The U.S. Supreme Court will hear its second securities case of the term this week, when it considers whether companies can appeal a federal judge’s decision to send a securities fraud class action to state court if the case doesn’t fall within the Securities Litigation Uniform Standards Act—the very law meant to force most securities class actions into federal court.
The justices ruled unanimously in March that SLUSA covers securities claims by individuals who “hold” securities, but don’t purchase or sell them. That decision—Merrill Lynch, Pierce, Fenner & Smith v. Dabit—thwarted efforts by plaintiffs’ lawyers to circumvent SLUSA by bringing certain types of class actions in state court that might be difficult or impossible to bring under federal law (see Related Coverage in box at right).
