BIRMINGHAM, Ala. (1/27/10)--The U.S. District Court in Birmingham, Ala., Monday gave 13 executives and former executives and volunteer board members of U.S. Central FCU 14 days to respond to the latest filing in a securities fraud lawsuit brought against the individuals and U.S. Central's accounting firm RubinBrown by Corporate America CU (CUAC). The suit centers around U.S. Central's action in December to convert $450 million of non-permanent capital to permanent paid-in-capital shares known as "PIC II." Neither U.S. Central nor the National Credit Union Administration (NCUA)--the conservator of U.S. Central--is a party in this complaint filed by the Alabama-based corporate. Corporate America CU filed its response brief to the defendants' Dec. 16 motion to dismiss the case on Friday. The case is before U.S. District Judge Inge Johnson. At issue is whether the PIC II shares are securities. Unlike the other cases involving U.S. Central, the defense argues that the PIC II capital shares in U.S. Central do not qualify as "securities" under the federal securities laws. Instead, they argue that NCUA--not the Securities Exchange Commission (SEC), which administers the federal securities laws on which much of CACU's complaint is premised--is the regulator responsible for federally insured credit unions such as U.S. Central. NCUA's regulations, specifically 12 CFR part 704, apply to corporate credit union capital instruments such as PIC II, and NCUA's role as the federal safety and soundness regulator of corporate credit unions means that the securities laws should not apply based on established legal precedents, according to defense filings. Attorneys for the U.S. Central executives and board argue that if the PIC II are not securities, then the CACU's federal and state securities laws claims should be dismissed because those laws only apply to the offering and/or sale of securities. The defense lawyers also argued that the claims not based on securities laws should also be dismissed because Alabama would only be the appropriate venue for the non-securities claims if those claims piggyback on securities laws claims, since U.S. Central is based in Kansas, according to the motion to dismiss. CACU's complaint alleges securities fraud and breach of fiduciary duty against the individuals, and professional negligence and state securities law violations against the accounting firm RubinBrown for its valuation of the PIC II shares. CACU's response to the motion to dismiss reiterated the complaint's theory that PIC II shares are securities, which are subject to the Securities Exchange Act of 1934.