This is a suit to recover damages for alleged securities fraud arising under Sections 10(b) and 20 of the Securities Exchange Act of 1934, as well as common law and the Georgia Securities Act of 1973. Appellant Ronald O. Pelletier d/b/a ROB Investments, is a customer of appellee, Stuart-James Company, Inc. ("Stuart-James"). Stuart-James is a registered broker-dealer with the Securities and Exchange Commission and has an office in Atlanta, Georgia. Appellee Coy Paschal, Jr., ("Paschal"), was an account executive of Stuart-James in Atlanta, Georgia. Appellee Art Rocker is an agent of Stuart-James and supervisor of Paschal in connection with the security transactions at issue in this action.

In March 1986, Paschal on behalf of Stuart-James allegedly entered into an agreement with appellant that Stuart-James would sell appellant 10,000 units of the initial public offering of Universal Medical Buildings, Inc. ("UMB") at a price of $2.50 per unit. Each unit of the public offering consisted of five common shares of UMB and two warrants which could be converted into UMB's stock. The units of the public offering constituted securities under the Exchange Act.

As a condition for selling appellant 10,000 units of the public offering, Paschal allegedly required appellant to buy stock of Denpac Corporation ("Denpac") and to cause another account to be opened with Stuart-James. As part of the alleged agreement with Stuart-James, appellant purchased 12,000 shares of Denpac common stock and 250 shares of Denpac preferred stock. On March 3, 1986, appellant delivered a check in the amount of $7,140 to Stuart-James as a payment for the Denpac stock. Appellant contends that he would not have purchased the shares of Denpac stock but for the fact that Stuart-James refused to sell units of the initial public offering to appellant unless appellant purchased shares of Denpac stock.

After appellant purchased the shares of Denpac stock, Paschal informed appellant that Stuart-James could deliver to appellant only 1,000 units of the public offering rather than the 10,000 units of UMB's public offering. On March 5, 1986, appellant mailed a check in the amount of $2,500 for 1,000 units of UMB's public offering. Thereafter, Paschal repeatedly sought permission from appellant to sell appellant's 1,000 units of the public offerings of UMB on the day of the public offering. Appellant refused to make a binding commitment to allow Paschal to sell the 1,000 units of the public offering.

On March 17, 1986, appellant telephoned Paschal to instruct him to sell appellant's units of the public offering of UMB. Paschal informed appellant that the appellees had not delivered the units of the public offering to appellant. Appellant contends that appellees refused to deliver the units of UMB's public offering because appellant refused to agree to sell the units in the aftermarket on the day of the public offering.

Appellant filed a six-count claim on April 15, 1986, based on appellees' fraud in connection with the purchase and sale of securities. Appellant's complaint includes claims for violations of Sections 10(b) and 20 of the Securities Exchange Act of 1934, common law intentional misrepresentation and fraud, breach of contract, fraud in the inception of the contract, and violations of the Georgia Securities Act of 1973.

On October 6, 1987, the trial in the action commenced in the United States District Court for the Northern District of Georgia. At the conclusion of appellant's evidence, the district court stated:[I] conclude that the plaintiff has failed to prove any elements that would entitle plaintiff to recover under any of the theories observed by the plaintiff.

And I also conclude that even if the plaintiff has established liability, the plaintiff has failed to establish any legally recoverable damages causally connected to any of the actions by any of the defendants. Therefore, the motion for directed verdict is granted.

The district court judge entered the order on October 14, 1987, granting the appellees' motion for directed verdict.

On appeal, appellant contends that there is sufficient evidence to present a jury question on the issues of appellees' fraud in connection with the sale of securities to appellant and appellant's damages. Appellant alleges that Paschal's promise in connection with a securities transaction to sell appellant 10,000 units of UMB's public offering although secretly intending not to sell the stock to appellant violates Section 10(b) of the Securities Exchange Act of 1934. Furthermore, appellant alleges that appellees' later contract to sell appellant 1,000 units of UMB although appellees had a secret plan, undisclosed to appellant, of delivering new issue only if the purchaser agreed to sell the stock on opening date of the new issue violates Section 10(b). Finally, appellant alleges that there is sufficient evidence of appellees' intentional misrepresentation and fraud to present a jury question.

In reviewing the district court's order granting appellees' motion for a directed verdict, the court must examine the whole record in a light most favorable to the party opposing the motion. Dempsey v. Auto Owners Ins. Co., 717 F.2d 556, 559 (11th Cir.1983). A directed verdict is appropriate only when there can be but one reasonable conclusion as to the verdict. Id.

Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful to "use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance."1 15 U.S.C. Sec. 78j(b). Rule 10b-5, promulgated by the Securities and Exchange Commission under Section 10(b), prohibits any "artifice to defraud" or any act "which operates or would operate as a fraud or deceit upon any person, 'in connection with the purchase or sale of any security.' "2 17 C.F.R. Sec. 240.10b-5; see Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 97 S. Ct. 1292, 51 L. Ed. 2d 480 (1977).

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The United States Supreme Court, in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S. Ct. 1917, 44 L. Ed. 2d 539 (1975), held that a private damages action under Section 10(b) and Rule 10b-5 is confined to actual purchasers or sellers of securities.3 Id. It is equally well established that a contract to purchase or sell securities constitutes the purchase or sale of securities within the meaning of the antifraud provisions of the securities laws. Id., 421 U.S. at 750-51, 95 S. Ct. at 1932-33, (citing 15 U.S.C. Sec. 78c(a)(13) and (14)).4 Accordingly, a person who alleges a violation of Rule 10b-5 must demonstrate that he is an actual purchaser or seller, or that he was party to a legally enforceable contract to purchase or sell securities.5

In essence, one of appellant's theories of liability is based on a fraudulent refusal to perform a contract for the sale of 10,000 units. Appellees contend that the alleged agreement failed to comply with the Georgia "Statute of Frauds" for securities sales, O.C.G.A. Sec. 11-8-319(a), which provides:

A contract for the sale of securities is not enforceable by way of action or defense unless:

(a) There is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker sufficient to indicate that a contract has been made for sale of a stated quantity or described securities at a defined or stated price.

In response, appellant argues that there was sufficient evidence to take the contract out of the statute of frauds and render it enforceable. Appellant contends that appellant's claim of entitlement to 10,000 units of UMB securities should not be subject to the statute of frauds because of the broker's "admission" as to the existence of "the agreement," as well as the brokerage firm's negotiation of a check sent by appellant, allegedly for the purchase of 1,000 units.

The court notes that in the complaint, and throughout the course of the trial, the appellant's theory was based on a fraudulent refusal to perform a contract for the sale of 10,000 units of UMB securities, not a later alleged contract for the sale of 1,000 units. The record shows no "admissions" were made with respect to the 10,000 unit contract, nor was any payment made or accepted with respect thereto. Furthermore, appellant has failed to offer any writing signed by Stuart-James or by any authorized agent indicating that a contract existed for the sale of the UMB securities. Consequently, appellant's theory based on a fraudulent refusal to perform a contract for the sale of 10,000 units of UMB securities must fail because the alleged agreement is unenforceable as a matter of law.6 Where a contract is unenforceable, an action for damages cannot be maintained on the ground of fraud in refusing to perform the contract, even though the promisor at the time of making the oral contract may have had no intention of performing it. See Canell v. Arcola Housing Corp., 65 So. 2d 849, 851 (Fla.1953); see also Caplan v. Roberts, 506 F.2d 1039, 1041 (9th Cir.1974) (interpreting California law).

Section 10(b) and Rule 10b-5 proscribe fraudulent conduct "in connection with the purchase or sale of any security." 15 U.S.C. Sec. 78j; 17 C.F.R. Sec. 240.10b-5. Appellant must show that the fraudulent conduct "touches" the purchase or sale of securities.7 See Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 12-13, 92 S. Ct. 165, 169, 30 L. Ed. 2d 128 (1971). Because there exists no enforceable contract for the sale of UMB securities, appellant is precluded from asserting a 10b-5 fraud claim "in connection with" the attempted purchase of UMB securities. Appellant's purchase of the Denpac stock, however, serves as the predicate for an action under the securities law. See Smallwood v. Pearl Brewing Co., 489 F.2d 579, 595 (5th Cir.), cert. denied, 419 U.S. 873, 95 S. Ct. 134, 42 L. Ed. 2d 113 (1974).

Appellant argues as a second theory of liability that appellees fraudulently induced appellant to purchase Denpac stock from Stuart-James by means of appellees' promise to sell 10,000 units of UMB to appellant at a later date. In Messer v. E.F. Hutton & Co., 833 F.2d 909 (11th Cir.1987), this court recognized that a fraudulent promise to perform future acts--though not sufficient to support a common law fraud action--can be the basis of a claim of securities fraud under Section 10(b) if the promise is part of the consideration for the sale of securities.8 Id. at 914. Under this theory, the fraudulent promise to sell 10,000 units of UMB in the future in order to cause the Denpac purchase constitutes a "misleading and deceptive practice" in the "special Rule 10b-5 sense of the word [fraud]," Id. (quoting Woodward v. Metro Bank of Dallas, 522 F.2d 84, 93 (5th Cir.1975). See Luce v. Edelstein, 802 F.2d 49 (2d Cir.1986) ("Plausible allegations that defendants made specific promises to induce a securities transaction while secretly intending not to carry them out or knowing they could not be carried out, and that they were not carried out are sufficient to state a claim for relief under Section 10(b)."). See also Pross v. Katz, 784 F.2d 455 (2d Cir.1986); McGrath v. Zenith Radio Corp., 651 F.2d 458, 466 (7th Cir.), cert. denied, 454 U.S. 835, 102 S. Ct. 136, 70 L. Ed. 2d 114 (1981).

The law is clear that an action for fraud may not be predicated on inducing a party to enter into an unenforceable contract. Gregg v. U.S. Indus., 715 F.2d 1522 (11th Cir.1983). The court recognizes, however, that an allegation that a securities transaction was fraudulently induced by a promise, even an unenforceable one, to perform a future act can be actionable under Section 10(b) if the promise is part of the consideration of the sale.9 The dispute in this case focuses upon whether appellant sustained any legally recoverable damages from the appellees' alleged violations of Section 10(b) of the Securities Exchange Act of 1934.

Appellant seeks to recover the substantial profits that could have accrued to him as the owner of 10,000 units of UMB. Appellant argues that, at the very least, damages would be equal to the difference between the public offering of 10,000 units of UMB and the high market price of the units on the day of the public offering. Accordingly, appellant asserts an entitlement to damages exceeding $125,000.10

Although neither Section 10(b) of the Act nor Rule 10b-5 contains explicit provisions for determining damages, courts have applied the damages standard of Section 28 of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78bb(a), to Rule 10b-5 claims. Feldman v. Pioneer Petroleum, Inc., 813 F.2d 296, 301 (10th Cir.1987). Section 28(a) of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78bb(a), "limits recovery in any private damages action brought under the 1934 Act to 'actual damages.' "11 Blue Chip Stamps, 421 U.S. at 734, 95 S.Ct. at 1925. See Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 92 S. Ct. 1456, 31 L. Ed. 2d 741 (1972). In securities fraud cases, therefore, damages are determined in accordance with the extent to which a plaintiff is actually damaged as a result of the defendant's fraudulent conduct. Harris v. Union Elec. Co., 787 F.2d 355 (8th Cir.1986). "Actual damages" has been interpreted to mean some form of economic loss and does not include punitive damages.12 Jones v. Miles, 656 F.2d 103, 107 n. 8 (5th Cir. Unit B Aug. 1981). Generally, the appropriate measure of actual damages in a Rule 10b-5 case is out-of-pocket loss.13 Woods v. Barrett Bank of Ft. Lauderdale, 765 F.2d 1004 (11th Cir.1985); Alna Capital Ass'n v. Wagner, 758 F.2d 562 (11th Cir.1985); Hackbart v. Holmes, 675 F.2d 1114 (10th Cir.1983). Under Section 28 of the 1934 Act, according to the Supreme Court, the "correct measure of damages ... is the difference between the fair value of all that the [plaintiff] received and the fair value of what he would have received had there been no fraudulent conduct."14 Randall v. Loftsgaarden, 478 U.S. 647, 661, 106 S. Ct. 3143, 3152, 92 L. Ed. 2d 525 (1986) (quoting Affiliated Ute Citizens v. United States, 406 U.S. 128, 155, 92 S. Ct. 1456, 1473, 31 L. Ed. 2d 741 (1972)).

The strictly compensatory nature of damages awardable in private securities fraud action requires that the defrauded party show more than a mere loss of a noncontractual opportunity to buy or sell securities.15 The measure of damages in a Rule 10b-5 case is limited to actual pecuniary loss suffered by the defrauded party, and does not include any speculative loss of profits. See Wolf v. Frank, 477 F.2d 467, 478 (5th Cir.), cert. denied, 414 U.S. 975, 94 S. Ct. 287, 38 L. Ed. 2d 218 (1973); see also Harris v. American Inv. Co., 523 F.2d 220 (8th Cir.1975), cert. denied, 423 U.S. 1054, 96 S. Ct. 784, 46 L. Ed. 2d 643 (1976).

A plaintiff has the burden of proving every element of his Rule 10b-5 anti-fraud action, including damages. Upon careful examination of the record, we agree with the district court's finding that appellant has simply failed to prove any legally recoverable damages, i.e., actual pecuniary loss, resulting from the alleged fraudulently induced Denpac stock purchase.16 The failure to show actual damages is a fatal defect in an anti-fraud action pursuant to Rule 10b-5.17 Feldman, 813 F.2d at 302; Shapiro v. Midwest Rubber Reclaiming Co., 626 F.2d 63, 69-70 (8th Cir.1980), cert. denied, 449 U.S. 1079, 101 S. Ct. 860, 66 L. Ed. 2d 802 (1981).

Appellant correctly notes that a court may award "benefit of the bargain" damages18 under Rule 10b-5 when the circumstances require it. John R. Lewis, Inc. v. Newman, 446 F.2d 800, 805 (5th Cir.1971). While out-of-pocket loss is generally the proper measure of damages, this measure is "not a talisman." Garnatz v. Stifel, Nicolaus & Co., 559 F.2d 1357, 1360 (8th Cir.1977), cert. denied, 435 U.S. 951, 98 S. Ct. 1578, 55 L. Ed. 2d 801 (1978). The function of the court "is to fashion the remedy best suited to the harm." Id. Accordingly, a rescissional remedy may be available to a defrauded plaintiff under Rule 10b-5.19 Id.; Huddleston v. Herman & MacLean, 640 F.2d 534, 539 (5th Cir. Unit A, Mar. 1981).

In order to be entitled to "benefit of the bargain" damages, however, there must in fact be a "bargain" or contract. Specifically, there must be an enforceable contract for the "purchase or sale" of securities in order to support jurisdiction under Rule 10b-5, 17 C.F.R. 240.10b-5. Blue Chip Stamps, 421 U.S. 723, 95 S. Ct. 1917; see Reid v. Hughes, 578 F.2d 634 (5th Cir.1978). The damages that appellant seeks to recover in this case arise from the alleged fraudulent failure of appellees to perform an unenforceable contract. Appellant does not have standing to seek damages resulting from the attempted purchase of UMB securities because appellant was neither a purchaser nor seller in connection with that transaction. See Wolf, 477 F.2d at 478. The jurisdictional peg for liability under Rule 10b-5 is available only for damages resulting from the alleged fraudulently induced Denpac stock purchase. See Herpich v. Wallace, 430 F.2d 792, 806 (5th Cir.1970) ("We are of the opinion that only purchasers and sellers of ... securities in connection with which fraud has allegedly been committed [ ] can show injury of the type the rule is meant to prevent.")

Finally, appellant argues that there was sufficient evidence of appellees' intentional misrepresentation and fraud to present a jury question under Georgia law. Under Georgia law, fraud can be based on a misrepresentation of future events if the person making the misrepresentation at that time knew that the future event would not take place. Hines v. Good Housekeeping Shop, 161 Ga.App. 318, 291 S.E.2d 238 (1982) (citing McCravy v. McCravy, 244 Ga. 336, 337, 260 S.E.2d 52 (1979)). Moreover, appellant contends that appellees' fraud would have justified punitive damages pursuant to appellant's claims under Georgia law. Gower v. Cohn, 643 F.2d 1146, 1161 (5th Cir.1981) (citing Diana v. Monroe, 132 Ga.App. 669, 672, 209 S.E.2d 70 (1974)).

"Fraud, accompanied by damage to the party defrauded, always gives a right of action to the injured party." O.C.G.A. 51-6-1. By the express language of the statute, only fraud which results in damage is actionable. See Motors Ins. Corp. v. Morgan, 117 Ga.App. 654, 161 S.E.2d 382 (1968) ("Fraud without damage, or damage without fraud, gives no cause of action, but when these two concur an action lies.") The out-of-pocket measure of damages is also the usual rule of recovery in the common law action for deceit from which Rule 10b-5 derives. Huddleston, 640 F.2d at 555. See Restatement (Second) of Torts Sec. 549. As previously discussed, appellant has failed to show any actual damages resulting from the alleged fraud. Furthermore, punitive damages and attorney's fees are not recoverable when there is no entitlement to actual damages.20 Wade v. Culpepper, 158 Ga.App. 303, 305, 279 S.E.2d 748 (1981) (citing Anthony v. Anthony, 143 Ga.App. 691, 240 S.E.2d 167 (1977).

We conclude that the district court properly directed a verdict against appellant because there exists no enforceable contract for the sale of 10,000 units of UMB securities and appellant has not suffered any legally recoverable damages resulting from the alleged fraudulent conduct proscribed by Section 10(b). Accordingly, for the reasons given above, the decision of the district court is AFFIRMED.