Plaintiff brought claims for securities fraud under Kentucky’s Blue Sky Laws in the U.S. District Court for the Western District of Kentucky, alleging that defendant convinced plaintiff to invest in International Tractor Co. (ITC), a purported supplier of heavy construction equipment. Plaintiff’s complaint alleged that the investments were in fact part of a Ponzi scheme perpetrated by defendant, and that plaintiff lost substantially all of his $1.6 million investment.

Defendant moved to dismiss plaintiff’s securities fraud claims on a variety of grounds, including that the agreement by which plaintiff invested in ITC was not a contract for the sale of securities, as is required to state a claim under the Blue Sky Laws....