dollar deficit made it a very speculative stock. However, as we concluded in our original opinion, we do not think that the securities laws were intended to impose liability in the circumstances of this case. Fish was a reasonably intelligent businessman, a graduate of business school and an insurance broker. Although he stated that he was at that time looking toward retirement and therefore not interested in a speculative stock, he had for the previous seven years engaged in numerous speculative transactions. He had engaged in these transactions upon the advice of Warren and reaped handsome profits. From time to time, on Warren's advice, he shifted his holdings into bonds until market conditions appeared more propitious. Fish decided to purchase Strategic on the basis of a telephone conversation with Warren. During that conversation, as is related in our Finding of Fact #15, Warren described Strategic's operations and prospects in general terms. Fish himself admitted that Warren told him that Strategic's prospects rested on successful development of an experimental process, that it was a new company which did not pay a dividend, and that it was possible that Strategic might go from thirty to fifty within six months. Knowing these and other facts Fish must have been aware that Strategic was a speculative purchase. Nor do we think it would have been surprising for Fish to find out that such an inchoate venture was operating at a deficit. In any event, Fish admitted that he was relying on Warren's judgment and opinion. Warren did in fact accurately represent his opinion of Strategic; he bought about 9,000 shares of Strategic for himself at a cost of $229,000, and subsequently sold these shares at a loss of $173,598. Fish never requested any financial information concerning Strategic, and made his own decision to risk nearly $60,000 after talking with Warren on the telephone.
Such transactions occur daily. Warren was not an "insider" at the time of the transactions complained of; nor was he in possession of any information not generally available to investors who desired it. Fish was an experienced businessman who had made significant profits on Warren's advice in the past and who chose to risk significant amounts after hearing a brief discussion on the telephone. Fish admitted that Warren described Strategic and its prospects generally, and he does not question the accuracy of anything Warren told him concerning Strategic. Moreover, we think that this information was sufficient to apprise Fish of the general speculative nature of the investment which he perhaps overhastily undertook. Section 17(a) of the Securities Act of 1933 and Rule 10b-5 under the Securities Exchange Act of 1934 require in connection with such purchases that the seller not "omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading" or not "to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit . . .". As we concluded in our original opinion. "To make a broker liable under these circumstances would make him a virtual insurer of his investment recommendations unless he provided customers with every conceivable material fact concerning a stock before customers purchased." It might well be a salutory reform to require that investors be provided with some sort of prospectus before purchasing, but we cannot find any precedent for such a requirement at the present time.
We also find the plaintiff's other objections, which were stated in his moving papers but never briefed or argued to us, as lacking in merit, as is amply demonstrated by the briefs of the defendants on these questions.
And now, this 14th day of March, 1969, it is ordered that the motions for a new trial and to amend and supplement our Findings of Fact and Conclusions of Law filed January 14, 1969, are denied.