that he received the form "several days []after" the purchase. Press argues in opposing this motion that purchasers of Treasury securities such as himself "reasonably rely upon the fact that they will receive an accurate disclosure of the yield on their securities," and he seeks leave to replead a more detailed accounting of the fact that, at the time of his transaction, he "requested and received express representations concerning the yield."

 Nevertheless, even if Press could amend his Complaint to allege reliance, or even if he were entitled to a presumption of reliance insofar as he alleges a material omission, *fn15" Press still cannot succeed on his yield claim because the substantive allegation on which it depends fails as a matter of law to establish a material consideration. In short, the difference between the 178 day period from settlement to maturity that was actually used to calculate his yield figure, and the 181 day period from purchase to maturity that he claims should have been used, is immaterial as a matter of law. *fn16" No rational juror could conclude that, in determining whether to purchase the Treasury bill at issue, it would have "assumed actual significance" in the deliberations of a reasonable investor, TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 48 L. Ed. 2d 757, 96 S. Ct. 2126 (1976), to learn that the proffered yield figure for the transaction understated the value of the investment by the trivial monetary equivalent of a three-day expansion in the maturity period. The information concerning yield therefore cannot serve as the basis of either a misrepresentation or a material omission, and Press's claim based on that information must be dismissed.

 3. Delayed Access to Proceeds

 Press's final claim under Section 10(b) and Rule 10b-5 is that he entered into the Treasury bill purchase in reliance on the fact that he would be able to receive the proceeds of that transaction on the stated May 9, 1996 maturity date. That allegation is deficient as a matter of law for several reasons, including failure to plead materiality adequately; that is, Press cannot plausibly show that the mere two-day difference in the availability of the proceeds (or four-day difference in receipt) would have been a material factor in his decision whether to purchase the Treasury bill. *fn17" Cf. Feinman v. Dean Witter Reynolds, Inc., 84 F.3d 539, 541 (2d Cir. 1996) ("Reasonable minds could not find that an individual investing in the stock market would be affected in a decision to purchase or sell a security by knowledge that the broker was pocketing a dollar or two of the fee charged for the transaction.") The Court also finds Press's proceeds claim flawed in two additional respects: it fails to satisfy the "in connection with" requirement of Rule 10b-5, and is grounded on insufficient allegations of scienter under Rule 9(b), Fed. R. Civ. P.

 First, the defendants' failure to advise Press that he would be unable to obtain the proceeds of his investment on the maturity date does not constitute a fraudulent omission "in connection with the purchase or sale of a security," as is necessary to state a claim under Section 10(b). Shapiro v. Cantor, 123 F.3d 717, 720-21 (2d Cir. 1997). To satisfy this requirement, a plaintiff need only demonstrate "an injury as a result of deceptive practices 'touching' its purchase or sale of securities." In re Ames Dep't Stores Inc. Stock Litig., 991 F.2d 953, 967 (2d Cir. 1993) (quoting Superintendent of Ins. of the State of N.Y. v. Bankers Life & Cas. Co., 404 U.S. 6, 12-13, 30 L. Ed. 2d 128, 92 S. Ct. 165 (1971)). Nevertheless, "the incidental involvement of securities does not implicate the anti-fraud provisions of the federal securities laws," that is, the fraud alleged must be "integral to the purchase and sale of the securities in question." Pross v. Katz, 784 F.2d 455, 459 (2d Cir. 1986). In the usual case, the requisite connection is satisfied "when the fraud alleged is that the plaintiff bought or sold a security in reliance on misrepresentations as to its value." Ames, 991 F.2d at 967 (emphasis added). As Judge Friendly explained, the purpose of Section 10(b) and Rule 10b-5 "is to protect persons who are deceived in securities transactions--to make sure that buyers of securities get what they think they are getting." Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930, 943 (2d Cir. 1984) (emphasis added).

 Following Chemical Bank and Pross, courts within this Circuit have consistently held that "misrepresentations or omissions involved in a securities transaction but not pertaining to the securities themselves cannot form the basis of a violation of Section 10(b) or Rule 10b-5." Manufacturers Hanover Trust Co. v. Smith Barney, Harris Upham & Co., 770 F. Supp. 176, 181 (S.D.N.Y. 1991) (citing Chemical Bank, 726 F.2d at 943; Pross, 784 F.2d at 459). In particular, the majority of recent cases concur that, for a plaintiff's complaint to state a viable cause of action, "the misrepresentation must relate to the value of the security." *fn18" Vigilant Ins. Co. v. C. & F. Brokerage Servs., 751 F. Supp. 436, 438 (S.D.N.Y. 1990) (emphasis added). See also Bissell v. Merrill Lynch & Co., 937 F. Supp. 237, 242-43 (S.D.N.Y. 1996) (citing cases).

 Under these standards, the defendants' omission of information regarding the precise date on which Press could obtain his proceeds did not occur "in connection with" his purchase of the Treasury bill that produced those proceeds. At most this information related to an implied promise by the defendants that, upon maturity of the bill, Press would be afforded prompt access to the proceeds. But the exact availability date was not "integral" to the purchase or sale of the bill, Pross, 784 F.2d at 459, and in no way concerned its "value" as a security, Vigilant, 751 F. Supp. at 438, or affected the total amount of Press's return. *fn19" To the contrary, the release date of the proceeds was "merely a term of the arrangement between the broker and its customer under which the broker conducts [Treasury bill purchases] for the customer." Levitin v. PaineWebber, Inc., 933 F. Supp. 325, 329 (S.D.N.Y. 1996) (holding that broker's alleged failure to disclose that it used customers' collateral and proceeds from short sales to earn interest and gain other financial benefits stated no claim under Section 10(b) or Rule 10b-5). In other words, even if the defendants did make an omission or misrepresentation regarding the date on which Press could access his Treasury bill proceeds,


this sort of misrepresentation . . . goes not to any inducement by the defendants regarding the investment purpose of the sale, but to the arrangements concerning the mechanics of the sale.

 Bosio v. Norbay Secs., Inc., 599 F. Supp. 1563, 1566 (E.D.N.Y. 1985) (holding that no claims were stated under Section 10(b) by allegations that defendant fraudulently promised to follow plaintiff's instructions regarding stock sales and falsely represented that he would forward sale proceeds to plaintiff). Thus, Press did "get what [he] thought [he] [was] getting" in his Treasury bill purchase, Chemical Bank, 726 F.2d at 943, notwithstanding anything that the defendants said or omitted to say about the date the proceeds of that purchase would be available. His claim based on the delivery of those proceeds therefore fails to satisfy the "in connection with" requirement of Rule 10b-5 and must be dismissed.

 Press's proceeds claim also fails to meet the special requirements for pleading scienter under Rule 9(b). A plaintiff alleging fraud must assert scienter, or fraudulent intent,


either (a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.

 Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir. 1994). *fn20" In either case, however, "the facts alleged in the complaint must give[] rise to a 'strong inference' of fraudulent intent." Time Warner, 9 F.3d at 268 (alteration in original) (internal quotations and citations omitted) (emphasis added); accord Acito, 47 F.3d at 52. The allegations in Press's Complaint give rise to no such inference here. *fn21"

 As noted, the Complaint states that the defendants "knowingly or recklessly" made "materially false and misleading statements" or "failed to disclose material facts" to Press and the class, had "actual knowledge of the materially false and misleading statements" and omissions, and "intended to deceive [Press] and members of the class or acted with reckless disregard for the truth." These are mere conclusory assertions, however, wholly unsupported by the substantive allegations that precede them in the Complaint. Press's own account of his dealings with Chemical, from his first inquiry regarding a Treasury bill purchase to his final receipt of the proceeds, reveals those transactions to have been totally benign. His allegations do not come close to raising a "strong inference" that Chemical and Pershing either had a motive to defraud him or displayed conscious misbehavior or recklessness toward him. *fn22" Shields, 25 F.3d at 1128. Indeed, the Court would find otherwise if it were required to do so. At the very least, the Court cannot find that the facts alleged in Press's Complaint concerning the date on which his proceeds became available raise a sufficient inference of fraudulent intent to survive a motion to dismiss.

 C. Remaining Claims

 Press also seeks to impose liability on Chase and DLJ as the "controlling persons" of Chemical and Pershing under Section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a). But that claim for derivative liability fails a fortiori in light of the Court's dismissal of Press's claims under Section 10(b) and Rules 10b-5 and 10b-10. See Moss v. Morgan Stanley Inc., 719 F.2d 5, 16-17 (2d Cir. 1983). As to Press's state law causes of action, the Complaint contains no allegations to support diversity jurisdiction, and the Court declines to exercise supplemental jurisdiction over those claims.


 Press's claims under the federal securities laws are dismissed with prejudice, and his claims under state common law are dismissed without prejudice pursuant to this Court's discretion under 28 U.S.C. § 1367(c)(3). Because this is an Amended Complaint and the deficiencies in the pleadings cannot be cured by further amendment, Press will not be granted leave to amend. *fn23" The Clerk of Court is directed to enter judgment for the defendants and close the case.


 Dated: New York, New York

 December 22, 1997


 United States District Judge

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