Brodt v. Bache
United States Court of Appeals for the Ninth Circuit
595 F.2d 459 (1978)
- Written by Steven Pacht, JD
Facts
John Bergman (defendant) was an employee of brokerage house Bache & Company (Bache) (defendant). Bergman persuaded Robert Brodt and others (collectively, Brodt) (plaintiffs) to invest in a discretionary commodities account with Bache despite Brodt’s lack of knowledge about commodities trading. Brodt authorized Bache to withdraw funds from Brodt’s savings-and-loan account without advance notice to Brodt to finance commodities transactions. Brodt ultimately discovered that all of his commodities investments were lost and that the company Bache used to purchase commodity-option contracts was insolvent. Brodt sued, alleging that the discretionary commodities-trading account was an investment contract—and thus a security—within the meaning of the Securities Act of 1933. The district court ruled that the commodities account was not an investment contract. Brodt appealed.
Rule of Law
Issue
Holding and Reasoning (Kelleher, J.)
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