COR Clearing, LLC v. Calissio Resources Group, Inc., No. 17-3556 (8th Cir. 2019)
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COR, a securities clearing and settlement firm, filed suit against Calissio seeking to recover losses resulting from a dividend transaction that it has not already recovered in other proceedings. The Eighth Circuit affirmed the district court's grant of summary judgment dismissing all claims against SST (the transfer agent) and the Broker Defendants. The court held that the transfer agent had no knowledge of a misrepresentation in the use of a seemingly appropriate "CUSIP" number for additional shares of the same class as existing shares and the transfer agent reasonably relied on attorney opinion letters in issuing the new shares. Furthermore, COR failed to show it reasonably relied on the transfer agent's alleged misrepresentation. Accordingly, the transfer agent was entitled to judgment on plaintiff's fraudulent misrepresentation claims.
The court also held that the district court properly dismissed claims against the Broker Defendants. In this case, COR has no conversion claim against the Broker Defendants, who simply acted as pass-through agents of the buyers in receiving and distributing due bill credits. Likewise, COR's unjust enrichment claim failed because the Broker Defendants received due bill credits from DTC for the benefit of their account holders and passed the benefit to their account holders without delay.
Court Description: Loken, Author, with Erickson, Circuit Judge, and Magnuson, District Judge] Civil case - Fraud. In action against Calissio's transfer agent, the transfer agent was entitled to judgment on plaintiff's fraudulent misrepresentation claims because the transfer agent had no knowledge of a misrepresentation in the use of a seemingly appropriate "CUSIP" number for additional shares of the same class as existing shares, and the transfer agent reasonably relied on attorney advice in issuing the new shares; further, plaintiff failed to show that it reasonably relied on the transfer agent's alleged misrepresentation, given its own skills and experience; plaintiff's conversion claims against the broker defendants who simply acted as pass-through agents of the buyers in receiving and distributing due bill credits were properly dismissed; nor were the broker defendants unjustly enriched in the transactions.
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