Steinhardt Group Inc. v. Citicorp
United States Court of Appeals for the Third Circuit
126 F.3d 144 (1997)
Citicorp (defendant) created a limited partnership, Bristol Oaks, L.P., to pool defaulted mortgages and hide debt from a series of risky early-1990s transactions. Citicorp persuaded Steinhardt Group Inc. (plaintiff) to purchase a majority interest in Bristol Oaks, giving Steinhardt the right to approve its business plans. When Bristol Oaks failed, Steinhardt sued Citicorp under federal securities law, claiming it had been misled about the nature of its investment. The district court ruled for Citicorp, and Steinhardt appealed.
Whether a limited partnership interest is a security when the investing partner is able to exert significant control over the partnership's business affairs.