State Securities Class Action Suits: Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit

RS22311 -- State Securities Class Action Suits: Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit

Updated March 23, 2006

Summary

The Second Circuit held that in certain instances the federal Securities Litigation Uniform Standards Act of 1998 (SLUSA) does not preempt securities state class action suits. Four months after the Second Circuit decision, the Seventh Circuit took a very different approach to the issue. On March 21, 2006, the Supreme Court unanimously (Justice Alito took no part in consideration of the case.) vacated the judgment of the Second Circuit and held that the background, text, and purpose of SLUSA's pre-emption provision indicate that SLUSA pre-empts state law holder class action claims of the type that Dabit alleges. This report will not be further updated.