The opinion of the court was delivered by: Roberts, District Judge.
The Securities and Exchange Commission ("SEC") sued several
individuals and entities for allegedly engaging in a fraudulent
scheme to sell unregistered securities, and failing to register
as investment advisers. Defendant Tedford has moved under
28 U.S.C. § 1406 (1994) to dismiss claims against him or to transfer
this case alleging that venue is improper in this district.
Because the special venue provisions of the applicable securities
statutes make venue proper in this district, I deny the motion.
The first and second claims of the complaint allege that
Tedford and the remaining defendants engaged in fraudulent
misrepresentations and fraudulent securities transactions in
violation of § 10(b) of the Securities Exchange Act,
15 U.S.C. § 78j(b) (1994), and § 17(a) of the Securities Act,
15 U.S.C. § 77q(a) (1994). The third claim alleges that defendant Wallace
violated § 203(a) of the Advisers Act by acting as an investment
advisor and by not registering with the SEC in Washington, D.C.
as required. 15 U.S.C. § 80b-3(a) (1994). As such, the complaint
alleges an act and an omission, or failure to act, as violations.
Venue for the Advisers Act violation is governed by Section 214
of that Act. It places venue for suits or actions to enforce a
liability or duty created by § 203(a), or to enjoin any violation
of § 203(a), in any district where the act or transaction
constituting the violation occurred, among other districts.
15 U.S.C. § 80b-14 (1994).
In an action alleging a failure to make a required filing with
the SEC, venue lies in the District of Columbia. See Investors
Funding Corp. of New York v. Jones, 495 F.2d 1000, 1003
(D.C.Cir. 1974). Jones involved the failure to timely file
corporate quarterly and annual reports under the Securities
Exchange Act of 1934. "The place where a document is to be filed
may be regarded as the place where any asserted non-filing or
misfilings occurred." SEC v. Savoy Indus. Inc., 587 F.2d 1149,
1154 (D.C.Cir. 1978) (citations omitted) (involving three filings
under the Securities Exchange Act). The special venue provision
of the Securities Exchange Act of 1934 is identical in all
material respects to the Advisers Act special venue language.
Compare 15 U.S.C. § 78aa (1994) with 15 U.S.C. § 80b-14
(1994). I find, then, that venue for the Advisers Act claim
against defendant Wallace of failing to register with the SEC is
proper in this district.
Because venue is proper in the District of Columbia as to
defendant Wallace, the question is whether venue is also proper
as to defendant Tedford. I conclude that it is. In SEC v.
National Student Mktg. Corp., 360 F. Supp. 284 (D.D.C. 1973), the
SEC alleged that multiple defendants engaged in a securities
fraud scheme involving a merger of the District of Columbia-based
company and failure by its New York counsel to correct false
financial representations about the company, in violation of the
Securities Exchange Act of 1934. Judge Parker held that any
material act committed by one defendant in the District in
furtherance of a multi-defendant fraudulent scheme satisfies
venue under the Securities Exchange Act of 1934 as to all
defendants whether or not the other defendants ever committed a
violation in the District. Id. at 291-292.*fn1
In this case, an investor allegedly was induced to invest
$100,000 in non-existent prime bank securities. Defendant Wallace
purportedly acted as the investment adviser and was responsible
for arranging the trades using the money that defendant Tedford
channeled to Wallace. If the complaint is correct, then Wallace's
role was key, and his failure to register with the SEC in this
district was of no small moment in minimizing scrutiny and
maximizing the success of this fraud.
I conclude, then, that venue for this law suit is proper in
this district and I deny ...