## Facts

- Investors who purchased S&P 100 index options on October 20, 1987 sued the Chicago Board Options Exchange (CBOE) and 35 CBOE member market-makers.
- Plaintiffs alleged that, amid extreme post-crash volatility, some market-makers grossly overpriced options to recover prior-day losses.
- Plaintiffs also alleged other market-makers intentionally stayed away from the trading pit, reducing liquidity and contributing to disorderly conditions.
- Plaintiffs claimed these acts violated CBOE rules, including Rule 4.1 (just and equitable principles of trade) and Rule 8.7(a) (transactions reasonably calculated to maintain a fair and orderly market).
- Plaintiffs alleged the CBOE failed to enforce its rules against members and itself violated exchange rules.
- Plaintiffs brought claims under Exchange Act § 6(b), asserting it implied a private right of action against both the exchange and exchange members for exchange-rule violations.
- The district court dismissed under Rule 12(b)(6) for failure to state a claim; plaintiffs appealed.

## Issues

1. Whether Exchange Act § 6(b) implies a private right of action permitting investors to sue a national securities exchange for violating exchange rules or failing to enforce them.
2. Whether Exchange Act § 6(b) implies a private right of action permitting investors to sue exchange members for violating the exchange rules invoked in the complaint.

## Decision

- The Seventh Circuit affirmed dismissal under Rule 12(b)(6).
- The court held § 6(b) does not support a private suit against an exchange for violating or failing to enforce its own rules.
- The court held § 6(b) does not support a private suit against exchange members for violating the particular exchange rules alleged (including Rules 4.1 and 8.7(a)).
- The court declined to announce a categorical rule about every possible § 6(b) claim, limiting its holding to the claims presented.

## Legal Principles

- A statute focused on regulatory registration conditions, without rights-creating language or an expressed private remedy, generally does not imply a private damages action.
- Legislative history and statutory structure are central to implied-right analysis; absent evidence Congress intended a private remedy, courts will not create one.
- Express statutory duties elsewhere in the scheme (including provisions assigning enforcement oversight to the SEC) weigh against implying duplicative private remedies.
- Exchange-rule compliance and enforcement duties are primarily implemented through the Exchange Act’s administrative and self-regulatory framework, not investor damages suits under § 6(b).

## Conclusion

The Seventh Circuit held that Exchange Act § 6(b), a registration-standards provision, does not imply a private right of action allowing investors to sue an exchange for failing to enforce (or for violating) its own rules, and it does not authorize investor suits against exchange members for the specific exchange-rule violations alleged; the complaint was properly dismissed for failure to state a claim.


Spicer v. Chi. Bd. of Options Exch., Inc., 977 F.2d 255 (7th Cir. 1992)