A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.
Investors Krim et al. who purchased stock in pcOrder.com brought this consolidated securities action under Sections 11 and 15 of the Securities Act of 1933 against defendants pcOrder.com, its directors, its controlling shareholder Trilogy Software, and its investment bankers , alleging that the registration statements filed with the Securities and Exchange Commission were false and misleading. The district court concluded that, with one exception, the investors lacked Section 11 standing because they could not trace their stock to the registration statements in question. Finding the remaining investor's claims moot, the court dismissed all of the claims and denied a third-party motion to intervene.
To seek Section 11 standing, must the investors, as aftermarket purchasers, prove that their shares are traceable to the registration statements in question?
The Court affirmed district courts finding that the investors lacked Section 11 standing because they could not trace their stock to the registration statements in question. The investors, as aftermarket purchasers, asserted they could demonstrate standing by showing a very high probability that they each have at least one initial public offering or secondary public offering share. Because any share of the company's stock chosen at random in the aftermarket had at least a 90 percent chance of being tainted, its holder, according to the investors' view, would have had § 11 standing; it was likely that any street name shareholder could make a similar claim with regard to one share. This could not be squared with the statutory language. The court declined to reach further than the statute. As to intervention, that none of the individual claims remained viable when the motion to intervene was filed disposed of the attempt at intervention.