SW Legal Educational Publishing

Bad Securities Are Not Goods (or Services)
Description Investors time barred from bringing a federal or state securities fraud suit may not seek relief under the Pennsylvania consumer protection law which, like the Federal Trade Commission Act, applies to consumer goods and services, which do not include investment securities.
Topic Securities Law
Key Words Securities, Consumer Protection
C A S E   S U M M A R Y
Facts Plaintiffs brought a securities fraud suit against the issuer but all claims under the federal and state securities law were time barred. Plaintiffs also sought relief under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, which creates a private right of action for consumers injured in the purchase or lease of goods or services. This action would not fail the statute of limitations. Trial court dismissed the suit. Investment securities are neither goods nor services under Pennsylvania law. Plaintiffs appealed.
Decision Affirmed. The trial court was correct that Pennsylvania consumer protection laws have never been applied to securities and that securities do not meet the statutory definition of goods or services. Further, the court looked to the Federal Trade Commission Act, since Pennsylvania courts have looked to it for guidance in construing the state consumer protection laws. The FTC Act "has not been applied to securities transactions." Federal and state legislatures clearly intend for consumer protection and securities statutes to be distinct remedies.
Citation Algrant v. Evergreen Valley Nurseries Limited Partnership, ---F.3d--- (1997 WL 570840, 3rd Cir.)
or
126 F.3d 178 (3rd Cir., 1997)

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