                            In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 04-2514
KENNETH FOSS, Administrator
of the Estate of Vincent P. Koth,
                                              Plaintiff-Appellant,
                                v.

BEAR, STEARNS & CO., INC., and
PATRICK DELAHANTY O’MEARA,
                                           Defendants-Appellees.

                         ____________
         Appeal from the United States District Court for
        the Northern District of Illinois, Eastern Division.
         No. 03 C 8338—Matthew F. Kennelly, Judge.
                         ____________
 ARGUED NOVEMBER 30, 2004—DECIDED JANUARY 11, 2005
                   ____________




 Before BAUER, POSNER, and EASTERBROOK, Circuit
Judges.
  EASTERBROOK, Circuit Judge. Arthur McDonnell became
administrator of Vincent P. Koth’s estate in May 1998.
Discovering that Koth kept some securities in safe deposit
boxes, so that they did not appear in any of his brokerage
statements, McDonnell concealed them from the probate
court, Koth’s heirs, and the tax collector. He set up a corp-
2                                                No. 04-2514

oration and asked his son-in-law Patrick O’Meara to trans-
fer the securities to its ownership. O’Meara, an account
executive of Bear, Stearns & Co., did just that. McDonnell
withdrew the money for his own use. We must assume,
given the posture of the case, that O’Meara was McDonnell’s
accomplice and deceived Bear Stearns about what he was
doing and why—though this is no more than an allegation,
and perhaps O’Meara did not realize what McDonnell was
up to. Eventually McDonnell was caught, and a state court
has ordered him to repay more than $3.4 million; whether
the money can be recouped is doubtful. Kenneth Foss, who
replaced McDonnell as executor in May 2002, filed this suit
against both O’Meara and Bear Stearns under §10(b) of the
Securities Exchange Act of 1934, 15 U.S.C. §78j(b), and the
SEC’s Rule 10b-5, 17 C.F.R. §240.10b-5. Foss contends that
O’Meara defrauded the Koth Estate and that Bear Stearns
is vicariously liable for his misdeeds under §20(a), 15 U.S.C.
§78t(a).
  This statement of the claim reveals its weakness, for
O’Meara did not deceive McDonnell (or for that matter the
estate, which “knew” whatever McDonnell knew). There is
no violation of §10(b) without fraud and no fraud without
deceit. See, e.g., Dirks v. SEC, 463 U.S. 646 (1983); Chiarella
v. United States, 445 U.S. 222 (1980); Ernst & Ernst v.
Hochfelder, 425 U.S. 185 (1976). The deceit was committed
by McDonnell against the probate court and Koth’s heirs.
McDonnell doubtless violated §10(b) and Rule 10b-5, even
though his fraud does not concern the value of any security.
See SEC v. Zandford, 535 U.S. 813 (2002); United States v.
Naftalin, 441 U.S. 768 (1979); SEC v. Jakubowski, 150 F.3d
675 (7th Cir. 1998). But McDonnell is not a defendant.
Instead of deceiving McDonnell, O’Meara helped him bilk
the court, heirs, and revenue officials. Yet aiding and
abetting a fraud does not support damages in private
actions, see Central Bank of Denver, N.A. v. First Interstate
Bank of Denver, N.A., 511 U.S. 164 (1994), though it does
No. 04-2514                                                3

allow relief in some actions by the Securities and Exchange
Commission. See §20(e), 15 U.S.C. §78t(e). If O’Meara is not
liable to the Koth Estate, Bear Stearns cannot be liable
vicariously under §20(a). So the district court dismissed the
complaint for failure to state a claim on which relief may be
granted. 2004 U.S. Dist. LEXIS 8694 (N.D. Ill. May 14,
2004), 2004 U.S. Dist. LEXIS 9304 (N.D. Ill. May 17, 2004).
  O’Meara and Bear Stearns contend that we need not
consider these subjects, because the claim comes too late.
Until 2002, suit had to be filed by the earlier of one year
from discovery of the wrongdoing or three years from the
improper transactions. See Lampf, Pleva, Lipkind, Prupis
& Petigrow v. Gilbertson, 501 U.S. 350 (1991). As part of the
Sarbanes-Oxley Act, Congress changed the allowable time
to the shorter of two years from discovery or five years from
the improper transactions. See Section 804 of Pub. L. No.
107-204, 116 Stat. 745, 801 (2002), codified in part at 28
U.S.C. §1658(b). Defendants contend that, by the time
Sarbanes-Oxley took effect on July 30, 2002, three years
had passed since McDonnell’s corporation got record title to
the Koth securities. Only if the law retroactively revives
expired claims, defendants contend, is this suit viable.
  Foss insists that we lack authority to consider this ar-
gument because the district judge did not pass on it. That’s
wrong; prevailing parties may defend their judgments on all
grounds preserved below. See Massachusetts Mutual Life
Insurance Co. v. Ludwig, 426 U.S. 479 (1976); Pease v.
Production Workers Union, 386 F.3d 819, 821 (7th Cir.
2004). Foss also says that, because the judge did not make
a decision on this issue, the decision is not final and may
not be appealed. That’s odd, as Foss himself did appeal,
from a classic final judgment: one dismissing his complaint
with prejudice. A selection among reasons for the dismissal
did not make it any the less final.
  Having advanced ill-considered procedural responses to
defendants’ position, Foss then decided not to meet it on the
merits. That was both daring and foolish. He could have
4                                                No. 04-2514

asked us to emulate the district judge; after all, the period
of limitations is an affirmative defense that a complaint
need not address. Unless the complaint alleges facts that
create an ironclad defense, a limitations argument must
await factual development. See United States v. Northern
Trust Co., 372 F.3d 886 (7th Cir. 2004); Xechem, Inc. v.
Bristol-Myers Squibb Co., 372 F.3d 899 (7th Cir. 2004);
Walker v. Thompson, 288 F.3d 1005 (7th Cir. 2002). Per-
haps Foss could show that some of the improper transac-
tions occurred within three years of suit, or at least within
three years before the Sarbanes-Oxley Act tacked on two
more. But he has not advanced such an argument, so the
complaint is doomed unless the new statute is retroactive.
In re Enterprise Mortgage Acceptance Co. Securities Litiga-
tion, 2004 U.S. App. LEXIS 25010 (2d Cir. Dec. 6, 2004), the
first appellate decision on the subject, holds that it is not
retroactive. We find it persuasive and have nothing to add
to the second circuit’s explanation.
   For completeness we add that the district judge got this
right on the merits. O’Meara was at worst McDonnell’s
henchman, and there is no securities-law liability in private
litigation for aiding and abetting. If O’Meara is not liable to
the estate, then Bears Stearns cannot be vicariously liable
to it under §20(a). Foss wants us to call the conduct “manip-
ulation” rather than “fraud,” but this is a distinction
without a difference. In securities law, manipulation is a
kind of fraud; deceit remains essential. See Schreiber v.
Burlington Northern, Inc., 472 U.S. 1 (1985); Santa Fe
Industries, Inc. v. Green, 430 U.S. 462, 476-77 (1977).
  This drives Foss to contend that O’Meara deceived Bear
Stearns about what he was doing and about his relations to
McDonnell. Such deceit might make O’Meara liable to Bear
Stearns, even though it did not affect the value of any
security. See United States v. O’Hagan, 521 U.S. 642 (1997),
in addition to Zandford, supra. But how could that help the
estate? Bear Stearns is a defendant, not a plaintiff; if
No. 04-2514                                                  5

O’Meara is liable to Bear Stearns for deceiving it (and thus
depriving it of the value of his honest services), then it
rather than the estate would collect any damages.
  What Foss would like to do is put O’Meara’s (potential)
liability to Bear Stearns together with control-person lia-
bility under §20(a) in the estate’s favor. We don’t see how
that could be possible; Foss does not cite any decision hold-
ing that it is. Section 20(a) creates vicarious liability for a
person who actually or potentially controlled the primary
violator’s acts. See 17 C.F.R. §240.12b-2; Harrison v. Dean
Witter Reynolds, Inc., 974 F.2d 873, 880-81 (7th Cir. 1992);
Pommer v. Medtest Corp., 961 F.2d 620, 626-27 (7th Cir.
1992). If the primary violation is O’Meara’s deceit of Bear
Stearns, then McDonnell would be the control person. It
makes no sense to say that Bear Stearns is the control per-
son and victim at the same time. And if by some legerde-
main Bear Stearns could be thought to control O’Meara’s
fraud against itself, then as the victim of the primary
violation it would hold the right to collect from itself, a
useless circle.
  Unless §10(b) turns all transactions using the proceeds of
crime into a species of “fraud,” the estate lacks a claim
under the federal securities laws. Yet, as the Supreme
Court has held repeatedly, §10(b) is not an all-purpose
remedy for private misdeeds. Schreiber and Santa Fe make
the point directly, and Zandford distinguishes, as outside
the federal laws’ reach, “a case in which a thief simply
invested the proceeds of a routine conversion in the stock
market.” 535 U.S. at 820. Fraud differs from hawking or
fencing stolen goods (the best description of the activity in
which O’Meara aided McDonnell). A teller who embezzles
from the bank and invests the proceeds in stock does not
violate the federal securities laws. McDonnell embezzled
securities, so he did violate the federal securities laws; but
that primary violation is McDonnell’s alone. Given Central
Bank of Denver, which knocks out private actions for aiding
6                                            No. 04-2514

and abetting primary violations, there is no way that the
people and firms who dealt with McDonnell and the
proceeds of his crimes could themselves be liable under
§10(b) in this private suit.
                                               AFFIRMED


A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit




                  USCA-02-C-0072—1-11-05
