Cluster 321137

Judge Sneed, in a concurring opinion, identified the reason why investments arising from such brokered funds should be regulated: “The primary abuse that flows from brokered funds is the encouragement it provides to banks to make unsafe loans.” (Safeway, supra, 501 F.2d at p. 1124 (conc, opn. of Sneed, J.).) But, wrote Judge Sneed, “I have grave doubts, for example, that the 5/8 % bonus offered by [the broker] alone is sufficient to transform the entire package into a nonexe…

Wagner & Co., Inc., 501 F.2d 1120, 1124 (9th Cir.1974), in discussing the analogous controlling person provision of the 1933 Act, we had said that “[t]hose claiming the exemption have the burden of proving it.” In Buhler, Kersh, and Christoffel , however, we placed on the plaintiff the burden of disproving the defendant’s good faith.

Wagner & Co., 501 F.2d 1120, 1123 (9th Cir. 1974), this court did mention the continued success and solvency of the defendant as one factor indicating that the investor was involved in a common enterprise with the defendant and that the investor expected profits to come from the efforts of others.

Wagner & Company, Inc., 501 F.2d 1120, 1124 (9th Cir.1974); American General Insurance Company v. Equitable General Corporation, 493 F.Supp. 721 (E.D.Va.1980).

The defendant can rebut a prima facie case of controlling person liability with evidence that he “had no knowledge of or reasonable ground to believe in the existence of the facts by reason of which the liability of the controlled person is alleged to exist.” 8 15 U.S.C.A. § 77o; see Hill York, 448 F.2d at 695 n.22; Safeway Portland Employees' Federal Credit Union v. Wagner & Co., Inc., 501 F.2d 1120, 1124 (9th Cir. 1974).

Wagner & Co., 501 F.2d 1120, 1123 (9th Cir. 1974), this court did mention the continued success and solvency of the defendant as one factor indicating that the investor was involved in a common enterprise with the defendant and that the investor expected profits to come from the efforts of others.

Neither offered any proof and they are not justified in resting on the mere denials of their pleadings.” Safeway, supra, at 1124.

The combination created “an integrated investment package which must be viewed in its entirety in determining whether it is within or without the Act.” Safeway Portland Employees’ Federal Credit Union v. Wagner & Co., Inc., 501 F.2d 1120, 1123 (9th Cir. 1974).

The combination created "an integrated investment package which must be viewed in its entirety in determining whether it is within or without the Act." Safeway Portland Employees' Federal Credit Union v. Wagner & Co., Inc., 501 F.2d 1120, 1123 (9th Cir. 1974). 39 The Safeway Credit Union case involved an action against Wagner Co., a securities broker-dealer, for the sale of unregistered investment packages.

Wagner & Company, Inc., 501 F.2d 1120, 1123 (9th Cir. 1974) (Promise of broker to pay a 5/s% bonus on maturity of certificate of deposit made the latter an invest *1095 ment contract, and therefore a security, because “future payment of the bonus was dependent on the continued success and solvency of [the broker]”).

Wagner & Co., 501 F.2d 1120, 1124 (9th Cir. 1974).

Wagner & Co., Inc., 501 F.2d 1120, 1123 (9th Cir. 1974), the funding party “was led to expect profit as the result of [borrower’s] efforts” in completing certain anticipated transactions.