Ohio “Blue Sky” Rescission Liability Requires a Sale-Nexus: Routine Post‑Sale Brokerage Services Are Not “Participat[ing] in or Aid[ing] … in Making” an Unlawful Sale Under R.C. 1707.43(A)

I. Introduction

Bitounis v. Interactive Brokers, L.L.C., Slip Opinion No. 2026-Ohio-2268 addresses the outer boundary of secondary civil liability under Ohio’s Securities Act (“Blue Sky Law”), specifically R.C. 1707.43(A). The case arose after Constantine Antonas operated Epitome Investment Fund, L.P. (“Epitome”), solicited approximately $25 million from investors, and allegedly sold unregistered securities. After Antonas’s trading losses and his death, 21 investors (the “investors”) sought to recover their funds by suing Interactive Brokers, L.L.C. (“IB”), the brokerage platform that later opened and serviced Epitome’s brokerage account.

The core legal issue was narrow but consequential: whether a brokerage firm may be held liable under R.C. 1707.43(A) when its alleged conduct consists primarily of routine brokerage and compliance functions performed after the investors had already purchased the unlawful securities, plus pre-account opening review of certain materials (including a Private Placement Memorandum (“PPM”) that identified IB as broker).

Procedurally, the question reached the Supreme Court of Ohio on a Civ.R. 12(B)(6) dismissal: the Court assumed the complaint’s factual allegations as true, but asked whether those facts—if true—fit within the statutory phrase imposing liability on those who “participated in or aided the seller in any way in making such sale.”

II. Summary of the Opinion

The Supreme Court of Ohio reversed the Eighth District and reinstated the trial court’s dismissal. The Court held that R.C. 1707.43(A) does not extend liability to a brokerage firm whose alleged conduct amounts to routine, post-sale account services and other acts lacking a sufficient nexus to the unlawful sale itself.

Even accepting the investors’ allegations that IB reviewed the PPM before opening the account and later executed trades and performed compliance checks, the Court concluded the complaint did not allege conduct tied to the solicitation, negotiation, or execution of any specific sale of Epitome interests to the investors. Thus, IB did not “participate[] in or aid[]” Antonas “in making such sale” within the meaning of the statute.

Justice Brunner dissented, arguing the case was improvidently accepted and that the majority improperly narrowed the statute, asserting that “in any way” should capture allegations that IB failed to exercise reasonable diligence in compliance monitoring.

III. Analysis

A. Precedents Cited

1. Pleading-stage framework and statutory interpretation discipline

  • Perrysburg Twp. v. Rossford, 2004-Ohio-4362: The Court reaffirmed de novo review of a Civ.R. 12(B)(6) dismissal and “no deference” to lower courts. Here, that meant independently deciding whether pleaded facts, not labels, fit R.C. 1707.43(A).
  • Valentine v. Cedar Fair, L.P., 2022-Ohio-3710: Reinforced that factual allegations are taken as true and reasonable inferences drawn for the nonmovant. The majority used this to emphasize it was not weighing evidence but testing statutory fit.
  • Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190 (1988): Unsupported legal conclusions are not credited absent supporting facts. The Court treated allegations that IB “aided” sales as conclusory without pleaded sale-linked conduct.
  • Jones v. Action Coupling & Equip., Inc., 2003-Ohio-1099 and Summerville v. Forest Park, 2010-Ohio-6280: The Court invoked plain-meaning canons: when text is unambiguous, apply it as written, without substituting remedial purpose for statutory limits.
  • Vossman v. AirNet Sys., Inc., 2020-Ohio-872: The Court relied on whole-text interpretation—each phrase must be given effect. This underwrote the majority’s central move: “in any way” is broad, but only within the boundary set by “in making such sale.”

2. The Court’s prior R.C. 1707.43(A) “nexus to the sale” requirement

  • Boyd v. Kingdom Trust Co., 2018-Ohio-3156: The opinion’s anchor precedent. The Court reiterated Boyd’s statement that the “plain language of R.C. 1707.43(A) requires a person to have some nexus with the sale of illegal securities.” The majority also relied on Boyd for the proposition that a financial institution’s “mere participation in a transaction,” without aiding/participating in the sale itself, does not trigger liability.
  • Boomershine v. Lifetime Capital, Inc., 2008-Ohio-14: Cited alongside Boyd to support the view that liability does not arise where an institution’s role is limited to executing transactions at the account holder’s direction, i.e., routine financial intermediation not tied to the unlawful sale.
  • Bronaugh v. R. & E. Dredging Co., 16 Ohio St.2d 35 (1968): The Court cited Bronaugh to situate the Blue Sky Law’s purpose as deterring those who sell or market unregistered securities rather than reaching “peripheral participants in ordinary business transactions.” Bronaugh was used to reinforce that R.C. 1707.43(A) is not a catch-all for any entity connected to an investment loss.

3. Appellate applications illustrating “affirmative sale-furthering conduct”

  • Federated Mgt. Co. v. Coopers & Lybrand, 137 Ohio App.3d 366 (10th Dist. 2000): The Court described Federated as a case where evidence could support liability because the defendant’s conduct arguably went beyond ordinary banking and was related to the “actual note offering,” making summary judgment inappropriate. Federated served as a contrast: actionable involvement is offering-linked, not merely operational.
  • Boland v. Hammond, 144 Ohio App.3d 89 (4th Dist. 2001): Used as an example of direct sale facilitation—relaying sales terms and arranging meetings. The Court contrasted IB’s alleged conduct as lacking similar direct investor-facing sale assistance.

4. Federal analogies invoked to reject “knowledge + inaction” and “but-for” theories

  • Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, 511 U.S. 164 (1994): Cited for the general principle that secondary civil liability requires affirmative conduct within the statute, not expansion by implication. The Ohio court used it as an interpretive caution against reading broad, open-ended secondary liability into text that limits liability to those involved “in making such sale.”
  • Cox Communications, Inc. v. Sony Music Entertainment, 607 U.S. __, 146 S.Ct. 959 (Mar. 25, 2026) (Sotomayor, J., concurring in the judgment): Cited for the proposition that contributory liability cannot rest solely on knowledge coupled with inadequate action to prevent wrongdoing. This supported rejecting the investors’ “compliance monitoring failure” theory as sufficient by itself.

5. Dissent’s authorities (contextual, not adopted by the majority)

  • State v. Johnson, 2010-Ohio-6301: The dissent invoked Johnson to argue that when a statute is silent on mental state, it can operate as strict liability. The majority, however, framed the case as about sale nexus and sale-furthering conduct, not scienter.
  • Riedel v. Acutote of Colorado, 773 F.Supp. 1055 (S.D.Ohio 1991): The dissent cited Riedel to argue scienter is generally not required under statutes like R.C. 1707.43(A), and that state blue-sky remedies can be broader than federal law.
  • Callahan v. Class One, Inc., 58 Ohio St.3d 76 (1991): The dissent cited Callahan for the protective purpose of R.C. Chapter 1707—protecting the public from sales of unregistered securities.
  • NC Ents., L.L.C. v. Norfolk & W. Ry. Co., 2026-Ohio-1429 and Berkheimer v. REKM, L.L.C., 2024-Ohio-2787: Cited by the dissent to criticize the majority’s perceived tendency to decide fact questions as a matter of law at early stages.

B. Legal Reasoning

1. The controlling textual boundary: “in making such sale”

The majority treated R.C. 1707.43(A) as containing an internal limiter that courts must enforce:

“[E]very sale … made in violation of [R.C. Ch. 1707] is voidable … The person making such sale … and every person that has participated in or aided the seller in any way in making such sale ….”

The Court reasoned that “in making such sale” tethers liability to conduct that helps bring the unlawful sale about—conduct that is part of the sale’s creation, offering, solicitation, negotiation, or execution. Under this reading, “in any way” is expansive (covering many forms of assistance), but only if the assistance is still sale-making assistance.

2. Nexus requirement applied to the pleaded facts

The investors alleged:

  • IB reviewed the PPM and other materials before opening Epitome’s brokerage account.
  • The PPM listed IB as broker, which allegedly lent legitimacy to Antonas’s offering.
  • IB performed routine brokerage functions after account opening (account setup, compliance checks, trade execution, allowing deposits/withdrawals).
  • IB “should have known” of unlawful activity because of “red flags” and compliance obligations.

The majority held these allegations did not connect IB to the investors’ purchases of Epitome interests. Critically, the complaint did not allege that IB:

  • solicited investors;
  • marketed or promoted Epitome;
  • distributed or presented the PPM to the investors;
  • negotiated terms of the investors’ purchases;
  • executed the investors’ purchases through IB’s platform; or
  • otherwise undertook investor-facing steps that “made” the sales happen.

The Court therefore treated the alleged relationship as too attenuated: IB serviced an account used to manage funds after the unlawful securities interests had already been sold. That is not participation in “making” the sale.

3. Rejection of a “but for” theory grounded in compliance-monitoring failures

The Eighth District had effectively accepted that if IB’s monitoring failures enabled Antonas to continue operating, that sufficed at the pleading stage. The Supreme Court rejected that approach as incompatible with the statutory language. In the Court’s view, a “but for” causal story (if IB had acted differently, the scheme might have ended earlier) does not substitute for the statute’s required showing: assistance in making the sale.

This is where the opinion’s practical rule emerges: failure to detect, failure to stop, or postsale transaction processing—even with knowledge allegations—does not become “participation” absent sale-linked conduct. The majority treated the “compliance failure” theory as, at most, a claim about inadequate monitoring of account activity, not about helping sell securities to these purchasers.

4. The dissent’s competing reading

Justice Brunner argued the majority “added” a mental state requirement and unduly narrowed “in any way,” contending that alleged lack of reasonable diligence in compliance could qualify as “aid.” The majority, however, did not expressly impose scienter as an element; rather, it insisted on a different limiting principle: sale nexus and sale-furthering conduct. In effect, the dispute is less about culpability and more about what kind of conduct counts—sale-making versus postsale servicing/oversight.

C. Impact

1. A clearer safe harbor for routine intermediaries—at least at the pleading stage

The decision significantly strengthens defenses for brokers, custodians, and other financial intermediaries sued under R.C. 1707.43(A) where plaintiffs allege:

  • routine onboarding/“Know Your Customer” compliance,
  • trade execution and clearing,
  • custody and account administration,
  • monitoring failures or missed “red flags,”
  • and other services performed after an offering has already been sold to investors.

Plaintiffs will likely need to plead (and later prove) concrete facts connecting the defendant to solicitation or consummation of the specific securities sale to the purchaser—e.g., distributing offering materials, directly communicating terms, arranging meetings, structuring the offering, or otherwise taking affirmative steps that help close sales.

2. Narrowing of “secondary” rescission liability compared to broader remedial narratives

By rejecting a purposivist expansion based on the Blue Sky Law’s remedial goals, the Court signals that R.C. 1707.43(A) is not a general-loss-allocation tool for downstream service providers when a promoter becomes judgment-proof. This is especially consequential in fraud scenarios where the primary wrongdoer dies, disappears, or is insolvent—plaintiffs may be unable to use R.C. 1707.43(A) to reach financial institutions absent sale-linked conduct.

3. Litigation strategy consequences

  • Pleading: Complaints will need detail about how the intermediary was involved in the sale process, not merely the account life-cycle.
  • Discovery access: Because this case was dismissed at Civ.R. 12(B)(6), plaintiffs may face barriers obtaining discovery unless they can plead sale-linked conduct without it—heightening the importance of pre-suit investigation.
  • Alternative theories: Plaintiffs may look to other statutory or common-law causes of action (if available) that target negligent supervision, aiding-and-abetting (where recognized), or other duties—though those claims face their own doctrinal constraints.

4. Potential legislative response

If policymakers want financial institutions’ compliance omissions to generate rescission liability even absent sale-linked conduct, the opinion implicitly invites a statutory amendment to expand liability beyond those who aid “in making such sale.” As written, the Court has now authoritatively construed the phrase as a meaningful limitation.

IV. Complex Concepts Simplified

  • R.C. 1707.43(A) “voidable” and “rescission”: If a security is sold in violation of Ohio’s securities laws, the purchaser can elect to unwind the transaction—essentially demanding the money back (subject to statutory terms). This remedy targets those responsible for the illegal sale.
  • “Participated in or aided … in making such sale”: The key statutory phrase. The Court reads it to mean help that contributes to bringing about the sale—not merely providing services that occur after the sale or in the broader investment enterprise.
  • “Nexus” requirement: A required connection between the defendant’s conduct and the actual unlawful sale to the purchaser. Under this decision, generalized involvement with the fund or its account is not enough.
  • Civ.R. 12(B)(6) motion to dismiss: The court assumes pleaded facts are true but asks whether those facts, even if true, state a legal claim. Conclusory labels (“they aided”) don’t count without supporting factual detail.
  • “But for” causation vs. statutory elements: “But for IB’s inaction, the scheme might have stopped sooner” is a causation story. The Court held R.C. 1707.43(A) requires more: conduct that helped make the sale.
  • Know Your Customer (KYC): Federally required onboarding steps (identity verification and documentation). The Court treated KYC and routine compliance as ordinary business activity not inherently tied to selling the securities to investors.

V. Conclusion

Bitounis v. Interactive Brokers, L.L.C. establishes a sharpened rule for Ohio Blue Sky rescission liability: R.C. 1707.43(A) reaches only those whose conduct has a meaningful nexus to—and helps bring about—the unlawful sale itself. Routine brokerage services, clearing, custody, and compliance activity performed after the sale, as well as pre-account onboarding that is not tied to solicitation or execution of the purchasers’ transactions, do not constitute “participat[ing] in or aid[ing] … in making such sale.”

The decision will likely narrow the pool of viable R.C. 1707.43(A) defendants to those who engaged in offering- or investor-facing activity, while limiting attempts to impose rescission liability on financial intermediaries based on allegations of peripheral connection, monitoring lapses, or postsale account administration.