Securities Industry Association, The Bond Market Association Argue That Same Securities Class Action Standards Should Apply To Holders, Purchasers And Sellers Amicus Brief Filed With Supreme Court in Case of Merrill Lynch v. Dabit

The Securities Industry Association (SIA) and The Bond Market Association (TBMA) yesterday filed an amici curiae brief in support of Merrill Lynch’s appeal of the Second Circuit Court’s decision in Merrill Lynch, Pierce, Fenner & Smith, Inc. vs. Dabit. The case involves the applicability of the Securities Litigation Uniform Standards Act (“SLUSA”) to a suit brought under state law by a holder of a security who claims to have “refrained from selling” the security based upon alleged misrepresentations in the prospectus.

SIA and TBMA expressed their belief that SLUSA applies to claims brought by “holders,” just as it does to claims brought by investors who purchased or sold securities based on allegedly fraudulent statements. In all such cases, the brief argues, SLUSA was intended to preempt state law class action claims.

“We feel this is an extremely important matter for the Supreme Court to decide,” said Sarah Starkweather, Regulatory Counsel at The Bond Market Association. “Otherwise, state law class action claims alleging that defective disclosures by public issuers caused them to hold their securities will continue to proliferate in state courts.”