Sperber v. Boesky

Summary

The court considers a putative class action asserting that Ivan Boesky's insider trading and related conduct caused artificial inflation in securities prices and injured purchasers. Applying RICO's proximate-cause requirement, the court concludes that the alleged injuries from disclosure of the misconduct and from purported price inflation were not proximately caused by a violation giving rise to liability. The court grants Boesky's Rule 12(b)(6) motion to dismiss.

Holdings

1. A plaintiff cannot state a civil RICO claim for injuries arising from disclosure of the alleged RICO violation rather than from the commission of the predicate acts themselves.
2. Plaintiffs could not state a civil RICO claim for allegedly inflated security prices because they failed to allege that the RICO violation proximately caused their injuries.
3. The complaint was dismissed because, under the theories advanced, plaintiffs could prove no set of facts entitling them to relief.

Questions Presented

1. Whether plaintiffs could state a civil RICO claim for injuries allegedly caused by the disclosure of Boesky's RICO violations and the resulting decline in security prices.
2. Whether plaintiffs could state a civil RICO claim for purchasing securities at allegedly artificially inflated prices where the alleged RICO violation was only an indirect or cumulative cause of the market inflation.
3. Whether the complaint adequately alleged proximate causation and a duty sufficient to support civil RICO standing and damages.

Disposition

dismissed