Here, the parties agree that Oppenheimer acted as a clearing agent - a broker carrying a
nondiscretionary account. The duty of care owed by such an agent is an exceedingly narrow one.
At most, the duty consists of properly carrying out the transactions ordered by the customer. See
First American Discount Corp. v. Jacobs, 324 Ill. App. 3d 997, 1012 (2001); Commodity Futures
Trading Comm'n v. Heritage Capital Advisory Serv., 823 F.2d 171, 173 (7th Cir. 1987)
(Commodity).

Finnochio alleges that Oppenheimer breached this narrow duty by failing to follow the
wire transfer instructions and insuring that the funds were credited to the account as instructed.
However, Finnochio’s Amended Complaint does not allege that he instructed Oppenheimer to
wire transfer funds and place them in a particular account. Instead, he alleges that he instructed
the Bank of New York to credit his Oppenheimer account and identified the account into which
he wished the funds to be placed. There are no allegations that Finnochio instructed
Oppenheimer to carry out any function and that Oppenheimer failed to properly carry out
Finnochio’s instructions. Furthermore, the Request to Transfer Funds attached to the Complaint
indicates only account No. 62810762. Therefore, there is no allegation of a breach of a fiduciary
duty and the count must be dismissed.

Based on the above, Oppenheimer’s Motion to Dismiss Count IV of the Amended
Complaint is granted. Count IV is dismissed without prejudice.

Motion to Dismiss Count V

Count V alleges that Johnson’s conduct, as an employee and agent of Trautman,

constituted securities fraud in violation of 15 U.S.C. § 78j(b) and Rule 10-(b)(S) promulgated

thereunder. Trautman seeks dismissal of Count V on the grounds that the count is barred by the


Cir. 1991). Count IV further alleges that Oppenheimer failed to use due diligence to verify the
authenticity of the Request to Transfer Funds and in not conducting an audit to reveal that the
funds had been deposited to an authorized account. Oppenheimer had a fiduciary duty to verify
the authenticity of the wire transfer and had a duty to find the missing funds and deposit them in
the correct account once an inquiry into the funds was made. As a result of Oppenheimer’s
failure to exercise its fiduciary duty, Finnochio sustained damages of $200,000.

Oppenheimer seeks the dismissal of Count IV, arguing that it fails to state a claim upon
which relief can be granted.

In reviewing a motion to dismiss, the court reviews all facts alleged in the complaint and
any inferences reasonably drawn therefrom in the light most favorable to the plaintiff. See
Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000). Dismissal is
warranted only if the plaintiff can prove no set of facts in support of its claims that would entitle
it to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957). However, even under these liberal
pleading requirements, a plaintiff must allege more than bold assertions. A complaint must
include at least the operative facts upon which the plaintiff bases his or her claims. Lucien v.
Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992).

To state a claim for breach of fiduciary duty, a plaintiff must allege that a fiduciary duty
exists, that the fiduciary duty was breached, and that the breach proximately caused plaintiff's
injury. Neade v. Portes, 193 Ill. 2d 433, 444 (2000). “The general rule ... is that a broker is not
the fiduciary of his customer unless the customer entrusts him to select the customer’s
investments.” See In re Mexico Money Transfer Litig., 164 F.Supp. 2d 1002, 1016 (N.D. Ill.

2000).


applicable statute of limitations. Finnochio did not file a response in opposition to Trautman’s
motion.

Claims asserting violations of securities fraud under Section 10(b) of the Securities and
Exchange Act must be brought within one year of the discovery of the facts constituting the
violation and within three years after such violation. See Lampf, Pleva, Lipkind, Prupis &
Petigrow v. Gilbertson, 501 U.S. 350, 364.

Here, Finnochio alleges that the act of securities fraud occurred in April 1997, when his
monies were diverted. He further alleges that he did not become aware of the diversion in funds
until January 2000. However, Finnochio did not file suit until August 2, 2002, more than one
year after he discovered the facts constituting the violation and more than three years after the
alleged violation. Therefore, his securities fraud claim is barred by the statute of limitations; and
Count V is dismissed with prejudice.

For the reasons set forth above, Oppenheimer’s Motion to Dismiss Count IV of the
Amended Complaint and Trautman’s Motion to Dismiss Count V of the Amended Complaint are

granted. Count IV is dismissed without prejudice. Count V is dismissed ye prejudice.

a 200e Ns Vv

J OUN yh . DARRAH
United States District Judge



“e Minute Order orm (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge John W. Darrah Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 01 C5939 DATE 6/13/2002
CASE ANTHONY R. FINOCCHIO vs. ERIC JOHNSON
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(1) Oo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) o Answer brief to motion due . Reply to answer brief due. .
(4) Oo Ruling/Hearing on set for at
(5) Qo Status hearing[held/continued to] [set for/re-set for] on set for at
(6) im} Pretrial conference[held/continued to] [set for/re-set for] on setfor at.
(2) Oo Trial{set for/re-set for] on at
(8) im [Bench/Jury trial] [Hearing] held/continued to at
(9) ao This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
CUFRCP4(m) (General Rule21 OFRCP41(a)(1) O FRCP41(a)(2).
do) «Mf [Other docket entry] Status hearing held and continued to August 13, 2002 at 9:00 a.m. Enter
Memorandum Opinion And Order. Oppenheimer’s motion to dismiss Count IV of the amended
complaint and Trautman’s motion to dismiss Count V of the amended complaint are granted. Count IV
is dismissed without prejudice. Count V is dismissed with prejudice. Trautman’s answer to remaining
counts to be filed on or before July 11, 2002.
(il) & [For further detail see order (on reverse side of/attached to) the original minute order.]
No notices required, advised in open court.
No notices required. umber of notices
Notices mailed by judge's staff. ‘el 4 7002
Notified counsel by telephone. SUN ected
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UNITED STATES DISTRICT COURT ol

NORTHERN DISTRICT OF ILLINOIS ne
EASTERN DIVISION we Tai)
ANTHONY R. FINOCCHIO, sunt at
Plaintiff,
No. 01 C5939
Vv.
Judge John W. Darrah

ERIC JOHNSON; OPPENHEIMER & CO., a

New York corporation; TRAUTMAN
WASSERMAN & CO., a New York corporation;
TRAUTMAN KRAMER & CO., a New York
corporation; and PHYTOTECH, INC., a New Jersey
corporation,

Defendants.

wee SSS Se Se SS SS SY

MEMORANDUM OPINION AND ORDER

Plaintiff, Anthony Finocchio (“Finocchio”), brought a multi-count complaint against
Defendants, alleging violations of the Securities Exchange Act of 1934, 15 U.S.C. § 78j and
breaches of fiduciary duty. Presently before the Court are Oppenheimer & Co.’s
(“Oppenheimer”) Motion to Dismiss Count IV of the Amended Complaint and Trautman
Wasserman & Co./Trautman Kramer & Co.’s (“Trautman”) Motion to Dismiss Count V of the
Amended Complaint.

The allegations in those counts of Plaintiff's Amended Complaint support the following
summary of the purported relevant conduct of Oppenheimer and Trautman.

In early April 1997, Finocchio instructed CIB Bank of Hillside, in writing, to wire the
sum of $200,000 from his bank account at CIB Bank of Hillside to the Bank of New York for

deposit into account No. 8540904104, with additional instructions to credit the funds to Anthony


Finocchio in account No. 62811336. That same month, Finocchio instructed the Bank of New
York to credit the $200,000 to his Oppenheimer account No. 62811336. In April 1997,
Finocchio received confirmation from the CIB Bank of Hillside showing that $200,000 had been
transferred from his account at CIB Bank of Hillside to the Bank of New York. Finocchio did
not receive confirmation indicating that there was a proper transfer from the Bank of New York
to Oppenheimer account No. 62811336. At some point, Johnson, the Executive Vice President
of the Investment Banking Division of Trautman, interfered with the transfer of funds, diverting
Finocchio’s funds to an account other than Oppenheimer account No. 62811336.

In January 2000, Finnochio learned that the $200,000 was never credited to his account
No. 62811336 per his instruction to Bank of New York. Instead, the funds were transferred to
account No. 622810762, an account held by Finnochio’s son and daughter-in-law.

Finnochio alleges that he did not authorize a transfer of funds to account No. 622810762
and that Johnson took the money but did not invest the money; instead, Johnson spent the money.
Motion to Dismiss Count IV

Paragraph 15 of Count IV of Finocchio’s Amended Complaint alleges that Oppenheimer
transferred funds from account No. 62811336 into account No. 62810762 without authorization
or direction. In support of this allegation, Finocchio attached a copy of the Request to Receive
Funds to the Amended Complaint as Exhibit C. The Request to Receive Funds (Exhibit C)
contradicts Finocchio’s allegation as account No, 62810762 is the only account number
referenced on the document. Where an exhibit attached to a complaint contradicts or negates a
complaint’s allegations, the exhibit, fairly construed, controls in ruling on a Rule 12(b)(6) motion

to dismiss. See Graue Mill Dey. Corp. v. Colonial Bank & Trust Co., 927 F.2d 988, 991 (7th