Document: 444 U.S. 11 100 S.Ct. 242 62 L.Ed.2d 146 TRANSAMERICA MORTGAGE ADVISORS, INC. (TAMA), et al., Petitioners,v.Harry LEWIS. No. 77-1645. Argued March 20, 1979. Reargued Oct. 2, Decided Nov. 13, Syllabus Respondent, a shareholder of petitioner Mortgage Trust America (Trust), brought this suit in Federal District Court as derivative action on behalf the and class Trust's shareholders, alleging that several trustees Trust, its investment adviser, two corporations affiliated with latter, had been guilty various frauds breaches fiduciary duty violation Investment Advisers Act 1940 (Act). The complaint sought injunctive relief, rescission advisers contract between restitution fees other considerations paid by an accounting illegal profits, award damages. ruled confers no private right accordingly dismissed complaint. Appeals reversed, holding "implication for relief damages under favor appropriate plaintiffs is necessary to achieve goals Congress enacting legislation." Held: 1. Under § 215 Act, which provides contracts whose formation or performance would violate "shall be void . regards rights of" violator, there exists limited remedy contract. language itself fairly implies specific federal court. When declared certain are void, it intended customary legal incidents voidness follow, including availability injunction against continued operation contract, restitution. Pp. 18-19. 2. Section 206 Act—which makes unlawful any adviser "to employ device, scheme, artifice defraud [or] engage transaction, practice, course business operates fraud deceit upon client prospective client," specified transactions clients without making required disclosures—does not, however, create cause Unlike 215, simply proscribes conduct does not terms alter civil liabilities. In view express provisions sections enforcing duties imposed 206, possible infer existence additional action. And mere fact was designed protect advisers' require implication their behalf. 19-24. 9th Cir., 575 F.2d 237, affirmed part, reversed remanded. John M. Anderson, San Francisco, Cal., Mary Beth Uitti, Sacramento, petitioners. Eric L. Keisman, New York City, respondent. Ralph C. Ferrara, Washington, D. C., Securities Exchange Commission, amicus curiae, special leave Court. Mr. Justice STEWART delivered opinion 1 1940, 15 U.S.C. 80b-1 seq., enacted deal abuses found exist industry. question case whether creates persons aggrieved those who allegedly have violated it. 2 respondent, shareholders. Named defendants were individual trustees, Transamerica Advisors, Inc. TAMA, Land Capital, (Land Capital), Corp. (Transamerica), all petitioners case.1 3 respondent's alleged advising managing duty. set out three causes action, each said arise 1940.2 first advisory TAMA because registered provided grossly excessive compensation. second breached causing purchase securities inferior quality from Capital. third misappropriated profitable opportunities benefit companies Transamerica. restrain further 4 trial court complaint.3 Lewis v. Corp., Id., at 239.4 We granted certiorari consider important presented. 439 952, 99 348, 58 343. 5 nowhere expressly only provision authorizes suits enforce obligations created 209, permits Commission (Commission) bring district enjoin violations rules promulgated it.5 argument made, beneficiaries courts should therefore imply favor. See Cannon University Chicago, 441 677, 689, 1946, 1953, 60 560; Cort Ash, 422 66, 78, 95 2080, 2087, 45 26; J. I. Case Co. Borak, 377 426, 432, 84 1555, 1559, 12 423. 6 statute either implication, basically matter statutory construction. Touche Ross & Redington, 442 560, 568, 2479, 2485, 61 82; supra, U.S., 688, S.Ct., 1953; see National Railroad Passenger Association Passengers, 414 453, 458, 94 690, 693, 38 646 (Amtrak ). While some opinions placed considerable emphasis desirability implying order provide remedies thought effectuate purposes given statute, e. g., what must ultimately determined asserted, our recent decisions made clear. 2485; 1953. accept inquiry resolving issues presented before us. 7 Accordingly, we begin itself. Santa Fe Industries, Green, 430 462, 472, 97 1292, 1300, 51 480; Piper Chris-Craft Inc., 1, 24, 926, 940, 124. It asserted creation can inferred Act. broadly fraudulent practices advisers, disclosures.6 violator knowing successors interest.7 8 apparent and, parties well. As previously recognized, establishes "federal standards" govern 471, n. 11, 1300; Burks Lasker, 481-482, 10, 1831, 1839, 404; SEC Capital Gains Research Bureau, 375 180, 191-192, 275, 282-283, 237. Indeed, Act's legislative history leaves doubt impose enforceable obligations. H.R.Rep.No.2639, 76th Cong., 3d Sess., 28 (1940); S.Rep.No.1775, 21 SEC, Report Trusts Companies (Investment Counsel Advisory Services), H.R.Doc.No.477, 2d 27-30 (1939). But additionally these enforced through litigation different question. 9 On entirely silent—a state affairs surprising when remembered concededly explicitly whatever. 694, 1956. while absence anything indicates intention confer hardly helpful automatically undermine his position. This has held failure inevitably inconsistent intent part make such available. Ibid. Such may appear implicitly structure circumstances enactment. 10 conclude By declaring necessarily contemplates issue criteria litigated somewhere. At very least assumed could raised defensively preclude enforcement consequences typically so limited. A person power ordinarily resort rescinded obtain consideration paid. Deckert Independence 311 282, 289, 229, 233, 85 L.Ed. 189; S. Williston, Contracts, 1525 (3d ed. 1970); Pomeroy, Equity Jurisprudence §§ 881 1092 (4th 1918). recognized comparable provision, 29(b) 1934, 78cc(b), "right rescind" statute. Mills Electric Auto-Lite Co., 396 375, 388, 90 616, 623, 24 593. Moreover, general viewed equitable similar relief. E. Kardon Gypsum 69 F.Supp. 512, 514 (E.D.Pa.1946); Loss, Regulation 1758-1759 (2d 1961). Cf. Blue Chip Stamps Manor Drug Stores, 421 723, 735, 1917, 1925, 44 539. For reasons restitution.8 hold correct ruling respondent maintain seeking contract.9 quite differently, claims monetary 206. conduct, If liability plaintiff found, read into Yet elemental canon construction where particular remedies, chary reading others "When limits thing done mode, includes negative mode." Botany United States, 278 49 129, 132, 73 379. Amtrak, 693; Investor Protection Barbour, 412, 419, 1733, 1738, 263; T. E., 359 464, 79 904, 908, 952. both judicial administrative means compliance First, 217, 80b-17, willful criminal offenses, punishable fine imprisonment, both. Second, 209 actions including, course, Third, authorized 203 sanctions highly improbable "Congress absentmindedly forgot mention action." 742, 1981 (POWELL, J., dissenting). 13 Even settled yield, persuasive evidence contrary intent. 1738; 693. case, circumstantial though be, weighs this. laws preceded here question, Company companion legislation, prescribed circumstances.10 example, misrepresentations contained underwriter's registration statement 11(a) 1933, materially misleading statements 18(a) 1934. "Obviously, then, wished remedy, knew how do did expressly." 572, 2487; 734, 1924; T.I.M.E., 908. analogous legislation strongly suggests unwilling potential suitor. Abrahamson Fleschner, 568 862, 883 (CA 1977) (Gurfein, concurring 14 omission substantive paralleled jurisdictional section, 214.11 Early drafts bill incorporated reference Public Utility Holding 1935, gave jurisdiction "of equity law by" (emphasis added). 3580, 40(a), (introduced Sen. Wagner, Mar. 14, 1940); H.R. 8935, Rep. Lea, 1940). After hearings Senate, representatives industry staff met discuss bill, changes made. 214 appeared compromise version bill. Confidential Committee Print, 213 (1940). That version, finally law, 4108, (1940), omitted references "actions law" "liability."12 unexplained deletion single phrase is, determinative exists. one more piece intend authorize beyond relief.13 Relying factors identified 26, argue cannot stop Congress, but utility traditionally relegated law. rejected same contentions last Term argued standing alone justified 17(a) case: 16 "It true forth four considered 'relevant' determining implicit providing one. decide entitled equal weight. central remains create, discussed —the focus history, purpose, 2088—are ones relied intent." 575-576, 2489. 17 neither members identifiable class, nor proscribed unlawful. 576, evident involved victims prohibited. 578, 2490; 690-693, 1954-1955; 421, 1738. dispositive remedy. Having answered negative, end. 18 stated opinion, equitable.14 judgment remanded proceedings consistent opinion. 19 ordered. 20 POWELL, concurring. I join Court's compatible my dissent 730, 1974, 560 (1979). Ante, 19-21. 22 WHITE, whom BRENNAN, MARSHALL, STEVENS join, dissenting. 23 today holds (Act) advisors contracts. reaching decision, departs established principles governing confusing available unavailable rejects conclusion every States 862 (CA2 1977); Wilson First Houston 566 1235 (CA5 1978); 237 (CA9 1978). decision reconciled recognizing implied substantially Act.1 resurrecting distinctions reaches result that, agree, anomalous. * long authorization. Texas Pacific R. Rigsby, 241 33, 36 482, 874 (1916); Tunstall Locomotive Firemen Enginemen, 323 210, 65 235, 89 187 (1944).2 preferred approach outlined 26 (1975). Four relevant;3 although subsequent, indicated "is solely action," 82 (1979), "the discerned." Davis Passman, 228, 241, 2264, 2275, 846 Proper application clearly 80b-6, II 25 assert threshold member." instant Respondent retained injured corporation. Thus advisers. concedes "intended advisers," 246, recognized. (1963); 480 (1977).4 Because member benefit, i. e., prong test satisfied case. III 27 negate claimed noted Cannon: "[T]he deny will equally silent ambiguous Therefore, situations present 'in clear rights, show explicit purpose controlling.' Cort, [95 2089, 2090] original)." 29 find foreclose actions. evinces actions.5 215(b) void." recognizes, Similar 80a-46(b), 79z(b), reflecting redress Acts. Brown Bullock, 194 207, 225-228 (SDNY), aff'd, 294 415 1961); (ED Pa.1946); Fischman Raytheon Mfg. 188 783, 787, 1951); 539 (1975); Goldstein Groesbeck, 142 422, 426-427 1944). 30 ignores relationship Like "creates own force effect; imposes liabilities." 577, 2490. merely specifies consequence prohibitions practical necessity contemplated use also powers exclusive Act.6 31 litigants restricted confuses nature Last 239, 2274, [of] litigant 'cause action' analytically distinct prior if any, receive." Once wide discretion fashioning Sullivan Little Hunting Park, 400, 405, 386 (1969) ("The remedies"). Bell Hood, 327 678, 684, 66 773, 777, 930 (1946), "where invaded, sue invasion, good wrong done." Thus, indication exercising whatever congressional purpose. 423 (1964); 424, 1740, 263 cf. 39, 484. cited support voidance indicate need Shares 287-288, 232-233, 189 593 (1970) ("Monetary will, possibility"); ("[S]uch include money damages"). Porter Warner 328 395, 399, 1086, 1090, 1332 "where, here, properly invoked purposes, relevant matters dispute complete even decree might conferred law." 32 concludes words reflect [the Act]" 80b-14. Although Acts granting federal-court over law," significance Delphic best. previous draft became why replaced 214.7 House 208-221 "contain Act]." Second Circuit concluded F.2d, 875: "There shred assertion intentionally 'actions law' investors." 1242. recognizes plausible explanation unlike Acts, authorizing 874; Bolger Laventhol, Krekstein, Horwath Horwath, 381 260, 264-265 (SDNY 1974). But, cases indicate, silence automatic bar actions.8 33 fundamental problem attempts discern jurisdictional, rather than substantive, "[i]t Since source "in Act] they seek enforce, provision," ibid., 214's refer subject-matter unquestioned, regardless interpreted, "arising under" clause 1331. 880, Where denied independent creating rights.9 IV 34 portion standard requires compatibility scheme.10 frustration "when accomplishment decidedly receptive statute." 703, 1961. 35 reviewed extensively (1963). meticulous review convinced prevent advisers." 195, 284. construed like 'enacted avoiding frauds,' technically restrictively, flexibly remedial purposes." (footnote omitted). Implication unquestionably goal preventing essential achievement. empowers take offending engaging future violations, damages, victimized little hope obtaining injuries. Cannon, assure benefits able activate participate process 707, 1963 41. candidly admits tremendous growth industry, magnitude exceeds Commission's examination capabilities.12 maintains supplement activity. position seems unassailable. 1559; 706-708, 1962-1963. V 37 final analysis subject inappropriate activities traditional concern. During Senate preceding enactment informed six regulate Hearings 3580 Subcommittee Banking Currency, 996-1017 Most statutes subsequently patterned after legislation. Note, Private Causes Action 74 Mich.L.Rev. 308, 324 undoubtedly actionable common-law fraud, establish standards 1300 11; 283. applied "as statutes, [the] obviated." 479, 1837, 6, 404, VI 39 Each points toward defrauded scheme area Hereinafter petitioners" refers Trust. real estate trust within meaning 856-858 Internal Revenue Code 1954, 856-858. addition managed day-to-day operations. sponsor parent subsidiary, sold initial portfolio investments. Several time Transamerica, subsidiaries shareholder's claim restated claim. pertinent orders unreported. suit. recharacterized dismissing based granted, Fed.Rule Civ.Proc. 12(b)(6), noting apparently federal-question followed Courts Fifth Circuits, maintained 1977). 54 Stat. 854, amended, 80b-9, follows: "(e) Whenever shall engaged, about act practice constituting subchapter, rule, regulation, hereunder, aided, abetted, counseled, commanded, induced, procured, aiding, abetting, counseling, commanding, inducing, procuring, aid, abet, counsel, command, induce, procure violation, proper Territory place acts subchapter hereunder. Upon showing procuring permanent temporary restraining bond. transmit concerning thereunder, Attorney General, who, discretion, institute subchapter." 209(e) "aiding, procuring" added 1960. 887. 852, reads "§ 80b-6. Prohibited mails instrumentality interstate commerce, directly indirectly— "(1) client; "(2) "(3) acting principal account, knowingly sell security client, broker effect sale account disclosing writing completion transaction capacity he consent transaction. paragraph apply customer dealer relation transaction; "(4) act, fraudulent, deceptive, manipulative. shall, (4) regulations define, prescribe reasonably prevent, acts, practices, courses manipulative." 206(4) extended register 80b-3. 856, 80b-15, 80b-15. Validity "(b) Every heretofore hereafter involves of, continuance (1) order, engaged (2) being party acquired thereunder actual knowledge facts reason provision." One possibility, decline adopt anomalous remit courts. Jurisdiction 214, 80b-14, which, referring "suits violation," sustain simple declaratory sought. 12, 77k 77l ; 9(e), 16(b), 18, 78i(e), 78p(b), 78r; 16(a) 17(b), 79p(a) 79q(b); Indenture 1939, 323(a), 77www(a); 30(f), 80a-29(f). provides: offenses "The rules, regulations, concurrently State Territorial courts, thereunder. Any proceeding wherein occurred. defendant inhabitant transacts business, served wherever found. Judgments decrees rendered 1254, 1291 1292 title 28, section 7, 'An appeals Columbia', approved February 9, 1893. No costs assessed court." argues relevance often 1331, remedies. probably narrowed generally amended 1970 narrowly circumscribed companies. Dec. 1970, 1428, 80a-35(b). subsequent disclose nothing earlier laws, Bureau 199-200, 286-287, amendments another so. 1975, submitted proposal extend jurisdiction, regard amount controversy, 2849, 94th (1976). amendment confirm provisions. 2849 Banking, Housing, Urban Affairs, (1976); 12981 13737 Consumer Finance Interstate Foreign Commerce, 36-37 reported favorably proposed come vote House. awarded, rescinding less value party. A. Corbin, Contracts 1114 (1964). Restitution compensation diminution party's resulted adviser's inaction. indirection equivalent confer. 10(b) 78j(b), Rule 10b-5, CFR 240.10b-5 recovered. Superintendent Insurance Bankers Life Cas. 404 92 165, 169, 128 (1971); 1922, 80b-15(b), 78cc(b). Rigsby marked There novel infrequent feature common 39-40, 484-485 (citing Couch Steel, El. Bl. 402, 411, 118 Eng.Rep. 1193, 1196 (Q.B.1854)). "First, 'one especial enacted,' (1916) supplied)—that plaintiff? intent, implicit, one? See, Ass'n 460, (1974) underlying supra; 423, Calhoon Harvey, 379 134, 292, 190 finally, concern law? Wheeldin Wheeler, 373 647, 652, 83 1441, 605 434, Bivens Six Unknown Narcotics Agents, 403 394-395, 91 1999, 619 2006 (Harlan judgment)." 2087-2088. client"; (3) "a client" "for written disclosures "obtaining transaction." Statements Reports accompanied original reinforce investors Also, "entirely silent" action; conclusion. proceedings, oft-criticized maxim expressio unius est exclusio alterius rejection 82-83, 2089-2090, proposition exclusive. virtually identical embodied 874, Petitioners' suggestion change product pressure odds history. Industry objections focused unrelated 10065 Congressional light Congress' reliance determine 718, 1968 (REHNQUIST, concurring). admonitions legislate greater specificity future, ibid. concurring) id., 749, 1985 dissenting); 579, 2490-2491, faulted failing anticipate 1940. enacted, amend likewise offers none. 1960 expanded scope strengthened authority SEC. These addressed private-right-of-action passed. reviewing occasion: culled events surrounding passage '[O]pinions attributed twenty years event 1940.' " 287, admonition applies respect new "it odd newly [a regarding long-existing 83, 2090. accompanying affect elsewhere. H.R.Rep.No.91-1382, p. (1970); S.Rep.No.91-184, (1969). during 1976 1977 sessions add enforcement. proposal, Committee, S.Rep.No.94-910 (1976), 238, enact always reliable guide Red Lion Broadcasting FCC, 395 367, 382, 1794, 1802, 371 (1969); Fogarty 340 8, 13-14, 71 5, (1950). totally inadequate when, deemed unnecessary, adequacy existing fourth prongs ground ignored supra. However, unnecessary portions satisfied. contrast, 80b-9(e) (authorizing Act); 203(e), 80b-3(e) (empowering revoke advisers). December 31, 1978, total 5,385 estimates fiscal year ending October 30, 1980, $200 billion assets advisement Brief Amicus Curiae 32-33. 1977, 459 inspections 43 Ann.Rep. 234 (1977). many agency unable investigate meritorious complaints, few investigations uncover victims, included 41, 1962,

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