Court Opinion

ID: 9468597
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:18:42.754273+00
Date Added: 2024-06-11T17:40:56.845481
License: Public Domain

DUMBAULD, Senior District Judge,
concurring and dissenting:
I am not certain that the deceptive practice engaged in by defendant and his confederates was a fraud “in connection with the purchase or sale of any security” and hence violative of Section 10(b) of the Securities Exchange Act of 1934 (48 Stat. 891, 15 U.S.C. § 78j). Chiarella v. United States, 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980) and Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975) seem to evince a trend to confine the scope of § 10(b) to practices harmful to participants in actual purchase-sale transactions.
The culprits in the case at bar (as in Chiareila) owed no duty to the sellers of the target company securities which they purchased. Though they deceptively and improperly violated a fiduciary duty to their employers and customers of their employers, those parties had not at that time actually purchased or sold any target company securities. All that can be said is, as Mr. Justice Stevens judiciously observes, that respectable arguments could be made in support of either position (445 U.S. at 238, 100 S.Ct. at 1120).
Hence I prefer to rest my concurrence in the reversal of the District Court’s exculpation of defendant from trial for his reprehensible activities upon the more solid *21ground that he has clearly violated the Mail Fraud statute, 18 U.S.C. § 1341. As required by that provision, defendant is a person who “having devised ... a scheme ... to defraud,” for the purpose of “executing such scheme” makes use of the mails.
In view of the sophisticated mechanisms employed for concealment of defendant’s activities by use of foreign bank accounts, distribution of purchase orders, and utilization of confederates abroad, it is plain that the fraudulent scheme contemplated use of the mails as an integral feature of its operation and an essential incident to its successful consummation. Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 362-363, 98 L.Ed. 435 (1954). That defendant’s scheme was one to defraud is explicitly demonstrated by United States v. Von Barta, 635 F.2d 999, 1006-1007 (2d Cir.1980).
Accordingly, I concur in reversal of the order of the district court.