Court Opinion

ID: 9467382
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:47:33.236353+00
Date Added: 2024-06-11T17:40:19.202318
License: Public Domain

OPINION OF THE COURT
GIBBONS, Circuit Judge.
Samuel and Alice Weaver appeal from an order granting summary judgment in favor *159of Marine Bank (Bank) on their complaint seeking equitable relief against or damages from the Bank. The complaint asserts federal question jurisdiction, alleging that the Bank violated section 10(b) of the Securities Exchange Act of 1934 (1934 Act), 48 Stat. 891, .15 U.S.C. § 78j(b).1 It also pleads pendent claims for violation of the Pennsylvania Securities Act, Pa.Stat.Ann. tit. 70, § 1-101 et seq. (Purdon Supp. 1980), and for common law fraud. The district court granted summary judgment on the federal law claim and declined to exercise pendent jurisdiction over the state law claims. We reverse.
I.

Facts and Proceedings in the District Court

Many of the facts are undisputed. Marine Bank, beginning sometime in 1976, made three loans to Columbus Packing Company, an unincorporated business owned by Raymond J. and Barbara J. Piccirillo. Columbus Packing operated a wholesale slaughterhouse and a retail meat market in Corry, Pennsylvania. The loans were secured by perfected security interests in equipment, inventory and accounts receivable, liens on several motor vehicles, and second mortgages on two pieces of real estate. Early in 1978 Robert Santom, newly appointed manager of the Corry branch of Marine Bank, designated the Columbus Packing loans as concerned loans because he did not believe the proprietorship had adequate cash flow and because there was no set repayment program. Besides the outstanding loans, Columbus Packing also had a substantial overdraft position with the Bank. Santom told Mr. Piccirillo that the bank would take possession of its collateral and sell it unless Piccirillo either found a buyer, sold his business and paid the bank, closed the business and sold its assets to pay the bank, or secured additional capital.
On March 17,1978, a new loan agreement was executed, whereby the Bank loaned Columbus Packing $65,000 on a demand note signed by the Piccirillos, secured as before, by security agreements covering equipment, inventory and accounts receivable, liens on motor vehicles, and liens on the same two pieces of real estate. Simultaneously Mr. and Mrs. Weaver, who were farmers engaged in auctioning livestock, signed an agreement of guaranty which guaranteed payment of the Piccirillos’ debt to a maximum of $50,000. To secure this guaranty, the Weavers pledged to the bank a $50,000 certificate of deposit issued by the Marine Bank to them, payable in six years, and bearing interest at six percent. To purchase this certificate of deposit from Marine Bank’s Corry branch, the Weavers withdrew $50,000 from another bank. Aged 79 and 71 respectively, they had no formal education beyond the eighth grade, and had spent their lives as cattle farmers.
Prior to the closing on the loan, guaranty, and pledge, the Piccirillos and the Weavers entered into a written agreement providing that the Weavers were to receive fifty percent of the “adjusted net profits” of Columbus Packing and the sum of $100 a month.
The proceeds of the $65,000 loan were forthwith disbursed to repay loans and overdraft obligations to the Bank approximating $42,800, to pay past due federal taxes, and to pay past due obligations to trade creditors. That left approximately $3800 for working capital. Four months later, Columbus Packing filed a bankruptcy petition. The Bank’s security in property of Columbus Packing or of the Piccirillos is inadequate, and it intends to resort, for the deficiency, to the pledged certificate of deposit.
Turning to the disputed facts, the Bank contends that prior to the closing on the loan and guaranty it disclosed to the Weavers all the Columbus Packing debts of which it had knowledge, that at that time it believed its loans were fully collateralized by the Columbus Packing and Piccirillo properties, and that it had no knowledge whatsoever of the agreement between the *160Piccirillos and the Weavers. From the pleadings, affidavits, and depositions on file, however, a fact finder could find that at a time the Bank was aware of Columbus Packing’s desperate financial condition, and doubtful about the adequacy of its collateral position, employees of the Bank approached the Weavers and urged them to make an investment in Columbus Packing for the purpose of providing working capital. The Weavers then had no knowledge of or interest in investing in a slaughterhouse business. Further, it could be found that the Weavers initially declined Marine Bank’s suggestion that they make such an investment, but were persuaded to pledge their certificate of deposit in exchange for a $65,000 loan to Columbus Packing on the representation that substantially all of the loan would be available to that business for working capital, and on the representation that the existing collateral adequately protected both their interest and the Bank’s.
The district court did not conclude that the conduct of the Bank’s agents which a fact finder might find, if it occurred “in connection with” the sale or purchase of a security, would not be a violation of Rule 10(b)(5). The court appears to have assumed, without deciding, that liability might be predicated upon a conclusion that as an insider, having access to information not available to the public, the Bank had a duty to disclose material adverse information, or that even if the Bank were not treated as an insider it might be found to be an aider and abettor in a fraud committed by the Piccirillos. See, e. g., SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 848 (2d Cir. 1968), cert. denied, 404 U.S. 1005, 92 S.Ct. 561, 30 L.Ed.2d 558 (1971) (an insider is one who has access, directly or indirectly, to information intended to be available only for a corporate purpose and not for the benefit of anyone); Monsen v. Consolidated Dressed Beef, 579 F.2d 793, 799 (3d Cir.), cert. denied sub nom. First Pennsylvania Bank N.A. v. Monsen, 439 U.S. 930, 99 S.Ct. 318, 58 L.Ed.2d 323 (1978) (plaintiffs have the burden of establishing that there has been a wrongful act, and that the alleged aider and abettor knew of and substantially assisted in the wrongdoing); Landy v. FDIC, 486 F.2d 139, 162-63 (3d Cir. 1973), cert. denied, 416 U.S. 960, 94 S.Ct. 1979, 40 L.Ed.2d 312 (1974) (an aider and abettor is liable if an independent wrong exists, he knew of the wrong, and substantial assistance was given in effecting it). Rather, the court concluded that if a wrong occurred, on the undisputed facts as a matter of law it did not take place “in connection with the purchase or sale of any security.” 15 U.S.C. § 78j(b).
The Weavers urge that a fact finder could hold that the Bank’s manipulative and deceptive conduct fell within the proscription in section 10(b) because it was in connection with the purchase of a security from the Piccirillos, and also in connection with the sale of a security to the Bank. If they are right on either contention, summary judgment should not have been granted in favor of the defendant. We address those questions separately, starting with the definition of security in the Securities and Exchange Act of 1934 quoted in the margin.2
*161II.

The Piccirillo Transaction

A fact finder certainly could on the record before us find that the Bank’s manipulative and deceptive conduct, if it took place, was in connection with the execution and delivery of an agreement between the Piccirillos and the Weavers by which, in consideration of their pledge of a $50,000 certificate of deposit to enable Columbus Packing to obtain a working capital loan, they were given a fifty percent interest in the anticipated profits of the Piccirillos’ slaughterhouse. Nor is there any question but that the transaction between the Piccirillos and the Weavers would qualify as a sale. The narrower question is whether whatever interest was sold by the Piccirillos falls within one of the categories of securities set forth in section 3(a)(10). It is a settled rule of construction of that definitional section that the categories are not mutually exclusive. “Instruments may be included within any of [the Act’s] definitions, as a matter of law, if on their face they answer to the name or description.” Tcherepnin v. Knight, 389 U.S. 332, 339, 88 S.Ct. 548, 555, 19 L.Ed.2d 564 (1967), quoting SEC v. C. M. Joiner Leasing Corp., 320 U.S. 344, 351, 64 S.Ct. 120, 124-125, 88 L.Ed. 88 (1943). More specifically, an interest can be both a certificate of interest or participation in any profit-sharing agreement, and an investment contract. Tcherepnin v. Knight, 389 U.S. at 339, 88 S.Ct. at 555. We hold that the agreement whereby the Piccirillos and the Weavers each would receive fifty percent of the profits of Columbus Packing could be found by a trier of fact to be either or both.
The classic example of a certificate of interest or participation in a profit-sharing arrangement cited by Professor Loss is a contract whereby the buyer furnishes funds and the seller the skill for speculating in the stock or commodities markets under an arrangement to split any profits. 1 Loss, Securities Regulation 489 (2d ed. 1961). Aside from the brief reference to it in Tcherepnin, this clause has not often been considered by the Supreme Court. Cf. International Brotherhood of Teamsters v. Daniel, 439 U.S. 551, 558 n.11, 99 S.Ct. 790, 796, 58 L.Ed.2d 808 (1979). There are, however, ample applications elsewhere of that clause to arrangements which are quite closely analogous to that before us. See, e. g., SEC v. Addison, 194 F.Supp. 709, 721-22 (N.D.Tex.1961) (written agreements in connection with loans to the effect that defendants would cause contracts to be executed conveying to lenders a percentage interest in profits from defendants’ mining operations); William Tell Productions, Inc., Sec. Act Rel. 3852 (1957), 3-4 (fractional interest in a percentage of gross revenues to be realized from an exclusive production of a copyrighted television production). No reason occurs to us why a sale of an interest in the future profits of a slaughterhouse ought to be treated differently. In the cited interest or participation in a profit-sharing agreement cases the interest was offered to more persons than a husband and wife. The nature and size of the offering, however, bears only on whether the interest sold is exempt from registration under the Securities Act of 1933, not on whether the interest is a security. Section 10(b) of the 1934 Act covers both registered and unregistered securities. The Columbus Packing interest is evidenced by a writing calling for a participation in its future profits derived as a result of the Piccirillos’ management of the slaughterhouse. A jury could find that it was a certificate of interest or a participation in a profit-sharing agreement.3
In contrast with the profit-sharing agreement clause, the investment contract clause has received a fairly extensive exegesis in the Supreme Court. In the leading case of *162SEC v. W. J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946), contracts for the sale of units of land in a citrus grove development, coupled with contracts with the promoter for cultivating, harvesting, and marketing the crop were found to be investment contracts. The crop from the entire grove was to be sold, and the net proceeds distributed to the separate land owner in the proportion that the land of each produced the crop. If there is a difference between a profit-sharing agreement and an investment contract, probably it is in the fact that the latter includes transactions such as that in Howey, in which the purchaser did not share the profits on his investment with others, but kept the net proceeds himself. The court capsulized the test for distinguishing an investment contract from a mere commercial or consumer transaction as “whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.” 328 U.S. at 301, 66 S.Ct. at 1104. In subsequent cases the Court has adhered to this test,4 although recently the justices have differed as to its application to a specific set of facts. In United Housing Foundation, Inc. v. Forman, 421 U.S. 837, 95 S.Ct. 2051, 44 L.Ed.2d 62 (1975), a majority of the Court held that an investment in a cooperative housing project was not a security. Justice Powell, writing for the Court, quoted the Howey test and further stated:
The touchstone is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others. By profits, the Court has meant either capital appreciation resulting from the development of the initial investment, as in Joiner, supra (sale of oil leases conditioned on promoters’ agreement to drill exploratory well), or a participation in earnings resulting from the use of investors’ funds, as in Tcherepnin v. Knight, supra (dividends on the investment based on savings and loan association’s profits). In such cases the investor is “attracted solely by the prospects of a return” on his investment. Howey, supra, [328 U.S.] at 300 [66 S.Ct. at 1103-1104]. By contrast, when a purchaser is motivated by a desire to use or consume the item purchased — “to occupy the land or to develop it themselves,” as the Howey Court put it, ibid. —the securities laws do not apply.
421 U.S. at 852-53, 95 S.Ct. at 2060-2061 (footnote omitted). Here there is no evidence whatsoever in the record that the Weavers wanted to use or develop the Columbus. Packing slaughterhouse themselves. It does not appear that they were issuing their obligations to purchase a business they intended to manage.5 A fact finder could determine that the Weavers made a $50,000 investment motivated primarily by a desire to earn fifty percent of the profits earned by the use of those funds as working capital in a business run by the Piccirillos.
In rejecting the foregoing analysis the dissenting opinion relies on the fact that the Weavers were to obtain use of the Piccirillos’ barn and pasture. If a fact finder were to determine that use of the barn and pasture was a primary rather than an incidental purpose of the transaction, it might well decide in favor of Marine Bank. But unlike the dissent we decline to hold that this record compelled that determination as a matter of law.
Since a fact finder could have found that the Bank engaged in manipulative or deceptive acts or practices in connection with the purchase by the Weavers of a contract for a fifty percent share in the profits of Columbus Packing, and could *163have found that that contract was a certificate of interest or participation in a profit-sharing agreement, or an investment contract, or both, the entry of summary judgment against the Weavers was improper. That conclusion requires a reversal. Because we are remanding for trial it is also appropriate to address the additional question whether the pledge of a certificate of deposit was a sale of a security.
III.

The Certificate of Deposit

Certainly if the manipulative and deceptive acts or practices alleged by the Weavers actually occurred, it was in connection with the pledge of the certificate of deposit. Thus those acts or practices are actionable under section 10(b) unless the pledge arrangement was not a sale, or the certificate of deposit is not a security.
Under the 1934 Act the term purchase includes any contract to buy, purchase, or otherwise dispose of, and the term sale includes any contract to sell or otherwise dispose of. 15 U.S.C. § 78c(a)(13), (14). On March 17, 1978, the Weavers executed an assignment reading in part:
For value received and intending to be legally bound, the undersigned does hereby sell, assign, transfer and set over unto Marine National Bank (hereinafter called “Bank”) all the undersigned’s right, title and interest in and to a certain deposit account in the undersigned’s name in bank described as follows:
Marine Bank Certificate of Deposit # 38240 $50,000.00 due February 1984 together with all monies due and to become due thereon, both principal and interest, as security for the payment of a loan in the amount of $50,000.00....
Payment in full of said note shall render this assignment void; otherwise the same shall be and remain in full force and effect.
We have little doubt that if the Weavers had delivered a forged instrument the Bank would contend vigorously that it had made a purchase within the meaning of the 1934 Act, and that the Weavers ought to be prosecuted by the federal government. There is no reason for treating the Weavers’ pledge of a valid instrument differently. Thus we agree with those cases in the Second Circuit which have consistently held that a pledge is a sale. Mallis v. Federal Deposit Ins. Corp., 568 F.2d 824, 829-30 (2d Cir. 1977), cert. dismissed sub nom. Banker’s Trust Co. v. Mallis, 435 U.S. 381, 98 S.Ct. 1117, 55 L.Ed.2d 357 (1978) (pledge is a contract to sell or otherwise dispose of); United States v. Gentile, 530 F.2d 461, 466-67 (2d Cir.), cert. denied, 426 U.S. 936, 96 S.Ct. 2651, 49 L.Ed.2d 388 (1976) (pledge is a sale). See also Mansbach v. Prescott, Ball & Turben, 598 F.2d 1017, 1028-30 (6th Cir. 1979). There are contrary expressions in other courts.6 We do not find them persuasive, if for no other reason than that there is no reason to presume that Congress intended to exclude lending institutions extending credit on the security of pledged collateral from the protection of section 10(b). If a pledge is a purchase for the purpose of protecting a lender it is equally a sale for purposes of protecting the pledgor. Moreover, most of the» courts which have intimated that the pledge transaction is not a sale have conceded that its foreclo*164sure is.7 In this case since the Bank is the issuer of the certificate of deposit, foreclosure, if it is permitted, will take the form of a mere refusal to honor the certificate of deposit, and the setting off of the liability against the Columbus Packing debts. We conclude that on this record a fact finder could hold that a sale of the Weavers’ certificate of deposit occurred.
That leaves the question whether the certificate of deposit was itself a security. We note at the outset that it was issued by Marine Bank. That fact is significant only for purposes of section 3(a)(2) of the Securities Act of 1933, which exempts from its registration requirements securities issued by banks whose issues are regulated by federal or state banking officials. 15 U.S.C. § 77c(a)(2). However, bank securities are not exempt from the antifraud provisions of the 1934 Act. See 2 Bromberg & Lowenfels, Securities Fraud & Commodities Fraud, § 6.5(312), at 136.1 (1979).
We can in this case also exclude the exception in the 1934 Act’s definition of security for “currency or any note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months. . .. ” 15 U.S.C. § 78c(a)(10). The certificate of deposit pledged by the Weavers was certainly not currency. Furthermore, since the issuing bank had no obligation to pay for six years, it did not qualify for the nine month commercial paper exception.
In Tcherepnin v. Knight, 389 U.S. 332, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967), referred to above in our discussion of investment contracts and profit sharing agreements, the Supreme Court held that withdrawable capital shares in a savings and loan association were securities. From an investor’s standpoint those shares were the functional equivalents of certificates of deposit, except, perhaps, for the fact that the savings and loan in Tcherepnin was a mutual institution in which the depositors had an interest in profits. Here, Marine Bank’s obligation is to pay a sum certain and a fixed interest return. It is in form and in fact a long term debt obligation. Although, technically, Tcherepnin is not controlling, functionally, from the depositor’s standpoint, it is hard to distinguish long term deposit transactions with mutual institutions from similar deposit transactions with banks operated for the profit of stockholders. Moreover, when the Court wrote Tcherepnin it must have been aware that the Administrator of National Banks in a Statement of Policy on Advertising for Funds by National Banks, 31 Fed.Reg. 16581 (1966), endorsed the SEC’s view that deposit and share accounts of banks are subject to the antifraud provisions of the securities laws. See 1 Bromberg & Lowenfels, Securities Fraud & Commodities Fraud, #4.6(374), at 82.15. Finally, we note that the Securities and Exchange Commission has taken the position that certificates of deposit issued by banks are securities.8
Since there is no general antifraud exception for bank securities, and since when Marine Bank borrowed for more than nine months it issued what in all material respects is the functional equivalent of any other corporation’s bond or note, we cannot on this record hold that a certificate of deposit evidencing its debt is not, like other long term bonds or notes, a security.9 Perhaps at trial some distinguishing features may be developed. But certainly on the record before us it was error to grant summary judgment against the Weavers on the ground that the manipulative acts and practices of which they complain were not made in connection with the purchase or sale of a security. As did the court in Bellah v. First *165National Bank of Hereford, Texas, 495 F.2d 1109, 1116 (5th Cir. 1974), we remand “so as not [to] foreclose them from an opportunity to pursue that theory of liability in the district court.... ”
IV.

Other Considerations

A few words are appropriate with respect to the district court’s approach to the proper interpretation of the Securities Act of 1934. Throughout the court’s opinion granting summary judgment there is a general tone of nostalgia for the days when victims of fraud were relegated to the common law remedy of deceit, and when such actions were tried in state courts under state law standards. This interpretation of the Act is grudging of coverage and is fundamentally at variance with the decision made by Congress in 1934 to place a national floor under the level of conduct to which parties dealing in the national investment market might descend. The 1934 Act defines securities so broadly as to include virtually every transaction in which an investor might expect to receive a return on his money. It proscribes misconduct not in terms merely of common law fraud subject to all the vagaries of state law, but in the all-inclusive terms “manipulative acts and practices in connection with a purchase or sale” of a security. Most significantly, it provides in section 27 of the Act, 15 U.S.C. § 78aa, one of those comparatively rare instances in which federal jurisdiction is made exclusive. The message is clear that the federal courts have been given a very special responsibility for overseeing the level of permissible conduct in securities transactions. The reason for the congressional decision is equally clear considering the doleful pre 1934 history of securities transactions during which Congress, dependent upon state common law remedies for regulation of the level of conduct in securities transactions, watched standards of fiduciary duty and of representations in the market place descend to the level tolerated in the most tolerant jurisdiction.10 Given the special responsibility entrusted to them, the federal courts ought to interpret the 1934 Act with a presumption of coverage of any transaction which Congress did not expressly exclude. This is especially so when it is remembered that the state courts cannot enforce section 10(b), and thus that the Supreme Court will lack appellate jurisdiction to consider, when a trial is finally concluded in a state court, whether the underlying transaction offended national policy. 28 U.S.C. § 1257.
The federal exclusivity of the section 10(b) remedy is, moreover, a compelling reason why pendent state law claims ought to be heard in the federal court as well, even in states where state, law would afford as much or more relief. See, Cotler v. Inter-County Orthopaedic Association, P.A., 526 F.2d 537 (3d Cir. 1975). Thus we must also reverse the district court’s dismissal of the pendent state law claims, so that the trial court may reconsider whether their trial should be held in the same tribunal which must consider the section 10(b) claim.
V.

Conclusion

The order appealed from, granting summary judgment on the Weavers’ section 10(b) claim, and dismissing their pendent state law claims will be reversed, and the case remanded for further proceedings.

. In a motion for leave to file an amended complaint the Weavers also alleged that the Bank’s conduct violated § 17(a) of the Securities Act of 1933, 48 Stat. 84, 15 U.S.C. § 77q(a).

. Section 3(a)(10) provides in pertinent part: (a) When used in this chapter, unless the context otherwise requires—
(10) The term “security” means any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, or in general, any instrument commonly known as a “security”; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity is likewise limited.
15 U.S.C. § 78c(a)(10). As is here relevant, the definition of security is essentially the same as in § 2(1) of the Securities Act of 1933, 15 U.S.C. § 77b(l). In any event, the definitions have been considered to be virtually identical. See, e. g., United Housing Foundation, Inc. v. For*161man, 421 U.S. 837, 847 n.12, 95 S.Ct. 2051, 2058, 44 L.Ed.2d 621 (1975); Tcherepnin v. Knight, 389 U.S. 332, 342, 88 S.Ct. 548, 556, 19 L.Ed.2d 564 (1967).

. We speak in terms of what a jury could find since we review a grant of summary judgment. We do not imply that absent some issue of fact raised by the defendant the issue should not be decided as a matter of law.

. See Tcherepnin v. Knight, 389 U.S. 338, 88 S.Ct. 554 (withdrawable capital shares in savings and loan association are investment contracts); International Brotherhood of Teamsters v. Daniel, 439 U.S. at 558, 99 S.Ct. at 795-796 (1979) (noncontributory, compulsory pension plan is not an investment contract). The Howey rule was anticipated in SEC v. C.M. Joiner Leasing Corp., 320 U.S. 344, 64 S.Ct. 120, 88 L.Ed. 88 (1943).

. Cf. Lino v. City Investing Co., 487 F.2d 689 (3d Cir. 1973) (purchase of franchise accompanied with significant efforts on part of purchaser was not an investment contract).

. See, e. g., Lincoln Nat’l Bank v. Herber, 604 F.2d 1038, 1044 (7th Cir. 1979); National Bank of Commerce of Dallas v. All American Assurance Co., 583 F.2d 1295, 1299-30 (5th Cir. 1978); Reid v. Hughes, 578 F.2d 634, 638 (5th Cir. 1978); McClure v. First Nat’l Bank of Lubbock, Texas, 497 F.2d 490, 495-96 (5th Cir. 1974), cert. denied, 420 U.S. 930, 95 S.Ct. 1132, 43 L.Ed.2d 402 (1975); Rispo v. Spring Lake Mews, Inc., 485 F.Supp. 462, 467-68 (E.D.Pa. 1980).
As the dissent correctly notes, the Supreme Court has granted certiorari on the question of whether a pledge of stock to a bank as collateral for a bank loan is an offer of sale for a security under § 17(a) of the Securities Act of 1933. Rubin v. United States, 445 U.S. 960, 100 S.Ct. 1645, 64 L.Ed.2d 234 (1980), granting cert. to United States v. Rubin, 609 F.2d 51 (2d Cir. 1979).

. See, e. g., Lincoln Nat’l Bank v. Herber, supra; McClure v. First Nat’l Bank of Lubbock, Texas, supra.

. See MacKethan v. Peat, Marwick, Mitchell & Co., 439 F.Supp. 1090, 1094 (E.D.Va.1977), referring to the amicus curiae brief of the Securities & Exchange Commission filed in Burrus, Cootes & Burrus v. MacKethan, 537 F.2d 1262 (4th Cir. 1976).

. We do not rely on the language “certificate of deposit, for a security” in section 3(a)(1). That language refers to a type of security irrelevant to the issues in this case.

. See A. A. Berle and G. C. Means. The Modem Corporation and Private Property (1932).