## Facts

- Investors Alfred D. Lopez and Jeanie Reitzell sustained losses on investments made through Dean Witter Reynolds, Inc.
- Reitzell invested in Dean Witter’s “Commodity Guided Account Program” (CGAP).
- Under CGAP, 80% of each customer’s deposit was placed in U.S. Treasury bills, while 20% was placed with funds from other CGAP participants for commodities futures trading.
- Reitzell alleged Dean Witter induced her to invest in CGAP in violation of the Commodity Exchange Act (CEA) and mishandled her CGAP account in violation of the Securities Act of 1933.
- The district court granted summary judgment for Dean Witter on Reitzell’s CEA and 1933 Act claims related to CGAP, and she appealed only that dismissal.

## Issues

1. Whether CGAP participation constituted involvement in a “commodity pool,” or otherwise supported a private claim under the CEA provisions Reitzell invoked.
2. Whether Reitzell’s participation interest in CGAP was a “security” under the Securities Act of 1933.

## Decision

- The Ninth Circuit affirmed the grant of summary judgment to Dean Witter.
- The court held that CGAP, as structured, did not create the type of commodity pool relationship that supported the asserted CEA private claims.
- The court held that Reitzell’s CGAP participation interest was not a “security” within the meaning of the Securities Act of 1933.
- Because the statutory characterizations failed as a matter of law on the undisputed structure of CGAP, Reitzell’s CEA and 1933 Act claims relating to CGAP were dismissed.

## Legal Principles

- Whether an arrangement constitutes a CEA “commodity pool” turns on functional features beyond pooled trading, including how profits and losses are shared, the operator’s role, and whether accounts are separately maintained and settled.
- A private claim under the CEA requires a basis in the statutory scheme showing a cognizable private remedy for the alleged misconduct.
- An arrangement is a “security” under the 1933 Act only if it satisfies the elements of an investment contract (including a common enterprise and expected profits from the efforts of others); pooled trading alone does not automatically create a separate security.
- A broker’s managed or structured trading program may remain a customer–broker relationship rather than an issuance of a distinct security interest, depending on the program’s structure and the customer’s legal interest.

## Conclusion

The Ninth Circuit concluded that CGAP’s pooled futures-trading feature did not convert the program into a CEA commodity pool or create a separate 1933 Act security; therefore, Reitzell could not proceed on her CEA or Securities Act claims, and summary judgment for Dean Witter was affirmed.


Lopez v. Dean Witter Reynolds, Inc., 805 F.2d 880 (9th Cir. 1986)