of Orvis, certain of its subordinated lenders and its accountants.
The amended complaint charges that Orvis failed to keep accurate books and records and concealed the precarious financial condition of the firm until May, 1970, in violation of the rules and regulations of the Exchange and the Securities Exchange Act of 1934. It further claims that the general and limited partners and subordinated lenders of Orvis conspired to enable the firm to continue in business, despite its failure to meet Exchange net capital requirements, by improperly overstating Orvis' net capital position at the time of an audit of the firm. Finally, the complaint alleges that two subordinated lenders received a preferential transfer of securities at a time when the firm was insolvent.
All but one of the defendants have answeredFranklin, 141 F.2d 238 (2d Cir.) cert. denied, 323 U.S. 737, 65 S.Ct. 38, 89 L. Ed. 591 (1944), in which the existence of a private right of action under that section was first recognized. In Baird, a member of the Exchange converted the securities of one of its public customers. The Exchange had notice of the conversion, but took no disciplinary action against the member. Although the panel spoke with one voice in holding that the customer had a right of action against the Exchange for dereliction of its § 6 duties, the majority held that she had failed to prove that the Exchange's conduct caused her loss. The opinion of Judge Clark, who dissented from the result, presents the court's view as to the implication of