Opinion

JUSTICE O'CONNOR, with whom JUSTICE WHITE and JUSTICE STEVENS join, concurring in part and concurring in the judgment.

I agree with the Court that the civil action provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 84 Stat. 941, as amended, 18 U. S. C. §§ 1961-1968 (1988 ed. and Supp. II), have a proximate cause element, and I can even be persuaded that the proximate cause issue is "fairly included" in the question on which we granted certiorari. Ante, at 266, n. 12. In my view, however, before deciding whether the Securities Investor Protection Corporation (SIP C) was proximately injured by petitioner's alleged activities, we should first consider the standing question that was decided below, and briefed and argued here, and which was the only clearly articulated question on which we granted certiorari. In resolving that question, I would hold that a plaintiff need not be a purchaser or a seller to assert RICO claims predicated on violations of fraud in the sale of securities.

Section 10(b) of the Securities Exchange Act of 1934 (1934 Act) makes it unlawful for any person to use, "in connection with the purchase or sale of any security," any "manipulative or deceptive device or contrivance" in contravention of rules or regulations that the Securities and Exchange Commission (SEC) may prescribe. 15 U. S. C. § 78j(b). Pursuant to its authority under § 10(b), the SEC has adopted Rule 10b-5, which prohibits manipulative or deceptive acts "in connection with the purchase or sale of any security." 17 CFR § 240.10b-5 (1991). In 1971, we ratified without discussion the "established" view that § 10(b) and Rule 10b-5 created an implied right of action. Superintendent of Ins. of N. Y. v. Bankers Life & Casualty Co., 404 U. S. 6, 13, n. 9. Four years later, in Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723 (1975), we confirmed the federal courts' "longstanding acceptance" 1 of the rule that a plaintiff must have actually purchased or sold the securities at issue in order to bring a Rule 10b-5 private damages action. Id., at 733.

In this case, the District Court held that SIPC, which was neither a purchaser nor a seller of the allegedly manipulated securities, lacked standing to assert RICO claims predicated on alleged violations of § 10(b) and Rule 10b-5. App. to Pet. for Cert. 45a. The Court of Appeals reversed and held that Blue Chip Stamps' purchaser/seller limitation does not apply to suits brought under RICO. Securities Investment Protection Corp. v. Vigman, 908 F.2d 1461 (CA9 1990). An ex

IThat acceptance was not universal. E. g., Eason v. General Motors Acceptance Corp., 490 F.2d 654, 659 (CA7 1973) (holding that "the protection of [Rule 10b-5] extends to persons who, in their capacity as investors, suffer significant injury as a direct consequence of fraud in connection with a securities transaction, even though their participation in the transaction did not involve either the purchase or the sale of a security") (Stevens, J.). amination of the text of RICO, and a comparison with the situation the Court confronted in Blue Chip Stamps, persuades me that the Court of Appeals' determination was correct. Because the Court's decision today leaves intact a division among the Circuits on whether Blue Chip Stamps' standing requirement applies in RICO suits,2 I would affirm this portion of the decision below, even though we go on to hold that the alleged RICO violation did not proximately cause SIPC's injuries.

Our obvious starting point is the text of the statute under which SIPC sued. RICO makes it unlawful for any person who has engaged in a "pattern of racketeering activity" to invest, maintain an interest, or participate in an enterprise that is engaged in interstate or foreign commerce. 18 U. S. C. § 1962. "[R]acketeering activity" is defined to include a number of state and federal offenses, including any act indictable under 18 U. S. C. § 1341 (1988 ed., Supp. II) (mail fraud) or § 1343 (wire fraud), and "any offense involving... fraud in the sale of securities... punishable under any law of the United States." § 1961(1). RICO authorizes "[a]ny person injured in his business or property by reason of a violation of section 1962" to sue for treble damages in federal court. § 1964(c).

RICO's civil suit provision, considered on its face, has no purchaser/seller standing requirement. The statute sweeps broadly, authorizing "[ainy person" who is injured by reason of a RICO violation to sue. "[P]erson" is defined to include "any individual or entity capable of holding a legal or beneficial interest in property." § 1961(3) (emphasis added). "Insofar as 'any' encompasses 'all'," Mobil Oil Exploration & Producing Southeast, Inc. v. United Distribution Cos., 498 U. S. 211, 223 (1991), the words "any person" cannot reasonably be read to mean only purchasers and sellers of securities. As we have explained in rejecting previous efforts to narrow the scope of civil RICO: "If the defendant engages in a pattern of racketeering activity in a manner forbidden by [§ 1962's] provisions, and the racketeering activities injure the plaintiff in his business or property, the plaintiff has a claim under § 1964(c). There is no room in the statutory language for an additional... requirement." Sedima,

Of course, a RICO plaintiff "only has standing if, and can only recover to the extent that, he has been injured in his business or property by [reason of] the conduct constituting the violation." Id., at 496. We have already remarked that the requirement of injury in one's "business or property" limits the availability of RICO's civil remedies to those who have suffered injury in fact. Id., at 497 (citing Haroco, Inc. v. American National Bank & Trust Co. of Chicago, 747 F.2d 384, 398 (CA7 1984)). Today, the Court sensibly holds that the statutory words "by reason of" operate, as they do in the antitrust laws, to confine RICO's civil remedies to those whom the defendant has truly injured in some meaningful sense. Requiring a proximate relationship between the defendant's actions and the plaintiff's harm, however, cannot itself preclude a nonpurchaser or nonseller of securities, alleging predicate acts of fraud in the sale of securities, from bringing suit under § 1964(c). Although the words "injury in [one's] business or property" and "by reason of" are words of limitation, they do not categorically exclude non purchasers and nonsellers of securities from the universe of RICO plaintiffs.

Petitioner argues that the civil suit provisions of § 1964(c) are not as sweeping as they appear because § 1964(c) incorporates the standing requirements of the predicate acts alleged. But § 1964(c) focuses on the "injur[yJ" of any "person," not the legal right to sue of any proper plaintiff for a predicate act. If standing were to be determined by reference to the predicate offenses, a private RICO plaintiff could not allege as predicates many of the acts that constitute the definition of racketeering activity. The great majority of acts listed in § 1961(1) are criminal offenses for which only a State or the Federal Government is the proper party to bring suit. In light of § 1964(c)'s provision that "any person" injured by reason of a RICO violation may sue, I would not accept that this same section envisions an overlay of standing requirements from the predicate acts, with the result that many RICO suits could be brought only by government entities.

Nor can I accept the contention that, even if § 1964(c) does not normally incorporate the standing requirements of the predicate acts, an exception should be made for "fraud in the sale of securities" simply because it is well established that a plaintiff in a civil action under § 10(b) and Rule 10b-5 must be either a purchaser or seller of securities. A careful reading of § 1961(1) reveals the flaw in this argument. The relevant predicate offense is "any offense involving... fraud in the sale of securities... punishable under any law of the United States." The embracing words "offense... punishable under any law of the United States" plainly signify the elements necessary to bring a criminal prosecution. See Trane Co. v. O'Connor Securities, 718 F.2d 26, 29 (CA2 1983); Dan River, Inc. v. Icahn, 701 F.2d 278, 291 (CA4 1983). To the extent that RICO's reference to an "offense involving fraud in the sale of securities" encompasses conduct that violates § 10(b), see infra, at 282-283, the relevant predicate is defined not by § 10(b) itself, but rather by § 32(a) of the 1934 Act, 15 U. S. C. § 78ff(a), which authorizes criminal sanctions against any person who willfully violates the Act or rules promulgated thereunder. As we have previously made clear, the purchaser/seller standing requirement for private civil actions under § 10(b) and Rule 10b-5 is of no import in criminal prosecutions for willful violations of those provisions. United States v. Naftalin, 441 U. S. 768, 774, n. 6 (1979); SEe v. National Securities, Inc., 393 U. S. 453, 467, n. 9 (1969). Thus, even if Congress intended RICO's civil suit provision to subsume established civil standing requirements for predicate offenses, that situation is not presented here.

Although the civil suit provisions of § 1964(c) lack a purchaser/seller requirement, it is still possible that one lurks in § 1961(1)'s catalog of predicate acts; i. e., it is possible that § 1961(1) of its own force limits RICO standing to the actual parties to a sale. As noted above, the statute defines "racketeering activity" to include "any offense involving... fraud in the sale of securities... punishable under any law of the United States." Unfortunately, the term "fraud in the sale of securities" is not further defined. "[A]ny offense... punishable under any law of the United States" presumably means that Congress intended to refer to the federal securities laws and not common-law tort actions for fraud. Unlike most of the predicate offenses listed in § 1961(1), however, there is no cross-reference to any specific sections of the United States Code. Nor is resort to the legislative history helpful in clarifying what kinds of securities violations Congress contemplated would be covered. See generally Bridges, Private RICO Litigation Based Upon "Fraud in the Sale of Securities," 18 Ga. L. Rev. 43, 58-59 (1983) (discussing paucity of legislative history); Note, RICO and Securities Fraud: A Workable Limitation, 83 Colum. L. Rev. 1513, 15361539 (1983) (reviewing testimony before Senate Judiciary Committee). Which violations of the federal securities laws, if any, constitute a "fraud in the sale of securities" within the meaning of § 1961(1) is a question that has generated much ink and little agreement among courts 3 or commentators,4 and one

The Role of Civil RICO in Securities Litigation, 65 Notre Dame L. Rev. 896, 944-947 (1990) (securities fraud is a predicate offense only if fraud which we need not definitively resolve here. The statute unmistakably requires that there be fraud, sufficiently willful to constitute a criminal violation, and that there be a sale of securities. At the same time, however, I am persuaded that Congress' use of the word "sale" in defining the predicate offense does not necessarily dictate that a RICO plaintiff have been a party to an executed sale.

Section 1961(1)'s list of racketeering offenses provides the RICO predicates for both criminal prosecutions and civil actions. Obviously there is no requirement that the Government be party to a sale before it can bring a RICO prosecution predicated on "fraud in the sale of securities." Accordingly, any argument that the offense itself embodies a standing requirement must apply only to private actions. That distinction is not tenable, however. By including a private right of action in RICO, Congress intended to bring "the pressure of 'private attorneys general' on a serious national problem for which public prosecutorial resources [were] deemed inadequate." Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U. S. 143, 151 (1987). Although not everyone can qualify as an appropriate "private attorney general," the prerequisites to the role are articulated, not in the definition of the predicate act, but in the civil action provisions of § 1964(c)-a plaintiff must allege "injur[y] in his business or property by reason of" a RICO violation.

Construing RICO's reference to "fraud in the sale of securities" to limit standing to purchasers and sellers would be

occurs in actual sale of a security); Tyson & August, The Williams Act Mter RICO: Has the Balance Tipped in Favor of Incumbent Management?, 35 Hastings L. J. 53,79-80 (1983) (criminal violations of antifraud provisions of the securities laws should constitute racketeering activity, provided that the conduct is in connection with purchase or sale of securities); Note, Application of the Racketeer Influenced and Corrupt Organizations Act (RICO) to Securities Violations, 8 J. Corp. L. 411, 430-431 (1983) ("fraud in the sale of securities" applies to fraudulent purchase as well as fraudulent sale of securities). in tension with our reasoning in Blue Chip Stamps. In that case, the Court admitted that it was not "able to divine from the language of § 10(b) the express 'intent of Congress' as to the contours of a private cause of action under Rule 10b-5." 421 U. S., at 737. The purchaser/seller standing limitation in Rule 10b-5 damages actions thus does not stem from a construction of the phrase "in connection with the purchase or sale of any security." Rather, it rests on the relationship between § 10(b) and other provisions of the securities laws, id., at 733-736, and the practical difficulties in granting standing in the absence of an executed transaction, id., at 737-749, neither of which are relevant in the RICO context.

Arguably, even if § 10(b)'s reference to fraud "in connection with" the sale of a security is insufficient to limit the plaintiff class to purchasers and sellers, § 1961(1)'s reference to fraud "in" the sale of a security performs just such a narrowing function. But we have previously had occasion to express reservations on the validity of that distinction. In United States v. Naftalin, 441 U. S. 768 (1979), we reinstated the conviction of a professional investor who engaged in fraudulent "short selling" by placing orders with brokers to sell shares of stock which he falsely represented that he owned. This Court agreed with the District Court that N aftalin was guilty of fraud "in" the "offer" or "sale" of securities in violation of § 17(a)(1) of the Securities Act of 1933, 15 U. S. C. § 77q(a)(l), even though the fraud was perpetrated on the brokers, not their purchasing clients. The Court noted:"[Naftalin] contends that the requirement that the fraud be 'in' the offer or sale connotes a narrower range of activities than does the phrase 'in connection with,' which is found in § 10(b).... First, we are not necessarily persuaded that 'in' is narrower than 'in connection with.' Both Congress, see H. R. Rep. No. 85, 73d Cong., 1st Sess., 6 (1933), and this Court, see Superintendent of Insurance v. Bankers Life & Cas. Co., 404 U. S. 6,10 (1971), have on occasion used the terms interchangeably. But even if 'in' were meant to connote a narrower group of transactions than 'in connection with,' there is nothing to indicate that 'in' is narrower in the sense insisted upon by Naftalin." 441 U. S., at 773, n. 4.

So also in today's case. To the extent that there is a meaningful difference between Congress' choice of "in" as opposed to "in connection with," I do not view it as limiting the class of RICO plaintiffs to those who were parties to a sale. Rather, consistent with today's decision, I view it as confining the class of defendants to those proximately responsible for the plaintiff's injury and excluding those only tangentially "connect[ed] with" it.

In Blue Chip Stamps, we adopted the purchaser/seller standing limitation in § 10(b) cases as a prudential means of avoiding the problems of proof when no security was traded and the nuisance potential of vexatious litigation. 421 U. S., at 738-739. In that case, however, we were confronted with limiting access to a private cause of action that was judicially implied. We expressly acknowledged that "if Congress had legislated the elements of a private cause of action for damages, the duty of the Judicial Branch would be to administer the law which Congress enacted; the Judiciary may not circumscribe a right which Congress has conferred because of any disagreement it might have with Congress about the wisdom of creating so expansive a liability." Id., at 748. To be sure, the problems of expansive standing identified in Blue Chip Stamps are exacerbated in RICO. In addition to the threat of treble damages, a defendant faces the stigma of being labeled a "racketeer." Nonetheless, Congress has legislated the elements of a private cause of action under RICO. Specifically, Congress has authorized "[ainy person injured in his business or property by reason of" a RICO violation to bring suit under §1964(c). Despite the very real specter of vexatious litigation based on speculative damages, it is within Congress' power to create a private right of ac tion for plaintiffs who have neither bought nor sold securities. For the reasons stated above, I think Congress has done so. "That being the case, the courts are without authority to restrict the application of the statute." United States v. Turkette, 452 U. S. 576, 587 (1981).

In sum, we granted certiorari to resolve a split among the Circuits as to whether a nonpurchaser or nonseller of securities could assert RICO claims predicated on violations of § 10(b) and Rule 10b-5. See cases cited n. 1, supra. I recognize that, like the case below, some of those decisions might have been more appropriately cast in terms of proximate causation. That we have now more clearly articulated the causation element of a civil RICO action does not change the fact that the governing precedent in several Circuits is in disagreement as to Blue Chip Stamps' applicability in the RICO context. Because that issue was decided below and fully addressed here, we should resolve it today. I would sustain the Court of Appeals' determination that RICO plaintiffs alleging predicate acts of fraud in the sale of securities need not be actual purchasers or sellers of the securities at issue. Accordingly, I join all of the Court's opinion except Part IV.

Notes

2 Compare Securities Investment Protection Corp. v. Vigman, 908 F.2d 1461, 1465-1467 (CA9 1990) (purchaser/seller standing limitation does not apply to RICO claims predicated on acts of fraud in the sale of securities); Warner v. Alexander Grant & Co., 828 F.2d 1528, 1530 (CA111987) (same), with International Data Bank, Ltd. v. Zepkin, 812 F.2d 149, 151-154 (CA4 1987) (standing to bring RICO action predicated on fraud in the sale of securities is limited to purchaser or seller of securities); Brannan v. Eisenstein, 804 F.2d 1041, 1046 (CA8 1986) (same).

3 Compare First Pacific Bancorp, Inc. v. Bro, 847 F.2d 542, 546 (CA9 1988) (violations of §§ 13(d) and 14(e) of the 1934 Act cannot be RICO predicate offenses because neither provision embraces fraud "in the sale" of a security); In re Par Pharmaceutical, Inc. Securities Litigation, 733 F. Supp. 668 (SDNY 1990) (violation of § lO(b) and Rule lOb-5 involving fraud in connection with the purchase of securities cannot be a predicate offense), with In re Catanella and E. F. Hutton & Co. Securities Litigation, 583 F. Supp. 1388, 1425, n. 56 (ED Pa. 1984) (reach of RICO claims predicated on violations of § lOb and Rule 10b-5 encompasses "both purchases and sales"); Lou v. Belzberg, 728 F. Supp. 1010, 1026 (SDNY 1990) (violation of Hart-Scott-Rodino reporting requirement relates to "fraud in the sale of securities" and may constitute a RICO predicate act); Spencer Coso v. Agency Rent-A-Car, Inc., 1981-1982 CCH Fed. Sec. L. Rep., 98,361, p. 92,215 (Mass. 1981) (violation of § 13(d) reporting requirements is RICO predicate act because "[t]he remedial purpose of the statute would appear to encompass fraud committed by the purchaser of securities, as well as by the seller").

4 See, e. g., Bridges, Private RICO Litigation Based Upon "Fraud in the Sale of Securities," 18 Ga. L. Rev. 43, 81 (1983) ("fraud in the sale of securities" encompasses any violation of a specific antifraud or antimanipulation provision of the securities laws and regulations or use of stolen or counterfeit securities, as long as violation is by means of an actual sale of securities); Johnson, Predators Rights: Multiple Remedies for Wall Street Sharks Under the Securities Laws and RICO, 10 J. Corp. L. 3, 39-40 (1984) (allegations of violations of antifraud provisions of the federal securities laws should satisfy "fraud in the sale of securities" definition); Long, Treble Damages for Violations of the Federal Securities Laws: A Suggested Analysis and Application of the RICO Civil Cause of Action, 85 Dick. L. Rev. 201, 225-226 (1981) (any violation of federal securities laws other than reporting or "housekeeping" measures suffices to assert predicate act of "fraud in the sale of securities"); MacIntosh, Racketeer Influenced and Corrupt Organizations Act: Powerful New Tool of the Defrauded Securities Plaintiff, 31 Kan. L. Rev. 7,30-37 (1982) ("fraud in the sale of securities" is both broader and narrower than antifraud provisions of securities laws); Mathews, Shifting the Burden of Losses in the Securities Markets: