• Northern District of Illinois Dismisses With Prejudice Assignee’s Securities Fraud Action Against Aircraft Manufacturer For Lack of Standing

  11/03/2026

  On October 15, 2026, Chief Judge Virginia M. Kendall of the United States District Court for the Northern District of Illinois dismissed with prejudice a securities fraud action against an aircraft manufacturer (the “Company”) and its former CEO (collectively, “Defendants”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5.  Value Recapture Partners LLC v. The Boeing Co., No. 23 C16550 (N.D. Ill. Oct. 15, 2026).  Plaintiff, which sued as the assignee of claims held by two investment funds that purchased the Company’s stock, claimed Defendants made false and misleading statements concerning two crashes of one of the Company’s airplane models, the resulting grounding of the fleet, and its return to service. The Court held that plaintiff, as an assignee that never purchased or sold the Company’s securities, lacked standing.

  According to plaintiff, the funds (the “Assignors”) assigned to plaintiff all of their rights to recover on claims arising from their ownership of or transactions in the Company’s stock in July 2020, more than a year after a putative class action asserting substantially the same claims was filed in the same district.  Plaintiff alleged the assignment occurred as the Assignors were winding down and that assigning securities claims is within the ordinary course of business for investment advisers liquidating funds and returning capital to investors.  Plaintiff also alleged it had entered into an agreement requiring the Assignors to provide discovery in the litigation (the “Cooperation Agreement”).  The Court had dismissed plaintiff’s prior complaint for lack of standing before plaintiff added these allegations.

  The Court found that plaintiff’s new allegations did not change the result. The Court noted that the Supreme Court’s decision in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975), which permits only actual purchasers and sellers of securities to bring private claims under Section 10(b) and Rule 10b-5, did not explicitly address assignees, but that the majority of courts to consider the issue have held Blue Chip’s rationale forecloses assignee claims.  The Court found the Fifth Circuit’s decision in Smith v. Ayres, 977 F.2d 946 (5th Cir.1992) persuasive.  There, the assignee received the claims and a single share under a settlement agreement that gave him only the right to sue—no voting, management, or other ownership rights—and required the assignee to return the share once it was no longer needed for the litigation.  The Fifth Circuit held the assignee lacked standing, reasoning that, although Blue Chip did not address assignees, it discouraged actions by remote purchasers.

  Plaintiff argued that its assignment, allegedly made in the ordinary course of winding down the Assignors’ funds, was different.  While the Court agreed that the assignment appeared less obviously tactical than the one in Smith, it held the outcome was the same because plaintiff still never purchased or sold the Company’s securities and did not fall within any exception Blue Chip recognized.  The Court added that plaintiff’s acquisition of the claims after the alleged fraud and after the class action was filed, while not the same as acquiring claims to create standing, raised similar red flags as in Smith, and that recognizing plaintiff’s standing could encourage entities to acquire claims once securities litigation appears likely.

  The Court also rejected plaintiff’s argument that the Cooperation Agreement resolved the evidentiary concerns underlying the purchaser-seller rule.  In Blue Chip, the Supreme Court reasoned that permitting suits by those who did not themselves buy or sell would create proof problems, including dependence on discovery from third parties to establish the claims, which is what the Cooperation Agreement contemplated.  Because Blue Chip expressly voiced doubt about such third-party discovery, and plaintiff failed to identify any case law holding that a cooperation agreement resolved such doubts, the Court held the Cooperation Agreement did not cure plaintiff’s standing problem.

  Having dismissed on standing grounds, the Court did not reach Defendants’ merits-based arguments.  The dismissal was with prejudice.

  Category: Standing
  

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• VALUE RECAPTURE PARTNERS V. BOEING MTD