Supreme Court Considers Scope of Preclusion of State Law Securities Fraud Class Action Litigation Under the Federal Securities Litigation Uniform Standards Act
On Monday, October 7, the first day of the new term, the Supreme Court heard oral arguments in Chadbourne & Parke LLP v. Samuel Troice in which the Court is expected to clarify the scope of preclusion under the Securities Litigation Uniform Standards Act (“SLUSA”) of state-law securities fraud class actions. SLUSA precludes state-law fraud class actions to the extent they are “in connection with” SLUSA-covered securities. The Court will likely resolve a circuit split and determine when an alleged misrepresentation is sufficiently related to the purchase or sale of a covered security to satisfy the “in connection with” requirement for SLUSA to preclude state-law class actions.