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Securities & Antitrust Issues
Hialeah, Inc. v. Florida Horsemen's Benevolent & Protective Ass'n, 899 F. Supp. 616 (S.D. Fla. 1995).
Hialeah Racetrack claimed that the Florida HBPA unjustifiably withheld its consent to allow Hialeah to simulcast races, which consent was required under the Interstate Horse Racing Act, and caused its members to refuse to send horses to race at the track, in order to urge Hialeah to restrict its part of the takeout. The court held that Hialeah had standing to pursue an anititrust claim against the HPBA, and that a claim was properly made under federal and state antitrust laws.
Holden v. Hagopian, 978 F.2d 1115 (9th Cir. 1992).
Promoter of general partnership which owned horses was sued under the securities laws by parternership investors who claimed that the partnership interests were securities. The Court of Appeals held that the interests in the partnership were not "securities" as that term is defined in the securities laws.
Kefalas v. Bonnie Brae Farm, 630 F. Supp. 6 (E.D. Ky. 1985).
Purchaser of a share in a stallion syndicate sued for violation of federal and state securites laws. The district court held that fractional interest shares in the stallion syndicate were not "securities" regulated by federal and state securities laws.
Kelley v. Mid-America Racing Stables, Inc., Fed. Sec. L. Rep. par 96,224, 139 F.R.D. 405 (W.D. Ok. 1990), and Kelley v. Mid-America Racing Stables, Inc., Fed. Sec. L. Rep. par 95,626, 1990 WL 193626 (W.D. Ok. 1990).
Securities fraud claim brought by investors in a corporation formed to engage in investing in horses. In the first opinion, the district court denied a motion for class certification, largely because the plaintiffs were not suitable class representatives. In the second opinion, the district court held that a claim against the company's accountants that they should have known that the value of the horses was overstated, stated a claim under the securities laws sufficient to survive a motion to dismiss.
Marshall v. Harris, 555 P.2d 756 (Ore. 1976).
Inexperienced horseman acquired an interest in two racehorses in exchange for agreeing to pay the expenses associated with the horses. The seller retained control of the horses. The buyer defaulted and the seller sued. The court ruled that the fractional interests in the race horses constituted "securities" regulated by the Oregon securities laws, and the buyer was entitled to rescind the sale. |
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McGonigles v. Combs, 968 F.2d 810 (9th Cr. 1992).
Investors in Spendthrift Farm sued promotors and others under the securities laws, alleging a variety of misrepresentations and omissions in the stock offering material. The trial court dismissed the claims against several defendants, and a jury verdict was rendered in favor of the remaining defendants. The Court of Appeals affirmed.
Romani v. Shearson Lehman Hutton, 929 F.2d 875 (1st Cir. 1991).
Disappointed purchaser of limited partnership interest in equine limited partnership sued promoters for fraudulently inducing him to invest in the partnership. The court ruled that the purchaser failed to allege securities fraud claim with the particularity required by the federal rules. The court stated that a claim that the partnership's financial projections were unrealistically optimistic, given the recession the horse industry was entering, was insufficiently specific.
Sheets v. Dziabis, 738 F. Supp. 307 (N.D.Ind 1990).
Purchaser, who owned no mares, bought two shares in stallion syndicates through a bloodstock agent. The bloodstock agent allegedly told the purchaser that the shares were a good investment because he could sell the seasons in advance through the bloodstock agent. The court held that the shares consituted securities because profit was expected to derive from the efforts of others, specifically the bloodstock agent.
Stratmore v. Goodbody, 866 F.2d 189 (6th Cir. 1989).
Plaintiff, a member of a stallion syndicate, claimed that a provision in the syndicate agreement which prevented him from selling a nomination at auction constituted a violation of the antitrust laws. The court of appeals ruled that such prohibition was not void as violating the antitrust laws because any anticompetitive effect was negligible.
Thornock v. Kinderhill Corp., 712 F.2d 1123 (S.D.N.Y. 1989).
Limited partnership interest holders in limited partnership engaged in the horse business sued under federal securities laws and RICO alleging that defendants failed to disclose the down-turn in the thoroughbred market in their private placement memorandum and disclosed only selective information about the market. The district court held that the plaintiffs adequately alleged causation, but failed to properly allege a RICO violation.
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