Securities Investor Protection Corporation, Eugene W. Bell, Trustee for the Liquidation of Joseph Sebag Incorporated, and John L. Britton, Trustee for the Liquidation of First State Securities Corporation v. Seymour Vigman, et al.

Summary

The Ninth Circuit reversed the dismissal of Eugene C. Ferri, Jr. and Mobile International Corporation in a securities-fraud action brought by the Securities Investor Protection Corporation and liquidation trustees. The court held that Section 27 of the Securities Exchange Act authorizes nationwide service of process, that personal jurisdiction over a resident defendant depends on contacts with the United States, and that a co-conspirator venue theory may apply in multi-defendant securities litigation.

Holdings

1. Section 27 of the Securities Exchange Act authorizes nationwide service of process, and a federal district court may exercise personal jurisdiction over a resident defendant who has minimum contacts with the United States.
2. For a foreign defendant served under Section 27, personal jurisdiction depends on whether the defendant acted within any district of the United States or sufficiently caused foreseeable consequences in the United States.
3. In a multi-defendant action alleging a common scheme in violation of federal securities statutes, venue established for one defendant in a district is proper as to all alleged co-conspirator defendants, even if some defendants had no direct contact with the forum.
4. The plaintiffs should be allowed to amend their pleadings to show the relationship between Ferri and Mobile and the alleged securities-fraud scheme.

Questions Presented

1. Whether Section 27 of the Securities Exchange Act authorizes nationwide service of process and permits personal jurisdiction over defendants in any federal district court based on sufficient contacts with the United States.
2. What due-process standard governs personal jurisdiction over a foreign defendant served under the Act's nationwide-service provision.
3. Whether a co-conspirator theory of venue applies in a multi-defendant action alleging a common scheme in violation of federal securities laws.
4. Whether the plaintiffs should be permitted to amend their pleadings to allege the nexus between Ferri and Mobile and the alleged securities-fraud scheme.
5. Whether the district court should exercise pendent jurisdiction over the common-law fraud claim on remand.

Disposition

reversed_and_remanded