MEMORANDUM OPINION AND ORDER

Honorable Thomas M. Durkin, United States District Judge.

Plaintiff Sterling Huntley filed a two-count amended complaint on behalf of himself and all others similarly situated against Defendants Chicago Board of Options Exchange ("CBOE"), Options Clearing Corporation ("OCC"), and John Doe (Market Maker). The original complaint was filed on June 1, 2015 in the Northern District of Georgia, but the case was transferred to this district on September 23, 2015. The amended complaint alleges violations of the Securities Exchange Act ("the Act"), as well as fraud and unfair business practices under Georgia law. Currently ripe for decision is the motion to dismiss previously filed by Defendants on July 9, 2015, before the case was transferred to this Court. For the reasons set forth below, the Court now grants Defendants' motion to dismiss.

LEGAL STANDARD

A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See, e.g., Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir.2009). A complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), sufficient to provide defendant with "fair notice" of the claim and the basis for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This standard "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While "detailed factual allegations" are not required, "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. The complaint must "contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). "`A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Mann v. Vogel, 707 F.3d 872, 877 (7th Cir.2013) (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937). In applying this standard, the Court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the non-moving party. Mann, 707 F.3d at 877.

BACKGROUND

The well-pleaded facts of the complaint, accepted as true for purposes of this motion, show the following. Plaintiff Huntley is a resident of Georgia who purchased stock options on the Chicago Board of Options Exchange. R. 9 (Compl., ¶ 3).1 Defendant CBOE is a national securities exchange where stock option contracts are bought and sold. Id. (Compl., ¶ 4). Defendant OCC is a clearinghouse that facilitates the buying and selling of stock option contracts by serving as the issuer of those contracts. Id. (Compl., ¶ 5). The OCC "is the world's largest equity derivatives clearing organization," and "is dedicated to promoting stability and financial integrity in the marketplaces that it serves by focusing on sound risk management principles" and "acting as guarantor ... [to] ensure[ ] that the obligations of the contracts it clears are fulfilled." Id. (Compl., ¶ 6).

In November 2012, Plaintiff purchased options contracts with funds from two trading accounts held in his name. Id. (Compl., ¶ 18). Specifically, Plaintiff purchased over 29,000 $1.00 LEAPS "put" options of the UVXY series expiring in January 2015 at $0.35 each. Id.2 Plaintiff alleges that he purchased the options based on his calculation that each of the $1.00 "put" options would be worth $0.45 if the price of UVXY fell to $0.55 by January 2015. Id. (Compl., ¶ 17). During the more than two years that Plaintiff held the options, the underlying shares underwent two reverse splits declared by the issuer of UVXY. Id. (Compl., ¶¶ 19-20).3 When a stock split occurs, OCC is supposed to adjust the investor's options holding "to reflect the proportion of the split, in a manner that the investor will end up with the same rights that he or she had before the split. This is accomplished by giving the investor the same aggregate contract value or net position value that he or she had before the split." Id. (Compl., ¶ 16). As a result of the first UVXY reverse stock split, the OCC adjusted Plaintiff's options so that his net position in those options did not change. Id. (Compl., ¶ 19). As a result of the second UVXY reverse stock split, however, the adjustment issued by the OCC resulted in a change in Plaintiff's position value in the UVXY options. Id. (Compl., ¶¶ 20-23).

Because of the second adjustment made by the OCC, the market value of Plaintiff's options dropped overnight, and Plaintiff suffered significant losses. Id. (Compl., ¶ 24). Plaintiff seeks a declaratory judgment establishing among other things that Defendant John Doe (Market Maker) has been unjustly enriched by the OCC's adjustments, while Plaintiff and others similarly situated have been harmed. R. 9 at 21 (Prayer for Relief, ¶ f).4 Plaintiff asks the Court to order Defendant John Doe (Market Maker) to pay back any funds it received from the reverse stock split action taken by the OCC, which caused Plaintiff and all others similarly situated to lose money. Id. at 22 (Prayer for Relief, ¶ 1). Plaintiff also seeks a declaration among other things that, after the OCC's adjustment, Plaintiff "did not end up with a net position value, which is equivalent to his position before the split," and that "Article VI Section 11A of OCC bylaws makes all Put options worthless, not just $1 or $2 strikes, if the stock were to undergo 7 reverse stock splits." Id. at 21 (Prayer for Relief, ¶¶ b, d). Plaintiff seeks an injunction ordering among other things that the CBOE "stop listing the UVXY options series immediately or until such time [as] the problem is corrected," that the OCC "stop adjusting all stock options with the current reverse stock split rules outlined in Article VI Section 11A of the OCC bylaws until such time the problem is corrected," and that the OCC "stop clearing UVXY options to open immediately, until such time [as] the problem is corrected." Id. (Prayer for Relief, ¶¶ h-j).

DISCUSSION

Defendants have moved to dismiss the complaint based on the doctrine of regulatory immunity. It is well established that self-regulating organizations ("SROs") are immune "from suit for conduct falling within the scope of the SRO's regulatory and general oversight functions." D'Alessio v. N.Y. Stock Exch., Inc., 258 F.3d 93, 105 (2d Cir.2001). "`[A]bsolute immunity is particularly appropriate in the unique context of the self-regulation of the national securities exchanges,' where [the exchanges]' 'perform[ ] a variety of regulatory functions that would, in other circumstances, be performed by [the SEC]." Id. (quoting Barbara v. N.Y. Stock Exch., Inc., 99 F.3d 49, 59 (2d Cir.1996) (emphasis added)).

Dexter v. Depository Trust & Clearing Corp., 406 F.Supp.2d 260, 263 (S.D.N.Y. 2005) (internal quotation marks and citations omitted), aff'd, 219 Fed.Appx. 91 (2d Cir.2007).

"The term `self-regulatory organization' means any national securities exchange, registered securities association, or registered clearing agency...." 15 U.S.C. § 78c(a)(26). Plaintiff admits that the CBOE and the OCC are SROs. See R. 9 (Compl., ¶ 4) (alleging that the CBOE is a national securities exchange registered with the SEC); id. (Compl., ¶ 7) (alleging that the "OCC operates under the jurisdiction of both the SEC and the Commodity Futures Trading Commission (`CFTC')," and that, "[a]s a registered clearing agency under SEC jurisdiction, [the] OCC clears transactions for exchange-listed options, security futures and Over-the-Counter options").5 Plaintiff further agrees that if Defendants were acting under the aegis of their regulatory duties, they are entitled to assert regulatory immunity to the claims in this case. R. 29 at 8. Plaintiff alleges, however, that "[t]he doctrine of regulatory immunity does not apply in this case because Defendants Chicago Board of Options Exchange and Options Clearing Corporation's conduct in violation of the Act was not done under their regulatory functions." R. 9 (Compl., ¶ 2).

Plaintiff's conclusory allegation that Defendants were not acting within the scope of their regulatory functions does not withstand scrutiny given the factual allegations in the complaint. See D'Alessio, 258 F.3d at 105-06 ("In determining whether the NYSE is entitled to absolute immunity from suit in the present case, we look ... to the alleged misconduct of the NYSE as detailed in the complaint."). The complaint alleges that Defendants used a "flawed" methodology to adjust Plaintiff's "put" options after the reverse stock split, and that Defendants misrepresented the value of the UVXY options given what the value of those options turned out to be after the OCC made the adjustments called for by Article VI, Section 11A of the OCC's By-Laws. Plaintiff further alleges that the OCC failed to disclose that the value of the "put" options could change as a result of a reverse stock split, and failed to honor its guarantee that the obligations of the contracts it clears will be fulfilled. It is clear from these allegations that Plaintiff is asserting, not that the price adjustments at issue were outside Defendants' regulatory functions, but that Defendants implemented their regulatory function in a manner that harmed or defrauded Plaintiff and similarly situated investors.

The purpose of absolute immunity is to protect all conduct of an SRO from liability, so long as the conduct arises out of the discharge of its duties under the Exchange Act. Thus, assuming arguendo that the OCC's methodology in valuing Plaintiff's "put" options after the stock split was "flawed" and that the methodology caused Plaintiff's losses in contravention of the OCC's "guarantee," Defendants still enjoy immunity from Plaintiff's claims. As the Second Circuit explained, "immunity depends only on whether specific acts and forbearances were incident to the exercise of regulatory power, and not on the propriety of those actions or inactions. Indeed, if... immunity only attaches to those who follow the law, the immunity doctrine would be effectively subverted. After all, individuals characteristically do not bring suit alleging an SRO is obeying its statutory and legal obligations; they bring suit alleging an SRO is violating the law or acting inconsistently with its legal obligations." In re NYSE Specialists Sec. Lit., 503 F.3d 89, 98 (2d Cir.2007) (emphasis in original); see also Dexter, 406 F.Supp.2d at 263 ("There would be no point to an immunity that only protected actions that were in any event correct. Since absolute immunity must be absolute, it must protect even actions that a plaintiff could ultimately establish were in violation of law.") (internal quotation marks and citation omitted).

Plaintiff appears to acknowledge that his claims fall generally within the regulatory immunity principle discussed above but argues for an exception based on what he claims to be unique circumstances. According to Plaintiff, the adjustment formula used by the OCC is so flawed that if the formula adjustment were to be applied to any "put" option enough times, the ultimate effect of those multiple adjustments would be to render the "put" option completely worthless. Plaintiff argues that, because the OCC's adjustment formula has the potential to destroy all value in all "put" options, it is tantamount to fraud. But again, this argument runs directly against the rationale for the regulatory immunity doctrine as discussed in the case law cited above. If courts were to allow a fraud exception to the doctrine of regulatory immunity, the exception would swallow the rule. See, e.g., In re NYSE Specialists Sec. Lit., 503 F.3d at 98 n. 3 (rejecting argument that "absolute immunity is inappropriate where an SRO has either recklessly permitted or knowingly fostered wrongdoing and fraud"); DL Capital Group, LLC v. Nasdaq Stock Market, Inc., 409 F.3d 93 98 (2d Cir.2005) ("precedent, not to mention common sense, strongly militates against carving out a `fraud' exception to SRO immunity"); see also Sparta Surgical Corp. v. Nat'l Ass'n of Secs. Dealers, Inc., 159 F.3d 1209, 1215 (9th Cir.1998) (rejecting a bad faith exception to the immunity doctrine and holding that SROs "enjoy freedom from civil liability when they act[ ] in their regulatory capacity," even where they "act[ ] in a capricious, even tartuffian manner which cause[s] ... enormous damage").

Moreover, such an exception would be particularly inappropriate here, where the actions challenged by Plaintiff presumably resulted in both winners and losers in the marketplace, and where Plaintiff does not allege that the challenged actions conferred any particular benefit on Defendants.6 That Plaintiff's claims in this case focus on the formula used by the OCC to calculate the adjustment it applied to Plaintiff's options proves that Plaintiff is questioning a regulatory function of the OCC. As the complaint acknowledges, the adjustment formula in question, Section 11A, is part of the OCC's By-Laws, and the OCC's By-Laws are regulated by the SEC. See McDaniel v. Wells Fargo Invests., LLC, 717 F.3d 668, 673 (9th Cir. 2013) (citing 15 U.S.C. § 78s(b), and stating that SROs have "the power to promulgate rules that, once adopted by the SEC, have the force of law"). Far from establishing a basis for overcoming Defendants' regulatory immunity, Plaintiff's argument concerning the impact of the adjustment formula established by Section 11A on a specific segment of the market proves that regulatory immunity applies here.7

Plaintiff cites to Weissman v. National Association of Securities Dealers, Inc., 500 F.3d 1293, 1297 (11th Cir.2007), for the proposition that SROs do not have complete immunity from lawsuits. While Plaintiff is correct that the case law draws a line between immune and non-immune conduct, the relevant question for this Court is which side of the immunity line the conduct at issue here falls. To avoid Defendants' regulatory immunity, Plaintiff would have to allege facts plausibly showing that Defendants were "acting in [their] own interest[s] as [ ] private entit[ies]," id.(internal quotation marks and citations omitted), as opposed to within the ambit of their regulatory function. While in some situations the conduct at issue falls on the non-immune side of the line between regulatory and private conduct, this is not one of those situations.8 The specific functions at issue here are the OCC's listing and adjustment after a reverse stock split of the UVXY options contracts, and those functions fall squarely within Defendants' regulatory function. See Grisanti v. Options Clearing Corp., Civil Case No. 09-3424, Opinion & Order dated Jan. 4, 2010 (D.N.J) ("by converting options as part of a merger and adjusting the value of the options contracts, OCC was acting directly within the scope of its delegated authority pursuant to its rules and bylaws as an SRO"); see also Platinum Partners Value Arbitrage Fund, Ltd. P'ship, 364 Ill.Dec. 137, 976 N.E.2d at 422 (where plaintiff "concede[d] that the adjustment of IFN's strike price was a regulatory decision, serving to protect investors," but where court held that, "while the price adjustment itself may have been a regulatory decision, the manner in which it was disclosed — privately and prematurely — to the John Doe defendants was not"); cf. Sparta Surgical Corp., 159 F.3d at 1214 ("there are few functions more quintessentially regulatory than suspension of trading").

CONCLUSION

Defendants' motion to dismiss raises several issues other than regulatory immunity, but the Court need not address those other issues. The amended complaint is barred by the doctrine of regulatory immunity, and, accordingly, Defendants' motion to dismiss [R. 23] is granted.