Opinion ID: 1434350
Heading Depth: 2
Heading Rank: 2

Heading: Distinguishing Privately-Traded Shares from Publicly-Traded Shares

Text: Though Resorts seemingly should be determinative here because Fleet Bank transferred the buyout funds to the shareholders' banks and thus financial institutions were implicated in the transfers, the trustee argues that Resorts should not control our outcome because Resorts International was a publicly-traded company while Plassein only acquired privately-held companies. Moreover, the trustee argues that our opinion in Resorts took too wide a scope in considering the meaning of the phrase the securities trade. The trustee argues that the securities trade refers to the industry dealing in publicly-traded securities... and naturally refers only to the `business of buying and selling' publicly-traded securities. Appellant's Br. at 18 (emphasis in original). Thus, the trustee is arguing that the meaning of settlement payment is limited to payments made for securities in the actual public securities market. In contrast, however, in Resorts we concluded that the meaning of settlement payment is best understood by examining how the term is used by those who work in the public securities market. The trustee argues that Resorts did not consider the arguments he advances here and therefore we are not bound by that case, but we think that Resorts implicitly rejected the trustee's contentions advanced in this case. Certainly Resorts expressly rejected the argument that settlement payments must travel through the settlement system. Though it is true that Resorts International was a publicly-traded company whose shares when traded and the payment for them normally traveled through the settlement system, that circumstance had no bearing on our decision in Resorts. Lowenschuss sold his shares to Resorts International in a transaction outside of the publicly traded securities settlement system. See supra note 1 (describing the settlement system). If in determining what type of transaction constituted a settlement payment we had applied the definition the trustee advances here, we would have found that the shares in Resorts, as they were actually traded in that case, were not part of the industry dealing in publicly-traded securities but we did not do so. Instead, in Resorts we explored the meaning of settlement payment by examining how that term is used by those who work in the securities trade, and recognized that persons who work in the securities trade use the term settlement payment when referring to the payment that completes a leveraged buyout. Cf. QSI Holdings, Inc. v. Alford (In re QSI Holdings, Inc.), 571 F.3d 545, 549-50 (6th Cir.2009) (citing to Resorts and Contemporary Industries and holding that [t]he value of the privately held securities at issue is substantial and there is no reason to think that unwinding that settlement would have any less of an impact on financial markets than publicly traded securities); Contemporary Indus. Corp. v. Frost, 564 F.3d 981, 986 (8th Cir.2009) (citing Resorts and holding that [n]othing in the relevant statutory language suggests Congress intended to exclude these payments from the statutory definition of `settlement payment' simply because the stock at issue was privately held). For these reasons, we reject the trustee's attempt to distinguish Resorts. We will not ignore the plain language in that case which governs the present dispute. If we accepted the trustee's distinction, we would, at a minimum, be calling Resorts into serious question. But in this Court, a panel will not reject the clear holding of a previous panel. See 3rd Cir. Internal Operating P. 9.1; Blair v. Scott Specialty Gases, 283 F.3d 595, 610-11 (3d Cir.2002). [6]