ORDER

Catherine C. Blake, United States District Judge.

For the reasons stated in the foregoing memorandum, it is, this ____ day of January, 2001, hereby

ORDERED that:

Pursuant to 28 U.S.C. § 1404(a) and 1406(a), this case is transferred to the Northern District of Illinois.

MEMORANDUM

Now pending before the court is the defendants' Motion to Dismiss or For Change of Venue. Taking all of the assertions in the complaint as true for present purposes, the facts relevant to the disposition of this motion follow.

Celsion is a Maryland company that engages in medical research concerning treatments for cancer and other diseases. In 1996, Celsion decided that it wanted to raise capital for its business operations. In April of 1996, one of the defendants, Warren C. Stearns ("Stearns"), the president, director and majority shareholder of Stearns Management Corporation ("SMC"), an Illinois financial consulting services corporation, represented to Celsion that he could help the medical research firm raise funds. Celsion and SMC entered into a consulting agreement, dated May 28, 1996, by which SMC would provide financial advisory services to Celsion. To induce SMC to enter into the agreement, Celsion granted it a certain number of common stock purchase warrants, which gave the holder the right to purchase a percentage of Celsion's equity at a given price. At Stearns' direction, Celsion assigned the warrants in August of 1998 to various people and entities, namely Warren R. Stearns (a son of Stearns and citizen of Illinois), Charles A. Stearns (a son of Stearns and citizen of Illinois), Anthony Riker, Ltd. (an Illinois corporation), John T. Horton (a citizen of Illinois) and the George T. Horton Trust (an Illinois trust). In March of 1999, SMC demanded that Celsion register with the Securities and Exchange Commission the shares of stock that the warrant holders would receive upon exercise of the warrants. Celsion refused to register the stock shares, which have a present value exceeding $15 million.

Celsion has brought suit to rescind the contract and warrants under the Securities Exchange Act of 1934 ("the Act"). 15 U.S.C. § 78 et seq. Celsion claims that Stearns engaged in numerous sales of Celsion's securities without being registered as a broker-dealer in violation of 15 U.S.C. § 78o(a)(1). Celsion argues that this renders the consulting agreement void ab initio under 15 U.S.C. § 78cc(b). As a result, the warrants were never valid and the warrant holders cannot exercise them.

The defendants have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction, Fed.R.Civ.P. 12(b)(3) for improper venue, and Fed.R.Civ.P. 12(b)(6) for failure to state a claim. To the extent that venue is proper, they move, in the alternative, for a discretionary change of venue under 28 U.S.C. § 1404(a). The court finds it necessary to discuss only two of the defendants' arguments: personal jurisdiction and venue.

I. Personal Jurisdiction

The court has personal jurisdiction over all the defendants. "Where Congress has authorized nationwide service of process by federal courts under specific federal statutes," and due process is satisfied, "the service of process is sufficient to establish the jurisdiction of the federal court over the person of the defendant." Hogue v. Milodon Eng'g, Inc., 736 F.2d 989, 991 (4th Cir. 1984); see also ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 626 (4th Cir. 1997). Thus, Celsion must show (1) that a statute authorizes service of process on the defendants and (2) that service comports with due process. Hogue, 736 F.2d at 991; ESAB Group, 126 F.3d at 626.

The Act authorizes service of process over the defendants. The Act gives district courts "exclusive jurisdiction of . . . all suits in equity and actions at law brought to enforce any liability or duty created by this chapter or the rules and regulations thereunder." 15 U.S.C. § 78aa; Stern v. Gobeloff, 332 F. Supp. 909, 913 (D.Md. 1971). The defendants argue that Celsion's suit does not fit this jurisdictional provision because it does not "enforce any liability or duty created" by the Act. The Supreme Court has noted that this language refers to "the various provisions in the 1934 Act that explicitly establish duties for certain participants in the securities market or that subject such persons to possible actions brought by the Government, the Securities and Exchange Commission, or private litigants." Leroy v. Great W. United Corp., 443 U.S. 173, 181-82 (1979). In Leroy, a Texas corporation attempting to takeover an Idaho company sued Idaho state officials in federal court in Texas for a declaration that Idaho's takeover laws were invalid. Id. at 177. The Court held, however, that the Act did not impose any affirmative duty on state officials, rendering venue (and, by extension, personal jurisdiction) improper. Id. at 182. The instant case is distinguishable; it asserts potential liability arising from Stearns' failure to perform a duty explicitly required by the Act — the duty of a person engaged in selling securities to register with the Securities and Exchange Commission pursuant to 15 U.S.C. § 78o(a)(1). See Kansas City Power Light Co. v. Kansas Gas Elec. Co., 747 F. Supp. 567, 572 (W.D.Mo. 1990) (indicating that jurisdiction would extend to a proposed takeover target's suit challenging the legality of a form required for takeovers by the Act). Accordingly, the suit fits the Act's jurisdictional provision, which authorizes service of process over the defendants.

Second, due process is satisfied. When a federal statute explicitly authorizes service, due process requires "minimum contacts" only with the United States and not with the forum state. Mates v. North Am. Vaccine, Inc., 53 F. Supp.2d 814, 820 (D.Md. 1999) (requiring minimum contacts with United States); see also Hogue, 736 F.2d at 991 (a federal defendant "must look primarily to federal venue requirements for protection from onerous litigation"). In this case, all of the defendants are citizens or residents of the United States and no "extreme inconvenience or unfairness" would result from subjecting them to personal jurisdiction in Maryland. See ESAB Group, 126 F.3d at 627; see also Hallwood Realty Partners, L.P. v. Gotham Partners, L.P., 104 F. Supp.2d 279, 286-87 (S.D.N.Y. 2000). This Court has personal jurisdiction over them.

II. Venue

Venue provides a different question. In cases where jurisdiction is founded not solely on diversity of citizenship, 28 U.S.C. § 1391(b) governs venue questions "except as otherwise provided by law." 28 U.S.C. § 1391(b). The Act contains a venue provision. It sets venue in any district where "any act or transaction constituting the violation occurred" or where the defendant is found, is an inhabitant or "transacts business." 15 U.S.C. § 78aa; Miller v. Asensio, 101 F. Supp.2d 395, 404 (D.S.C. 2000); Sec. Investor Prot. Corp. v. Vigman, 764 F.2d 1309, 1316 (9th Cir. 1985). The complaint states that all the defendants are Illinois residents or businesses, so they are not found in nor inhabitants of the District of Maryland.

Stearns and SMC alone transact business in the District of Maryland. The complaint states that when Celsion sought to raise capital in April 1996, Stearns represented that "he was a financial advisor who was in the business of helping companies raise capital." Compl. ¶ 19. Stearns, as SMC's representative, then met with Celsion officers in Columbia, Maryland. Compl. ¶ 20. Although an employee does not necessarily transact his or her own business when he or she represents an employer, see Medoil Corp. v. Clark, 753 F. Supp. 592, 599 (W.D.N.C. 1990), Warren Stearns is the president, a director and majority shareholder of SMC, Compl. ¶ 4, and thus exerts influence over the corporation's affairs. Accordingly, both Stearns and SMC transact business in Maryland. See Magic Toyota, Inc. v. Southeast Toyota Distributors, Inc., 784 F. Supp. 306, 320 (D.S.C. 1992) ("[T]he Court will look to the transaction of corporate affairs by a defendant who has such a large stake in the corporation that he is in effect transacting his own affairs."). The complaint does not assert, on the other hand, that any of the warrant holders transact business in the District of Maryland. Accordingly, venue is not proper as to the warrant holders under this part of the statute.

Thus, to render venue proper as to the warrant holders, Celsion must show that an "act or transaction constituting the violation occurred" in the District of Maryland. Because this language provides for venue based on acts or transactions without reference to the parties, it suggests that Celsion need not specify acts committed by each defendant to provide venue — a single act committed by any one of them will render venue proper. Courts have adopted this expansive reading of the statute only in common scheme or conspiracy cases, when at least one co-conspirator in a fraudulent scheme has committed acts in the appropriate district. See, e.g., Miller, 101 F. Supp.2d at 407-08 (explaining co-conspirator theory and predicting that Fourth Circuit would adopt it); Sec. Investor Prot. Corp., 764 F.2d at 1317-18 nn. 4-5; Southmark Prime Plus v. Falzone, 768 F. Supp. 487, 489 n. 3 (D.Del. 1991); Bertozzi v. King Louie Int'l, 420 F. Supp. 1166, 1171 (D.R.I. 1976); Zorn v. Anderson, 263 F. Supp. 745, 748 (S.D.N.Y. 1966). In these cases, courts have held that one defendant's acts in furtherance of a conspiracy involving other defendants are, in essence, "acts" done by the other defendants for venue purposes. Southmark, 768 F. Supp. at 489 n. 3; Bertozzi, 420 F. Supp. at 1171; Zorn, 263 F. Supp. at 748. The fact that courts have developed a "co-conspirator" theory under 15 U.S.C. § 78aa implies that, in the absence of a common scheme, each defendant must commit an act or transaction constituting a violation in the relevant district for venue to be proper. This result comports with the general principle that under 28 U.S.C. § 1391 venue must be proper as to each defendant. 15 Wright, Miller Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3807 (1986). In the present case, only two defendants (SMC and Stearns) allegedly have violated the Act. Compl. ¶ 51. Celsion does not allege that the warrant holders have violated the Act by selling securities without being registered. Moreover, Celsion does not allege a fraudulent conspiracy among the defendants and cannot avail itself of the "co-conspirator" theory. Accordingly, venue as to the warrant holders is improper under 15 U.S.C. § 78aa.

Nor is venue proper under 28 U.S.C. § 1391(b)(2). Section 1391(b)(2) provides that venue is proper in a judicial district "in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated." 28 U.S.C. § 1391 (b)(2). Although the complaint alleges that Stearns, on behalf of SMC, negotiated a consulting agreement with Celsion in Maryland, Compl. ¶¶ 20-22, it does not allege that any of Stearns' solicitations, the actions giving rise to the current lawsuit, occurred in Maryland. Nor does the complaint, which provides the names and locations of some of the solicited investors, Compl. ¶¶ 36-37, allege that Stearns solicited Maryland investors. Moreover, the stock purchase warrants at issue were transferred to Illinois citizens and business. Compl. ¶ 28. In sum, a "substantial part" of the events and property giving rise to this claim do not involve Maryland. Venue as to the warrant holders is not proper under either the Act or section 1391(b)(2).

III. Transfer

The court has determined that venue is proper as to defendants Stearns and SMC, but not as to the warrant holders. Under 28 U.S.C. § 1406(a), the district court in which venue for a case is improper "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." Where venue is appropriate as to some defendants but not others, courts prefer a transfer to an appropriate venue over severance of the case. Cf. Miller, 101 F. Supp. 2 d at 409 (preferring transfer pursuant to sections 1404(a) and 1406(a) to severance where venue proper as to corporate, but not individual, defendants); Magic Toyota, 784 F. Supp. at 321 (same). In the present case, there is good reason for consolidation: the warrant holders clearly are necessary parties in any action against Stearns and SMC that seeks to void the warrants. Because all of the defendants reside in Illinois and all the warrants at issue in this case are held there, venue is proper in the Northern District of Illinois. Accordingly, I will transfer this case to the Northern District of Illinois, pursuant to 28 U.S.C. § 1406(a) with regard to the warrant holders and 28 U.S.C. § 1404(a) with regard to Stearns and SMC.

An order effectuating the rulings in this memorandum will be entered herewith.