United States Court of Appeals

For the First Circuit

No. 20-1810

EDGEPOINT CAPITAL HOLDINGS, LLC,

Plaintiff, Appellant,

v.

APOTHECARE PHARMACY, LLC,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Nathaniel M. Gorton, U.S. District Judge]

Before

Lynch, Lipez, and Thompson, 

Circuit Judges.

Michael D. Brier, with whom Kevin T. Peters and Gesmer 

Updegrove, LLP were on brief, for appellant. 

Andrew R. Dennington, with whom Julie M. Muller and Conn 

Kavanaugh Rosenthal Peisch & Ford, LLP were on brief, for appellee. 

July 6, 2021
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LYNCH, Circuit Judge. In this breach of contract action 

by EdgePoint Capital Holdings, LLC ("EPCH"), arising out of the 

sale of the defendant Apothecare Pharmacy, LLC ("Apothecare"), two 

primary issues were raised: one of federal securities law and one 

of state contract interpretation law. On cross-motions for summary 

judgment the district court rejected Apothecare's federal 

securities law defense that the contract sued on was void under 

Section 29(b) of the Securities Exchange Act of 1934 ("Exchange 

Act"). EdgePoint Cap. Holdings, LLC v. Apothecare Pharmacy, LLC, 

478 F. Supp. 3d 75, 81-82 (D. Mass. 2020). However, it granted 

summary judgment in Apothecare's favor on the ground that, as a 

matter of Massachusetts contract interpretation law, EPCH was not 

entitled to the fee it sought. Id. at 83. We affirm the grant of 

summary judgment to Apothecare. Apothecare's federal securities 

law defense is valid, and therefore the plaintiff EPCH may not 

recover. 

I. Facts

EPCH is an investment banking firm based in Beachwood, 

Ohio. Most of EPCH's work is assisting companies in the selling

of their businesses. EdgePoint Capital Advisors, LLC ("EPCA") is 

affiliated with EPCH and together the parties refer to them as 

"EdgePoint." EPCH and EPCA are legally distinct, but they are 

owned by the same person and share expenses, office space, and 

some employees. EPCH handles asset sales and is not registered 
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and has never been registered as a broker-dealer. EPCA, by 

contrast, is a registered broker-dealer and was registered in 

Massachusetts at the time of the events in this case. EdgePoint 

benefits from using EPCH rather than its higher-cost registered 

arm EPCA to complete transactions that do not require a brokerdealer. 

EdgePoint's practice when engaging a new client is to 

allocate the contract to either EPCH, its non-registered arm, or 

EPCA, its registered arm. It says it does this based on its view 

of whether the engagement will involve a securities transaction, 

as only registered brokers may broker securities transactions. 15 

U.S.C. § 78o(a)(1). EdgePoint admits it assigns contracts from 

EPCH to EPCA well after it has started its efforts on behalf of 

its client if it comes to believe the engagement will involve a 

securities transaction. EdgePoint says it often looks to the 

Letter of Intent between its client and a prospective buyer to 

determine whether an EPCH contract should be reassigned to EPCA,

and its practice allows contracts to be assigned "within . . . a 

month of closing." EdgePoint prefers to handle transactions 

through EPCH when possible to avoid the "[Financial Industry 

Regulatory Authority ("FINRA")] tax on all FINRA transactions . . 

. [and the] record-keeping obligations for FINRA." Because of the 

expense sharing agreement between EPCA and EPCH, EdgePoint also 
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finds it "easier to administ[er] the transactions that are done 

[through EPCH]." 

The defendant Apothecare is a long-term care pharmacy 

company serving group home patients, hospice patients, and others 

who require special pharmaceutical packaging. Apothecare provides 

services to over 5,100 "beds" at more than 1,000 institutions in 

New England and had sales of approximately $26 million in 2015. 

Rudy Dajie purchased Apothecare in 2012 and served as its Chief 

Executive Officer until November 2019. 

A. Apothecare's Dealings with EdgePoint

Sometime before December 2015, Dajie became interested 

in selling Apothecare. Dajie was introduced to EdgePoint in 

December 2015. On December 18, Daniel Weinmann, a managing 

director at EdgePoint employed by both EPCH and EPCA, delivered a 

pitch presentation to Dajie about the services EdgePoint could 

provide. The presentation listed "EdgePoint" as a registered 

broker-dealer, and Weinmann's email signature included the 

language "EdgePoint, Member of FINRA." 

The next day, on December 19, Weinmann emailed Dajie a 

draft engagement letter (the "Sell-Side Agreement") listing EPCA, 

EdgePoint's registered broker-dealer arm, as the contracting 

party. 

Six months later, on June 15, 2016, Weinmann sent Dajie 

a new draft of the Sell-Side Agreement. EdgePoint had unilaterally 
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revised the agreement to list EPCH, its non-registered arm, rather 

than EPCA as the contracting party.1 The file name of the revised 

agreement was "EPCA-Apothecare Sell-side Agreement 6-15-16,"

contrary to the terms of the revised agreement. (Emphasis added.) 

The cover message did not explain or identify this change, and 

stated only that "[a]ttached is the revised sell-side agreement we 

discussed on our call today." The change was also not highlighted, 

"redlined," or otherwise emphasized in the draft. Dajie testified 

that no one at EdgePoint told him that there were two separate 

entities, explained the distinction between EPCH and EPCA, or 

alerted him that the agreement had been modified to list EPCH as 

the contracting party.

The final Sell-Side Agreement was executed on September 

6, 2016. It stated that 

Apothecare Pharmacy, LLC and all related 

affiliates (collectively known as the 

"Seller") hereby engages and authorizes

EdgePoint Capital Holdings, LLC ("EdgePoint") 

to assist the Seller in the sale of all or 

part of the Company or its assets (including 

real estate assets held in a related holding 

company) or assisting in the formation of a 

joint venture. Seller agrees to advise 

EdgePoint of any buyers, agents (i.e. Brokers, 

etc.), or other Transactional Partners that 

the Seller wishes to consider in addition to 

those identified by EdgePoint and agrees to 

1 At his deposition Weinmann said he made the change 

because he "thought that [any transaction] was most likely going 

to be an asset sale," but that "if we later determined that we did 

find a buyer that was willing to do a stock transaction, we could 

always assign it to [EPCA]."
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allow EdgePoint to pursue discussions with 

them.

. . . 

Seller agrees to engage EdgePoint as its sole 

representative in the sale of Seller, and 

further agrees to direct all Inquiries as to 

the sale of such company(ies) to EdgePoint. 

(Emphasis added.)

The Sell-Side Agreement required Apothecare to make an 

initial payment of $35,000: $15,000 as a "commitment fee" and 

$20,000 as an "additional" payment thirty days later. It also 

specified that if a sale was made, Apothecare would be required to 

pay EPCH a "Success Fee" equal to the greater of $350,000 or 1.75% 

of the transaction value up to $40 million plus 7.0% of the 

transaction value in excess of $40 million. 

This breach of contract suit is based on the "tail 

provision" of the contract, which stated that if the agreement was

terminated by either party, "[Apothecare] . . . shall be obligated 

to pay [EPCH] a fee as previously outlined [if] . . . within 18 

months of the date of the termination of this contract" it

completed "any Transaction with a company or individual identified 

or contacted by [Apothecare] or EdgePoint during the term of this 

agreement (a 'Transactional Partner')."2

On October 26, 2016, Matthew Lazowski, an EdgePoint 

employee, sent Dajie a draft sixty-page Confidential Information 

2 The Sell-Side Agreement also included an indemnification 

provision which is the basis for EPCH's attorneys' fees claim.
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Memorandum ("CIM"). The following day, Lazowski sent Dajie a 

"Potential Buyers List" of approximately four hundred companies. 

Clearview Capital, LLC ("Clearview") and Starboard Capital 

Partners, LLC ("Starboard") were on the list. 

The CIM is a marketing document designed to inform 

potential buyers about Apothecare's business. The CIM draft 

explained EdgePoint's role in selling Apothecare. It stated that 

EPCA, not EPCH, had prepared the CIM and was "the Company's 

exclusive advisor in th[e] proposed transaction." The CIM 

explained that it was "solely for use by prospective purchasers 

considering acquiring the Company" and that Apothecare "reserves 

the right to negotiate with one or more prospective purchasers at 

any time and to enter into a definitive agreement for sale of the 

Company . . . ." (Emphasis added.) The CIM asked that "[p]arties 

interested in pursuing this transaction" specify their preferred 

"[d]eal structure (i.e., stock/asset)." It also stated that the 

existing Apothecare management team "intend[ed] to continue 

leading the growth of Apothecare to the extent desired by a buyer." 

After reviewing the October 26 draft CIM with Dajie, 

Weinmann emailed a revised draft to Dajie on November 2. The 

November 2 draft also referred to EPCA and did not mention EPCH. 

Dajie and Weinmann agreed, due to concerns that Apothecare's 

financial records understated its accounts receivable, not to 

circulate the November 2 CIM to potential buyers until the CIM was 
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updated with new financial statements. The problems with 

Apothecare's accounts receivable were not fully resolved before 

Apothecare terminated its engagement with EPCH and the CIM was 

never shown to any potential investors. 

Lazowski stated at his deposition that at some point 

between September 27 and October 27, 2016, he contacted Matthew 

Blevins, an employee at Clearview. Lazowski said that, without 

referring to Apothecare directly, he asked Blevins if Clearview 

would be "interested in a roughly 6 million dollar [Earnings Before 

Interest, Taxes, Depreciation, and Amortization] pharmacy/drug 

distribution business located east of the Mississippi." Between 

October 2016 and February 2017, EPCH contacted six additional 

companies as "potential investor[s] or purchaser[s]." It did not 

disclose the name of or confidential information about Apothecare 

to these companies. No additional potential buyers were contacted 

after February 2017.

On August 21, 2017, Apothecare sent EPCH a notice of its 

intent to terminate the Sell-Side Agreement.3 EPCH did not 

respond. 

3 The letter stated:

Apothecare recognizes [that] the Agreement 

contemplates certain payments to EdgePoint 

could be required during the 18-month period 

following the termination of this agreement 

. . . if such sale occurs with a 

"Transactional Partner" . . . . As no 

"Transactional Partner" was identified or 
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B. Apothecare's Eventual Sale Independent of EdgePoint

On November 30, 2017, Dajie's estate planning attorney 

Christopher Graham had lunch with P.J. Smith, a managing director 

of Starboard to discuss an investment opportunity unrelated to 

Apothecare. At this lunch, Smith stated that Starboard was 

interested in investing in companies in the healthcare and pharmacy

industries. Graham told Smith about Apothecare. This was the 

first time Starboard had heard of Apothecare. About one week 

later, on December 6, 2017, Smith of Starboard reached out to 

Clearview to see if it was interested in jointly investing in 

Apothecare. 

On December 22, 2017, Starboard and Apothecare executed 

a non-binding Letter of Intent ("LOI") for an eventual acquisition

of Apothecare. The LOI valued Apothecare at $47 million and 

"contemplated that the acquisition shall be primarily consummated

contacted by Seller or EdgePoint prior to the 

date of this notice of termination, the 18-

month survival period is, for all intents and 

purposes, moot and without effect.

. . .

Mr. Dajie is not interested in selling

Apothecare as originally contemplated back 

when the Agreement was entered into in 

September of 2016. . . . Unless I am advised 

otherwise, I will assume the contents of this 

letter are accepted and the Agreement shall 

be terminated effective as of September 22, 

2017.
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as an acquisition of the stock of Apothecare by a newly-formed 

entity established by the Buyer ('Newco')." Dajie would receive 

$36 million in cash plus $9 million of "junior participating 

preferred stock" in Newco. It also stated that the "Sellers" would 

be able to purchase a "pro rata share of the common stock" of 

Newco. 

In January 2018, Starboard and Clearview executed a CoSponsorship Agreement for the acquisition of Apothecare. The 

transaction closed on July 17, 2018. 

The transaction was structured such that the existing 

owners of Apothecare transferred their equity interests to AGD 

Investments Inc., a newly formed holding company, so that AGD 

Investments owned all of Apothecare. Another new entity, 

Apothecare Pharmacy Acquisition Corporation, then purchased $36 

million of Apothecare's LLC units from AGD Investments. Apothecare 

Pharmacy Acquisition Corporation was wholly owned by Apothecare 

Pharmacy Holdings, LLC. Apothecare Pharmacy Holdings, LLC then 

bought the remaining units of Apothecare from AGD Investments in 

exchange for 9 million of its own units. Clearview acquired 64.48% 

of the membership units in Apothecare Pharmacy Holdings, LLC, 

Starboard acquired 5.47%, and AGD Investments acquired 30.05%. 

AGD Investments received $36 million, minus transaction costs and 

other adjustments, in cash and $9 million in LLC units. 
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II. Procedural History

On September 18, 2018, EPCH filed a complaint in the 

Northern District of Ohio alleging that Apothecare had breached 

the Sell-Side Agreement by failing to pay the Success Fee. EPCH 

argued that it was entitled to the Success Fee under the tail 

provision because Apothecare's equity had been sold to Clearview 

and Starboard, both of which had been "identified" or "contacted" 

by EPCH. The complaint also alleged that EPCH was entitled to any 

costs and fees incurred in the lawsuit under the contract's 

indemnification clause. 

On November 20, 2018, Apothecare filed a motion to 

dismiss for lack of jurisdiction and improper venue, or in the 

alternative to transfer venue. EPCH opposed the motion, which was 

granted as to the transfer. EdgePoint Cap. Holdings, LLC v.

Apothecare Pharmacy, LLC, No. 1:18-CV-2155, 2019 WL 1255205, at *6 

(N.D. Ohio Mar. 19, 2019). On March 19, 2019, the case was 

transferred to the District of Massachusetts. On May 2, 2019, 

Apothecare filed its answer and asserted various defenses. 

On April 14, 2020, EPCH filed a motion for summary 

judgment on all claims and argued that Apothecare's affirmative 

defenses failed as a matter of law. Apothecare filed a crossmotion for summary judgment arguing (1) that EPCH's failure to 

register as a broker-dealer barred enforcement of the Sell-Side 

Agreement under Section 29(b) of the Exchange Act, which makes 
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voidable contracts "made" in or whose performance "involves" a 

violation of securities law,4 (2) that EPCH was not entitled to a 

Success Fee because neither Clearview nor Starboard had been 

identified or contacted by EPCH as a "Transactional Partner," and 

(3) that the indemnification provision did not require Apothecare 

to pay legal fees that EPCH incurred in affirmatively suing 

Apothecare for breach of contract. 

On May 4, 2020, Apothecare filed an amended answer adding 

an affirmative defense of fraudulent inducement alleging that 

Weinmann had misled Apothecare as to whether "EdgePoint" was a 

registered broker-dealer and member of FINRA. On June 15, 2020, 

EPCH filed a motion for summary judgment on this affirmative 

defense. Apothecare did not file a cross-motion for summary 

judgment on this defense. 

The district court denied EPCH's motions for summary 

judgment. EdgePoint Cap. Holdings, LLC, 478 F. Supp. 3d at 81-

84. It granted Apothecare's cross-motion for summary judgment as 

to each of EPCH's claims based on the following reasoning. It 

4 Apothecare also argued that the Sell-Side Agreement was 

unenforceable under Massachusetts law. The Massachusetts Uniform 

Securities Act requires broker-dealers to register before 

effecting transactions in securities in Massachusetts. Mass. Gen. 

Laws ch. 110A, §§ 201, 401(c). Under Massachusetts law, "[n]o 

person who has made or engaged in the performance of any contract 

in violation of any provision of this chapter . . . may base any 

suit on the contract." Mass. Gen. Laws ch. 110A, § 410(g). Because 

we conclude that the contract is voidable under federal law, we do 

not reach this argument. 
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first rejected Apothecare's affirmative defense under Exchange Act

Section 29(b). It determined that the contract was enforceable 

despite the fact that EPCH was not registered as a broker-dealer 

because EPCH did not in fact broker a securities transaction for 

Apothecare and "EPCH could have fulfilled its obligations without 

violating the securities laws by facilitating an asset sale." Id.

at 81-82. 

The district court next held as a matter of contract 

interpretation that EPCH was not entitled to the Success Fee 

because neither Clearview nor Starboard was properly considered a 

"Transactional Partner" in the context of the agreement. Id. at 

83. It reasoned that "[t]he act of listing Clearview and Starboard 

among 300 entities or vaguely describing a look-alike to an 

associate in passing does not satisfy the Fee Tail Provision or 

entitle EPCH to compensation." Id. 

The district court also concluded that EPCH, as an 

"unsuccessful plaintiff in this lawsuit," was not entitled to 

attorneys' fees because "[w]hen an indemnitee seeks to recover 

'self-inflicted costs incurred in prosecuting affirmative claims 

against an indemnitor' . . . there is a 'strong argument that [the 

indemnitor] should not be required to reimburse attorneys' fees.'" 

Id. at 84 (second alteration in original) (quoting Caldwell Tanks, 

Inc. v. Haley & Ward, Inc., 471 F.3d 210, 217 (1st Cir. 2006)). 
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The district court did not reach Apothecare's fraudulent 

inducement defense. Id. EPCH timely appealed. 

III. Analysis

We review the grant of summary judgment de novo, 

construing the record in the light most favorable to the nonmoving party. Roman Cath. Bishop of Springfield v. City of 

Springfield, 724 F.3d 78, 89 (1st Cir. 2013). "On an appeal from 

cross-motions for summary judgment, the standard does not change; 

we view each motion separately and draw all reasonable inferences 

in favor of the respective non-moving party." Id. We may affirm 

a district court's decision on any ground supported by the record. 

Robinson v. Town of Marshfield, 950 F.3d 21, 24 (1st Cir. 2020).

EPCH argues on appeal that it is entitled to the Success 

Fee because it identified or contacted Clearview and Starboard. 

EPCH also argues that if it prevails on appeal, it is entitled to 

attorneys' fees and litigation expenses under the indemnification 

provision. Because we agree with Apothecare that the Sell-Side 

Agreement is voidable under Section 29(b) of the Exchange Act, the 

contract is unenforceable and EPCH cannot recover. 

A. Statutory Background: Exchange Act Sections 15(a) and 29(b)

Section 15(a) of the Exchange Act states that it is 

unlawful for unregistered brokers to "effect any transactions in, 

or to induce or attempt to induce the purchase or sale of, any 

security." 15 U.S.C. § 78o(a)(1). A "broker" is defined as "any 
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person engaged in the business of effecting transactions in 

securities for the account of others."5 15 U.S.C. § 78c(a)(4)(A). 

"The broker-dealer registration requirement serves as 

the 'keystone of the entire system of broker-dealer regulation'" 

and "[a] broker-dealer that has registered with the [Securities 

and Exchange] Commission is bound to abide by numerous regulations 

5 "[A] person may 'effect transactions'" "by assisting an 

issuer to structure prospective securities transactions, by 

helping an issuer to identify potential purchasers of securities, 

or by soliciting securities transactions." SEC v. Morrone, 997 

F.3d 52, 61 (1st Cir. 2021) (quoting Strengthening the Commission's 

Requirements Regarding Auditor Independence, Exchange Act Release 

No. 34-47265, 79 SEC Docket Nos. 1284, 1571, at *18 n.82 (Jan. 28, 

2003)); see also SEC v. Mieka Energy Corp., 259 F. Supp. 3d 556, 

561 (E.D. Tex. 2017); SEC v. Gagnon, No. 10-cv-11891, 2012 WL 

994892, at *11 (E.D. Mich. Mar. 22, 2012); SEC v. Deyon, 977 F. 

Supp. 510, 518 (D. Me. 1997). A broker also "effects" a 

transaction when it is involved in the negotiations between a 

purchaser and seller of securities. Cornhusker Energy Lexington, 

LLC v. Prospect St. Ventures, No. 804CV586, 2006 WL 2620985, at *6 

(D. Neb. Sept. 12, 2006) (unpublished); 5 The Law of Securities 

Regulation § 14.63 (7th ed. May 2021 update). The receipt of 

transaction-based compensation or holding oneself out as a brokerdealer further indicates that a party is engaged in the business 

of effecting transactions. Morrone, 997 F.3d at 61 (citing

Strengthening the Commission's Requirements Regarding Auditor 

Independence, 79 SEC Docket Nos. 1284, 1571, at *18 n.82); see 

also SEC v. Bio Def. Corp., No. 12-11669-DPW, 2019 WL 7578525, at 

*17-20 (D. Mass. Sept. 6, 2019); Cornhusker Energy Lexington, LLC,

2006 WL 2620985, at *6. Transaction-based compensation is a 

"hallmark" indication that a party has acted as a broker and must 

register because it "represents a potential incentive for abusive 

sales practices that registration is intended to regulate and 

prevent." Legacy Res., Inc. v. Liberty Pioneer Energy Source, 

Inc., 322 P.3d 683, 688-89 (Utah 2013) (quoting Cornhusker Energy 

Lexington, LLC, 2006 WL 2620985, at *6). 

In the transaction at issue, EdgePoint held itself out 

as a broker-dealer to Apothecare, agreed to identify and be 

involved in negotiations with purchasers, and was to receive 

transaction-based compensation. 
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designed to protect prospective purchasers of securities, 

including standards of professional conduct, financial 

responsibility requirements, recordkeeping requirements, and 

supervisory obligations over broker-dealer employees." Roth v. 

SEC, 22 F.3d 1108, 1109 (D.C. Cir. 1994); see also, e.g., FINRA 

Rule 2010; FINRA Rule 2210(d)(1); FINRA Rule 4513. 

As the Fifth Circuit said in Eastside Church of Christ

v. National Plan, Inc., "[t]he requirement that brokers and dealers 

register is of the utmost importance in effecting the purposes of 

the [Exchange Act]." 391 F.2d 357, 362 (5th Cir. 1968); see also

Roth, 22 F.3d at 1109; Turbeville v. FINRA, 874 F.3d 1268, 1270 

(11th Cir. 2017) (explaining that the Exchange Act requires 

registered brokers to comply with "conduct rules 'designed to 

prevent fraudulent and manipulative acts and practices, to promote 

just and equitable principles of trade, . . . [and] to protect 

investors and the public interest'" (quoting 15 U.S.C. § 78o3(b)(6))). "It is through the registration requirement that some 

discipline may be exercised over those who may engage in the 

securities business and by which necessary standards may be 

established with respect to training, experience, and records." 

Eastside Church of Christ, 391 F.2d at 362. Registration ensures 

that sellers of securities "understand[] and appreciate[] both the 

nature of the securities [they] sell[] and [their] 

responsibilities to the investor[s]." Roth, 22 F.3d at 1109. 
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An entity "attempts" to induce the sale of securities

and therefore must register when it publishes advertisements for 

securities or contacts potential buyers to solicit investment. 

See, e.g., SEC v. Nutra Pharma Corp., 450 F. Supp. 3d 278, 291 

(E.D.N.Y. 2020) (holding that the SEC adequately alleged a 

violation of Section 15(a) where its complaint stated that 

defendant had "induced or attempted to induce the purchase or sale 

of securities by calling investors, mailing invitations to 

promotional events, and attending dinners and lunches and making 

promotional pitches"); SEC v. Schmidt, No. 71 Civ. 2008, 1971 WL 

293, at *1-2 (S.D.N.Y. Aug. 26, 1971); In re First Cap. Funding, 

Inc., Exchange Act Release No. 30,819, 50 SEC 1026, 1027-28 (June 

17, 1992) (explaining that transmitting a "pre-qualification form"

to potential investors describing investment opportunity and 

including "language of solicitation" was an attempt to induce the 

purchase or sale of securities). 

Section 29(b) of the Exchange Act states that "[e]very 

contract made in violation of any provision of this chapter . . . 

and every contract . . . the performance of which involves the 

violation of or the continuance of any relationship or practice in 

violation of, any provision of this chapter . . . shall be void

. . . as regards the rights of any person who, in violation of any 

such provision, rule, or regulation, shall have made or engaged in 

the performance of any such contract." 15 U.S.C. § 78cc(b). As 
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stated by the Supreme Court in Mills v. Electric Auto-Lite Co., 

Section 29(b) does not immediately void the contract at issue;

instead the contract is "voidable at the option of the innocent 

party." 396 U.S. 375, 387-88 (1970). 

A party seeking to void a contract under Section 29(b) 

must show (1) that it is in contractual privity with the opposing 

party, (2) that it is within the class of people that the 

securities acts were designed to protect, and (3) that the contract 

involved a prohibited act. See Berckeley Inv. Grp., Ltd. v. 

Colkitt, 455 F.3d 195, 205 (3d Cir. 2006); Reg'l Props. Inc. v. 

Fin. & Real Est. Consulting Co., 678 F.2d 552, 559 (5th Cir. 1982). 

There is no dispute that Apothecare was in privity with EPCH or 

that Apothecare is among the class of persons intended to be 

protected by the securities acts. See Eastside Church of Christ, 

391 F.2d at 362 (holding that issuer of bonds sold by unregistered 

broker was within the class of persons meant to be protected by 

Section 15(a)'s registration requirements). 

Section 29(b) is not limited to voiding contracts which 

"on their face" violate the Exchange Act. See Reg'l Props. Inc., 

678 F.2d at 560 ("A statute that voided only contracts by which 

persons have agreed in express terms to violate the Act would be 

so narrow as to be a waste of the congressional time spent in its 

enactment."). There is also no requirement that the contract's 

making or performance "necessarily" required a violation of the
- 19 -

Exchange Act. See id. at 560-61 ("That these contracts, under 

different circumstances, could have been performed without 

violating the [Exchange Act] is immaterial."). Instead, a contract 

may be voidable under Section 29(b) if its performance in fact

involved a violation of the Exchange Act. See id.

B. The Sell-Side Agreement is Voidable under Section 29(b)

We agree with Apothecare that the contract is voidable

and hold that EPCH's performance of the Sell-Side Agreement 

involved a "practice in violation of [the Exchange Act]," 

specifically "induc[ing], or attempt[ing] to induce the purchase 

or sale of any security" as an unregistered broker. 15 U.S.C. 

§§ 78o(a)(1), 78cc(b). 

EPCH states that after drafting the CIM, it contacted 

seven companies, including Clearview, as "potential investor[s] or 

purchaser[s]" of Apothecare. From the text of the Sell-Side 

Agreement, the CIM, and deposition testimony from EPCH employees, 

it is clear that these contacts were an attempt to induce the 

purchase or sale of Apothecare's equity. The Sell-Side Agreement 

explicitly contemplated the sale of securities, stating that EPCH 

would attempt to sell "all or part of the Company" and any 

affiliates, which would include any holding company. The CIM was 

a further elucidation of the proposed sale and confirmed that the 

deal included a possible sale of securities. The CIM stated that 

Apothecare was looking for a prospective buyer "of the Company," 
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that buyers could specify if they were interested in a "stock" 

transaction, and falsely listed EPCA as Apothecare's 

representative, which would wrongly reassure potential buyers that 

a registered broker was at that time handling the purchase and 

sale. Weinmann also testified that EPCA maintained its brokerdealer registration in Massachusetts "because of the Apothecare 

engagement," and that EPCH was prepared to assign the contract to 

EPCA at any time. 

The fact that Apothecare is an LLC, whose units are not 

always classified as securities under the Exchange Act, does not 

alter our conclusion that EPCH attempted to induce the sale of 

securities. LLC units can be classified as securities, so 

depending on the deal structure, the sale of Apothecare's LLC units 

could have been a securities transaction. See 15 U.S.C. § 77b;

Affco Invs. 2001, LLC v. Proskauer Rose, LLP, 625 F.3d 185, 189 

(5th Cir. 2010) (holding that ownership interests in an LLC were 

securities under the Exchange Act). Further, any equity 

transaction between Apothecare and a purchaser was likely to be a 

complex transaction involving the purchase or sale of holding 

corporation stock or other securities. This is evidenced by the 

fact that the Sell-Side Agreement explicitly discussed the 

possibility that Apothecare would be sold alongside "all related 

affiliates," and that the CIM asked potential investors to indicate 

whether they were interested in a "stock" transaction. 
- 21 -

Nor does the fact that a buyer could have requested that 

the sale be completed as an asset sale create a safe harbor for 

EPCH. Requiring registration even when the ultimate form of the 

transaction is uncertain not only serves the statutory purposes of 

protecting investors but also ensures that brokers comply with 

FINRA's codes of conduct, meant to effect the statutory purposes, 

from their first contact with potential purchasers of securities. 

See, e.g., FINRA Rule 2210(d)(1)(B) (prohibiting brokers from

predicting or projecting performance of a security or making any 

"exaggerated, unwarranted, promissory or misleading statement or 

claim"); FINRA Rule 2010 (requiring FINRA members to "observe high 

standards of commercial honor and just and equitable principles of 

trade"); FINRA Rule 4513 (requiring registered brokers to keep 

records of any complaints made "in connection with the solicitation 

. . . of any transaction"). 

That EPCH is able to assign contracts to EPCA does not

change that EPCH was required to register. When EPCH solicits 

purchasers, it at least "attempt[s] to induce" and arguably also 

"induce[s]" the sale of securities regardless of any subsequent 

assignment to EPCA. 15 U.S.C. § 78(o)(a)(1); See SEC v. Morrone, 

997 F.3d 52, 61 (1st Cir. 2021); Cornhusker Energy Lexington, LLC

v. Prospect St. Ventures, No. 804CV586, 2006 WL 2620985, at *6 (D. 

Neb. Sept. 12, 2006) (unpublished); SEC v. Mieka Energy Corp., 259 

F. Supp. 3d 556, 561 (E.D. Tex. 2017); see also In re Baker & Getty 
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Fin. Servs., Inc., 106 F.3d 1255, 1261 (6th Cir. 1997) (explaining 

in bankruptcy context that a broker "effects" transactions when it 

acts as an "essential link in the chain of distribution"). Section 

15(a)'s text and purpose make clear that the registration 

requirement applies as soon as a broker attempts to induce a 

securities transaction, and EdgePoint's plan to assign the 

Apothecare contract from EPCH to EPCA does not release it from the 

requirements of the Exchange Act during the "inducement" phase of 

a transaction. 

EPCH makes several counterarguments, none of which is 

persuasive. Its lead argument is that it has a safe harbor as to 

whether the contract was "made" in violation of securities law as 

long as it was possible that the sale of Apothecare would not 

involve a sale of securities. This argument relies on a misreading 

of Berckeley Investment Group, Ltd. v. Colkitt, and fails for 

several reasons.6 As a threshold matter, the argument is 

6 The Berckeley decision is factually and legally 

distinct. The case involved a contract for a loan between two 

parties and the security for the loan. Berckeley Inv. Grp., Ltd, 

455 F.3d at 198. Plaintiff Berckeley purchased from defendant 

Colkitt debentures which could be converted into unregistered 

stock. Id. at 199. At issue was whether Section 29(b) would allow 

Colkitt to void the loan agreement if a trier of fact determined 

that Berckeley, after converting the debentures, had illegally 

sold those unregistered securities. Id. at 206-07. The court 

held that it would not. Id. at 207. 

In Salamon v. Teleplus Enterprises Inc., the District of 

New Jersey also rejected the argument that Berckeley held that 

Section 29(b) voided only those contracts which "are inherently 

unlawful and could not, in any circumstances, be performed in a 
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immaterial because we conclude the contract's performance involved 

a violation of the Exchange Act, not that the contract was "made" 

in violation of the Exchange Act. Further, the mere fact that it 

is possible to legally perform a contract does not mean the 

contract was not made in violation of securities law. See Indus 

Partners, LLC v. Intelligroup, Inc., 934 N.E.2d 264, 265 n.1, 271

(Mass. App. Ct. 2010) (holding that a contract was made in 

violation of securities law where it required an unregistered 

broker to advise on a "possible Transaction" and "'Transaction' 

was defined to include, among other things, the 'sale or other 

transfer, directly or indirectly of all or any portion of the 

assets or securities . . . of Intelligroup'" (emphasis added)); 

see also Cornhusker Energy Lexington, LLC, 2006 WL 2620985, at *6.

If EPCH also means to argue that a contract is not 

voidable -- despite its performance involving a violation of the 

Exchange Act -- unless the contract "necessarily" required a 

violation of securities law, that argument also fails. Berckeley

does not hold that a contract is only voidable if its performance 

necessarily required a violation of the Exchange Act. Instead, it 

holds that a contract is voidable if the contract "involved a 

prohibited transaction" and there was "a direct relationship 

between the violation at issue and the performance of the contract; 

legal manner." No. 05-2058, 2008 WL 2277094, at *6-7 (D.N.J. June 

2, 2008) (unpublished).
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i.e., the violation must be 'inseparable from the performance of 

the contract' rather than 'collateral or tangential to the 

contract.'" Berckeley, 455 F.3d at 205.7 Berckeley also 

approvingly cited Regional Properties, in which the Fifth Circuit 

explained that Section 29(b) voids contracts "that are illegal 

when made or in fact performed" and rejected any argument that 

only contracts which "by their terms" "necessarily" required the 

violation of the Exchange Act were voidable. Reg'l Props. Inc., 

678 F.2d at 560. Our holding is consistent with Berckeley and 

Regional Properties. EPCH's attempts to induce the sale of 

securities were inseparable from the contract's central purpose of 

selling Apothecare and the Sell-Side Agreement was illegal as in 

fact performed.8

7 The Berckeley court then explained that when a contract 

"could [not] be performed without violating the securities laws," 

that was a circumstance in which the violation was "inseparable" 

from the contract. 455 F.3d at 206.

8 EPCH also relies on NTV Management Inc. v. Lightship 

Global Ventures, 140 N.E.3d 436 (Mass. 2020), in which the 

Massachusetts Supreme Judicial Court held that unregistered broker 

NTV Management Inc. did not "make" a contract in violation of 

securities law, because the contract did not "require[] NTV to act 

as a broker-dealer." Id. at 444. The contract at issue in NTV

provided that "NTV was to 'source capital and structure financing 

transactions from agreed-upon target investors and/or lenders,' 

and that 'NTV expect[ed] to introduce and facilitate investment 

from third party sources collectively able to finance all levels 

of the transactions (i.e., both equity and debt).'" Id. at 446.

NTV presented a different set of facts and a different 

legal question. In NTV the parties agreed to limit the analysis 

to whether the contract on its face was made in violation of 

securities law and no evidence was presented as to whether 
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EPCH's suggestion that we read Section 29(b) to void

contracts only when their performance necessarily involves a 

violation of securities law would also defeat the purposes of the 

Exchange Act. Section 29(b) does not include the word 

"necessarily" and we are precluded from inserting such language. 

See Reg'l Props. Inc, 678 F.2d at 560. 

EPCH next argues that the final transaction between 

Apothecare, Clearview, and Starboard was a sale of non-security 

LLC units and thus the performance of the Sell-Side Agreement could 

not have "involved" a sale of securities. We reject this argument. 

Whether EPCH attempted to induce the sale of securities under the 

Sell-Side Agreement does not turn on whether the later transaction 

-- in which EPCH was not involved -- was ultimately completed as 

a securities transaction.

EPCH also argues that a possible later assignment of the 

Sell-Side Agreement to EPCA, as was its practice should it choose 

to do so, would not undercut the purposes of the registration 

requirement.9 EPCH contends that the close relationship between 

performance involved NTV attempting to broker a securities 

transaction. Id. at 444 n.17. Again, in this case we conclude 

that EPCH's performance of the Sell-Side Agreement involved 

impermissible conduct and there is significant evidence that EPCH 

attempted to induce the purchase or sale of securities. 

NTV's interpretation of federal securities law is also not 

binding on this court. Cf. Elkins v. United States, 364 U.S. 206, 

224 (1960). 

9 EdgePoint has not established that it would be able to 
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EPCH and EPCA meant "there was no danger that a transaction would 

be brokered by someone who did not know what he or she was doing." 

The language of the statute forecloses this argument. The purposes 

of registration also go far beyond ensuring that broker-dealers 

are educated. Registered broker-dealers have record-keeping, 

record-retention, and financial responsibility requirements, must 

follow standards of professional conduct, and are subject to selfregulation. See Roth, 22 F.3d at 1109; 15 U.S.C. §§ 78(q), 78o.

These requirements protect both the public and the markets. See

United Hous. Found., Inc. v. Forman, 421 U.S. 837, 849 (1975); 15 

U.S.C. §§ 78b; 78o-3(b)(6). Despite their close relationship, 

EPCH and EPCA are legally distinct entities subject to different 

regulation at every stage of a transaction. 

We respond to a final argument suggested in EPCH's brief. 

The argument is that factually the cases cited earlier in this 

opinion do not go so far as to establish that EPCH's actions in 

this transaction, which was at the preliminary stages, violated 

securities law. After all, the argument would go, EPCH's 

freely assign this contract for professional services without 

Apothecare's approval. See 29 Williston on Contracts § 74:30 (4th 

ed. June 2021 update) ("A contractual duty is personal, and 

performance of it cannot be delegated where, for example . . . 

professional services are contracted for."); id. at § 74:28

("Contractual duties are . . . not delegable if they involve the 

personal qualities or skills of the obligor."). Its conclusory 

statement that contracts are, in general, freely assignable is 

insufficient.
- 27 -

representatives had done nothing more than make some phone calls 

to identify potential buyers in furtherance of effecting a 

transaction that might involve the transfer of securities but did 

not certainly involve such a transaction. EPCH's suggested 

argument conveniently ignores that it is the very contract with 

EPCH which is the basis for its claim for damages against 

Apothecare.

Regardless, we believe the policies behind the 

securities statutes, the cases articulating those policies, and 

the FINRA rules effectuating those policies would lead us to the 

same conclusion. EdgePoint knew it was attempting to induce a 

type of transaction expressly contemplated to include a possible 

securities transaction and chose to do it using its unregistered 

arm. The policies described above impose the risk of the 

transaction on EdgePoint, not Apothecare. 

Because we conclude that the Sell-Side Agreement is 

voidable, Apothecare is not required to pay either the Success Fee 

or EPCH's litigation expenses as outlined in the indemnification 

provision. 

IV. Conclusion

The grant of summary judgment for Apothecare is 

affirmed.