*Pursuant to Local Rule 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Local Rule 47.5.4.

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 95-60680

Summary Calendar

EDWIN E. MEEK AND HELEN R. MEEK,

Plaintiffs-Appellants,

VERSUS

HOWARD, WEIL, LABOUISSE, FRIEDRICHS, INC., BRADFORD & CO, INC.,

J.C. BRADFORD & CO., L.P., W. HARRY FRAZIER, III, and 

BERNIE L. SMITH, III

Defendants-Appellees.

Appeal from the United States District Court

For the Northern District of Mississippi

(3:93-CV-127-B-D)

June 25, 1996

Before REYNALDO G. GARZA, KING and EMILIO M. GARZA, Circuit Judges.

PER CURIAM:*

Edwin and Helen Meek ("the Meeks") sued Appellees, alleging

securities fraud, commodities fraud, and various causes of action

under Mississippi state law. Appellees moved for summary judgement
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on the securities and commodities fraud claims. The district court

granted summary judgment on the securities and commodities fraud

claims, and then dismissed the remaining state law claims without

prejudice on the ground that they were not properly before the

court in the absence of any viable federal claim. The Meeks appeal

from the summary judgment. For the reasons given below, we AFFIRM

the district court's judgment.

I.

FACTS

Bernie Smith ("Smith") was an investment advisor in Oxford,

Mississippi from 1986 to 1993. The Meeks were clients of Smith who

invested a substantial amount of money in the securities market

through Smith. Smith also traded securities for a number of other

clients. Smith had a second set of clients for whom he invested in

commodities futures. The Meeks, however, were strictly securities

clients; they never asked Smith to invest their money in

commodities futures.

Appellees Howard, Weil, Labouisse, Friedrichs, Inc. ("Howard

Weil"), and J.C. Bradford and Co. ("Bradford") are brokerage firms

that handle transactions in the commodities markets. Appellee

Harry Frazier is an investment advisor in Clarksdale, Mississippi

who allegedly solicited commodities trading from Smith while

Frazier was working for Howard, Weil and Bradford. Smith traded

commodities through Howard, Weil from 1987 to 1989, and through

Bradford from 1989 to 1993. He entered into a guaranteed

introducing broker ("GIB") agreement with Howard, Weil in April

1988, which was terminated in March 1989. He then entered into a

GIB agreement with Bradford in March 1989, which was terminated in

January 1993. As a GIB, Smith solicited or accepted orders for the

purchase or sale of commodities, but did not accept money for
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Appellees. In addition to soliciting orders from other investors,

Smith traded in commodities for his own accounts with Appellees.

When Smith lost large sums of his own money in the commodities

market, he covered his losses by stealing money from the investors

whose securities investments he handled. He liquidated their

investments without their authority, and used the money to invest

in the commodities market on his own account. In June 1993, Smith

pled guilty to five counts of mail fraud, and was sentenced to

forty-two months in prison.

The Meeks filed this suit against Appellees and Smith,

alleging violations of the Commodity Exchange Act and the

Securities Exchange Act of 1934, as well as several state law

causes of action. Appellees moved for summary judgment, basically

arguing that they were not liable for Smith's malfeasance because

they neither knew about it nor had anything to do with it. The

district court granted summary judgment for Appellees on the

Commodity Exchange Act and Securities Exchange Act claims, and then

dismissed the remaining state law claims without prejudice because

there was no viable federal claim. The Meeks appeal from the

summary judgment.

II.

DISCUSSION

A.

Standard of Review

We review the district court's granting of summary judgement

de novo. Bodenheimer v. PPG Indus., Inc., 5 F.3d 955, 956 (5th

Cir. 1993). Summary judgment is appropriate if there is "no

genuine issue as to any material facts and . . . the moving party

is entitled to judgment as a matter or law." Fed. R. Civ. P.

56(c). The threshold inquiry, therefore, is whether there are "any
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genuine factual issues that properly can be resolved only by a

finder of fact because they may reasonably be resolved in favor of

either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250

(1986). Of course, "the substantive law will identify which facts

are material." Id. at 248. All of the evidence must be viewed in

the light most favorable to the motion's opponent. Bodenheimer, 5

F.3d at 956.

B.

The Meeks' Commodity Exchange Act Claims

The district court did not err in granting summary judgment on

the Meeks' Commodity Exchange Act ("CEA") claims. The Meeks sued

under the anti-fraud provision of the CEA, which states:

It shall be unlawful (1) for any member of a contract

market or for any correspondent, agent or employee of any

member, in or in connection with any order to make, or

the making of, any contract of sale of any commodity . .

. for or on behalf of any other person . . . to cheat or

defraud or attempt to cheat or defraud such other person.

. . .

7 U.S.C. § 6b(a). This Court recently discussed the requirements

for bringing a cause of action under the anti-fraud provision in

Tatum v. Legg Mason Wood Walker, Inc., 83 F.3d 121, 122-23 (5th

Cir. 1996)(per curiam), a case that involved the same defendants

and the same fraudulent scheme that is the subject of this action.

In Tatum, this Court stated:

A plaintiff establishes a commodities violation for fraud

by a commodities broker only if such fraud is perpetrated

"in connection with" an order for the sale of a commodity

on behalf of the plaintiff. Plaintiffs in this case

never intended to purchase commodities. Smith liquidated

their securities investments to cover his losses in the

commodities market without Plaintiffs' knowledge or

permission. Plaintiffs were never parties to an order
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for the sale of a commodity, and thus they do not satisfy

the "in connection with" requirement of § 6b(a). Smith's

action may give rise to a common law claim for

conversion, but Plaintiffs did not thereby state a claim

for relief under the Commodity Exchange Act. The

district court did not err in granting summary judgment

for Howard Weil and J.C. Bradford on Plaintiffs' claims

under the Commodities Exchange Act.

Id. (internal citations omitted). 

Like the plaintiffs in Tatum, the Meeks never intended to

purchase commodities, and were never parties to an order for the

sale of a commodity. Therefore, they do not satisfy the "in

connection with" requirement of Section 6b(a). Because they do not

satisfy that requirement, the district court correctly granted

summary judgment dismissing their claims under the CEA.

C.

The Meeks' Securities Fraud Claims

The district court did not err in granting summary judgment

dismissing the Meeks' securities fraud claims. The Meeks sought to

hold Appellees vicariously liable for Smith's violations of the

Securities Exchange Act of 1934 and Securities and Exchange

Commission Rule 10b-5. They claim that Appellees are liable under

Section 20(a) of the 1934 Act, 15 U.S.C. § 74t(a), which imposes

vicarious liability on "controlling persons," and under common law

respondeat superior and agency theories. Our review of the record

convinces us that summary judgment was proper because the Meeks

failed to submit any evidence that the Appellees had the power to

control Smith's handling of the Meeks' securities accounts.
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The Meeks did not create an issue of material fact as to

whether Appellees were liable under Section 20(a) of the 1934 Act.

Section 20(a) provides—

Every person who, directly or indirectly, controls any

person liable under any provision of this chapter or of

any rule or regulation thereunder shall also be liable

jointly and severally with and to the same extent as 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.

This Court has not decided the exact showing that a plaintiff must

make in order to hold a defendant liable under Section 20(a). See

Abbott v. Equity Group, Inc., 2 F.3d 613, 619-20 (5th Cir. 1993),

cert. denied, 114 S. Ct. 1219 (1994). We do not need to decide it

now, however, because we have held that a plaintiff must at least

show that the defendant had an ability to control the specific

transaction or activity upon which the primary violation is based.

Id. at 620. In this case, the Meeks failed to present evidence

that Appellees had the power to control Smith's securities

dealings. At best, the evidence arguably shows that Appellees had

influence over Smith's commodities trading; it did not show that

Appellees had anything to do with Smith's handling of the Meeks'

securities investments, or any power to control his handling of

those investments. Therefore, summary judgment was proper on their

Section 20(a) claim.

The Meeks also contend that Appellees are liable for Smith's

1934 Act violations under common law agency principles, including
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respondeat superior. In order to recover under agency principles,

the Meeks must show that Smith acted within the scope of his

authority as an agent in defrauding them. Paul F. Newton & Co. v.

Texas Commerce Bank, 630 F.2d 1111, 1119 (5th Cir. 1980). Our

review of the record leads us to conclude that the Meeks presented

no evidence that Smith acted within his authority in defrauding the

Meeks. At best, the evidence showed that Smith had the authority

to solicit commodities transaction for Appellees. Appellees,

however, had no connection with Smith's handling of the Meeks'

securities investments; their relationship with him was strictly

limited to commodities trading. Because there was no evidence that

Smith acted within the scope of his authority as Appellee's agent

in defrauding the Meeks, summary judgment was proper on the Meeks'

1934 Act claims.

III.

CONCLUSION

While we sympathize with the Meeks' plight—they were defrauded

out of a large sum of money, and the person who defrauded will

probably be unable to repay them—there is simply no evidence that

Appellees are liable under either the Commodity Exchange Act or the

1934 Act for Smith's fraudulent conduct. Therefore, we AFFIRM the

judgment of the district court.

AFFIRMED.