Plaintiff, a partnership that was a member of the Philadelphia Stock Exchange (the Exchange), commenced an action against several employees, directors and officers of the Exchange asserting claims under, among other things, the Racketeer Influenced and Corrupt Organizations Act (RICO 18 USC 1962 et al). The federal District Court for the Eastern District of Pennsylvania dismissed the complaint, holding that plaintiff lacked standing to assert its claims because it was not directly injured by the defendants’ actions.
Plaintiff argued that defendants’ conduct, which was alleged to include the waste and mismanagement of corporate assets, ultimately injured it and other members of the Exchange. Rejecting this argument, the Court found that although defendants’ alleged acts may have harmed the Exchange, plaintiff could not adequately allege a direct injury to itself that was not a by-product of an injury to the Exchange. Because indirect or derivative injuries do not confer RICO standing, the Court dismissed the RICO claims with prejudice. (Penn Mont Securities v. Frucher, No. 05-CV-6686, 2007 WL 2343794 (E.D. Pa. Aug. 15, 2007))