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Lustgraaf v. Behrens

United States Court of Appeals for the Eighth Circuit
619 F.3d 867 (2010)


Facts

Bryan Behrens (defendant) was a registered representative of Sunset Financial Services, Inc. (Sunset) (defendant), a broker-dealer that provided Behrens access to the stock market. Behrens was also a general agent of Sunset’s parent company, Kansas City Life Insurance Company (KCL) (defendant). Behrens operated a Ponzi scheme. The plaintiffs were victims of this scheme. The plaintiffs brought a securities fraud suit against Sunset and KCL, alleging that Sunset and KCL had control of Behrens under Section 20(a) of the Securities Act of 1934 and thus were liable for Behrens’s fraud. The district court granted Sunset’s and KCL’s motion to dismiss for failure to state a claim on the ground that Sunset and KCL did not have sufficient control over Behrens to render them liable. The plaintiffs appealed.

Rule of Law

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Issue

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Holding and Reasoning (Melloy, J.)

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  • A "yes" or "no" answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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