## Facts

- Waldron Keith Seolas, a Cimetrix, Inc. shareholder, sued individually and derivatively on Cimetrix’s behalf.
- In late 1994, Paul Bilzerian allegedly acted as Cimetrix’s agent and told Seolas there was a discrepancy between Cimetrix’s shareholder records and SEC filings concerning Seolas’s holdings.
- Bilzerian allegedly represented that Cimetrix could not correct the problem through amended SEC filings and that Seolas needed to return 215,000 shares to prevent an SEC investigation and a resulting stock-price drop.
- Relying on these statements, Seolas and his family transferred about 215,000 shares back to Cimetrix without monetary consideration.
- Seolas alleged the statements were false because the discrepancy was overstated, could have been corrected by amended filings, and Cimetrix faced no real risk of an SEC investigation or price decline.
- Seolas alleged Bilzerian’s purpose was to increase the value of his own Cimetrix options and to fund an employee option plan with Seolas’s shares rather than diluting Bilzerian’s interest.

## Issues

1. Whether, after *Central Bank of Denver*, a corporation may face § 10(b) and Rule 10b-5 liability based on fraud by its agent attributed to the corporation under agency/respondeat superior principles.
2. Whether Cimetrix was entitled to judgment on the pleadings or summary judgment on Seolas’s claims premised on that theory.

## Decision

- The court denied Cimetrix’s motion for judgment on the pleadings and its alternative motion for summary judgment on Seolas’s third and eighth claims for relief.
- The court held *Central Bank of Denver* eliminated private aiding-and-abetting liability under § 10(b) but did not categorically bar corporate liability where the corporation is alleged to be a primary violator acting through its agent.
- The court concluded the pleadings and record, viewed in Seolas’s favor, supported a viable theory that Bilzerian’s alleged misrepresentations could be attributed to Cimetrix as conduct within the scope of agency.
- The court found disputed factual questions concerning the alleged misrepresentations, reliance, and motive that precluded dispositive relief at the Rule 12(c) or Rule 56 stage.

## Legal Principles

- *Central Bank of Denver* bars private § 10(b) claims premised solely on aiding-and-abetting, but it does not foreclose § 10(b) primary liability attributed to a corporation based on its agent’s conduct.
- A corporation may be treated as making fraudulent statements through an officer or agent when the challenged conduct is plausibly within the scope of authority and connected to corporate business.
- On a Rule 12(c) motion, the court tests whether the pleadings state a plausible claim; on summary judgment, the moving party must show no genuine dispute of material fact.
- Allegations of material misrepresentation, scienter, reliance, and resulting loss can support § 10(b)/Rule 10b-5 and common-law fraud theories sufficient to proceed past the pleading and early evidentiary stages.

## Conclusion

The court allowed Seolas’s § 10(b)/Rule 10b-5 and related fraud theories to proceed against Cimetrix, ruling that *Central Bank of Denver* does not bar attributing an agent’s alleged securities fraud to a corporate principal as a primary violation and that factual disputes prevented judgment on the pleadings or summary judgment.


Seolas v. Bilzerian, 951 F. Supp. 978 (D. Utah 1997)