Posts from March 2018.

A unanimous Supreme Court today held that "covered class actions" over exchange-traded securities are not removable from state courts under SLUSA when they assert only '33 Act claims.

The Court held the removal provisions of the Act are in aid of its state-law claim bar (removed to ensure dismissal), and do not otherwise affect the long-standing grant of concurrent jurisdiction for '33 Act claims.

"Under our reading of SLUSA, all covered securities class actions must proceed under federal law; most (i.e., those alleging 1934 Act claims) must proceed in federal court; some (i.e ...

Posted in: SCOTUS, SLUSA


In Cyan, Inc. v. Beaver County Employees Retirement Fund, the Supreme Court resolved two critical issues for class action claims brought under the Securities Act of 1933 (1933 Act). First, the Supreme Court held that state courts retain jurisdiction to adjudicate class actions brought under the 1933 Act. Second, the Supreme Court held that defendants may not remove class actions alleging only 1933 Act claims.

Cyan has its origin in an initial public offering. Cyan, a telecommunications company, and its officers and directors (the Petitioners), offered and sold shares of Cyan ...

It was the Ides of March for the Obama Administration's "fiduciary duty rule" that sought to remake much of nation's financial markets by back-door regulation of anyone dealing with IRA investors. The US Fifth Circuit vacated the regulation entirely in a stinging rebuke by Judges Edith Jones and Joy Clement; Chief Judge Carl Stewart dissented.

The Court held that the "novel assertion of DOL's power," Op. at 7, "fundamentally transforms over fifty years of settled and hitherto legal practices in a large swath of the financial services and insurance industries…." Op. at 3.

"The ...

Posted in: Fiduciary Rule

FINRA currently requires registered representatives to inform their broker-dealer of any proposed outside business activities that they may be engaging in so that the firms can determine whether to permit the representative to proceed with the activities. This requirement has a far reaching impact, which includes compliance concerns, reporting requirements, and investor protection protocols.

The proposed rule seeks to clarify the obligations and further strengthen investor protection. It would require representative's to provide "prior written notice for all ...

Posted in: FINRA

Last week, the unanimous Supreme Court clarified that the "clearing and settlement" exception to a bankruptcy trustee's avoiding powers covers only payments "to," not merely through, financial market participants.

The Bankruptcy Code provides trustees with various avoiding powers, including the ability to recoup for the estate actual or fraudulent transfers, under 11 U.S.C. § 548(a) (1). The Code also provides a number of exceptions to the trustee's avoiding powers, including some designed to protect the integrity of the clearing and settlement processes of the nation's ...

Posted in: Bankruptcy Code
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