Lopez v. Dean Witter Reynolds, Inc.
United States Court of Appeals for the Ninth Circuit
805 F.2d 880 (1986)
- Written by Brett Stavin, JD
Facts
Alfred Lopez and Jeanie Reitzell (plaintiffs) maintained investment accounts with Dean Witter Reynolds, Inc. (Dean Witter) (defendant). One of the investment programs was known as Dean Witter’s Commodity Guided Account Program (CGAP). CGAP was a program in which individuals invested funds into an account, which were then combined with funds from other participants in the program. From the combined funds, Dean Witter purchased and sold commodities futures contracts. However, each investor was assigned an individual account number, and the investor’s ability to trade in certain commodities was based on the total equity level in the investor’s account. Accordingly, not every investor in CGAP traded the same commodities futures contracts, and in turn, the investors did not share in CGAP’s gains or losses on a pro rata basis. Lopez and Reitzell sustained losses in their investment accounts. Lopez and Reitzell claimed that such losses were caused by Dean Witter engaging in excessive transactions for Dean Witter’s own financial gain. Lopez and Reitzell filed suit in federal district court against Dean Witter for violations of the Securities Act of 1933 and, for Reitzell alone, the Commodity Exchange Act (CEA). Reitzell alleged that Dean Witter had violated the CEA by inducing her to invest in CGAP. The district court dismissed Reitzell’s CEA claim on the basis that CGAP was not a commodity pool under the CEA. Reitzell appealed.
Rule of Law
Issue
Holding and Reasoning (Nelson, J.)
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