Ackerberg v. Johnson

892 F.2d 1328 (8th Cir. 1989)

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Nature of the Case

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Facts

Ackerberg (P) bought the Vertimag shares in March of 1984. P bought 12,500 shares from D, who, in addition to being the chairman of the board, was one of the founders of Vertimag and its largest individual stockholder. P bought 4,000 shares from Lindquist, a vice president at Piper, Jaffray & Hopwood (PJH). P paid $ 6.00 per share for 16,500 shares and paid PJH a commission of $2,062. The Vertimag transaction began in October of 1983, when Vertimag proposed a private placement of $10,000,000 in securities, to be sold at $ 6.00 to $ 6.50 per share. P expressed an interest and PJH sent a ninety-nine-page private placement memorandum which contained detailed information about Vertimag. On March 17, 1984, P signed a subscription agreement. P read and understood this document. Vertimag's counsel stressed to P that no sale could be made without the subscription agreement, which agreement informed Ackerberg that the Vertimag securities were unregistered and not readily transferable. P represented in the subscription agreement that his yearly income was in excess of $200,000, that his net worth was over $1,000,000, and that his liquid assets exceeded $500,000. P's account at PJH alone totaled around $500,000. P sued Ds in March of 1985 for violating the Securities Act of 1933 along with other securities laws. The district court entered summary judgment in favor of P on the § 12(1) claim and refused to compel arbitration of either remaining 1933 Act claim. D's motion for summary judgment on all claims remaining against him was denied. In part, the court found that D was not entitled to an exemption under § 4[(a)](1) of the 1933 Act. D appealed claiming that he was not an underwriter.