Holmes v. Securities Investor Protection Corporation, 503 U.S. 258 (1992)

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certiorari to the united states court of appeals for the ninth circuit

No. 90-727. Argued November 13, 1991—Decided March 24, 1992

Pursuant to its authority under the Securities Investor Protection Act

(SIPA), respondent Securities Investor Protection Corporation (SIPC) sought, and received, judicial decrees to protect the customers of two of its member broker-dealers. After trustees were appointed to liquidate the broker-dealers' businesses, SIPC and the trustees filed this suit, alleging, among other things, that petitioner Holmes and others had conspired in a fraudulent stock-manipulation scheme that disabled the broker-dealers from meeting obligations to customers; that this conduct triggered SIPC's statutory duty to advance funds to reimburse the customers; that the conspirators had violated the Securities Exchange Act of 1934 and regulations promulgated thereunder; and that their acts amounted to a "pattern of racketeering activity" within the meaning of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U. S. C. 1962, 1961(1), and (5), so as to entitle the plaintiffs to recover treble damages, 1964(c). The District Court entered summary judgment for Holmes on the RICO claims, ruling, inter alia, that SIPC did not meet the "purchaser-seller" requirement for standing under RICO. The Court of Appeals held the finding of no standing to be error and, for this and other reasons, reversed and remanded.

Held: SIPC has demonstrated no right to sue Holmes under 1964(c).

Pp. 265-276. (a) A plaintiff's right to sue under 1964(c)—which specifies that "[a]ny person injured . . . by reason of a violation of [ 1962] may sue therefor . . . and . . . recover threefold the damages he sustains . . ."— requires a showing that the defendant's violation was the proximate cause of the plaintiff's injury. Section 1964(c) was modeled on 4 of the Clayton Act, which was itself based on 7 of the Sherman Act, see Associated General Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519, 530, and both antitrust sections had been interpreted to incorporate common-law principles of proximate causation, see, e. g., id., at 533-534, and n. 29, 536, n. 33. It must be assumed that the Congress which enacted 1964(c) intended its words to have the same meaning that courts had already given them. Cf. id., at 534. Although 1964(c)'s language can be read to require only factual, "but for," causation, this

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