or unregistered securities traded in the over-the-counter market.
Defendants also contend that the Act does not create a civil right of action in people who may have been injured by a violation thereof. This argument, however, has been rejected by a number of decisions, including decisions of this court: Kardon v. National Gypsum Co., L.C.E.D. Pa. 1946, 69 F.Supp. 512;
Fry v. Schumaker, D.C.E.D. Pa. 1947, 83 F.Supp. 476, 477; Rosenberg v. Globe Aircraft Corp., D.C.E.D. Pa. 1948, 80 F.Supp. 123; Hall v. American Cane & Pretzel Co., D.C.E.D. Pa. 1947, 71 F.Supp. 266.
In Slavin v. Germantown Fire Insurance Co., 174 F.2d 799, 806, the Court of Appeals for the Third Circuit, by way of dictum, recognized the right to maintain a private action, stating: '* * * And if there was a scheme which actually culminated in harm to the corporation and which was effectuated in violation of the provisions of Section 10(b) of the Securities Exchange Act, we have no doubt that the corporation could prosecute the action for redress * * *'
Consequently, it is clear that plaintiffs have the right to bring the present action.
Defendant's contention that there was no proper service on the defendants must also be decided against them. Section 27
of the Act provides: 'Any suit or action to enforce any liability or duty created by this title or rules or regulations thereunder * * * may be brought in any such district (i.e. 'wherein any act or transaction constituting the violation occurred') * * * and process in such cases may be served in any other district of which the defendants is an inhabitant or wherever the defendant may be found.'
Even though service on the defendants was made in the state of Washington, service obviously was proper. Kardon v. National Gypsum Co., 69 F.Supp. 512, supra.
The last contention of the defendant is that as to plaintiffs Isabella V. Zimmerman and Floyd S. Zimmerman, who are not residents of the Eastern District of Pennsylvania, venue is improper because none of the acts of misrepresentation as to them are specifically described as having occurred in Pennsylvania. However, Par. 46 of the complaint says : 'Plaintiffs aver that all representations made, acts or things said or done, and all failures to state necessary and material facts and information required to have been disclosed by any one or more of the individual defendants were in furtherance of the common fraudulent combination and conspiracy into which all of the defendants had entered and were made on behalf of all of the said defendants with intent to deceive and defraud all of the plaintiffs.'
The allegations of the complaint viewed in the light most favorable to the plaintiffs, as they must be viewed in the consideration of this motion to dismiss, make it clear that the acts and transactions complained of, which occurred within the Eastern District of Pennsylvania, were part of the scheme to defraud Isabella V. Zimmerman and Floyd S. Zimmerman, along with the other plaintiffs and, therefore, Isabella V. Zimmerman and Floyd S. Zimmerman are entitled to join in the action.
Defendants' motion to dismiss the complaint is denied.