Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit
2006 United States Supreme Court case / From Wikipedia, the free encyclopedia
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Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71 (2006), was a case decided by the Supreme Court of the United States involving the extent to which state law securities fraud class action claims were preempted by the Securities Litigation Uniform Standards Act of 1998 (SLUSA). The Court unanimously[1] ruled that SLUSA barred state law "holder" claims, which are based on losses caused when a shareholder retains stock due to fraud instead of selling it, even though federal securities laws only provided a private cause of action to those suffering losses caused by the purchase or sale of stock. The Court's decision resolved a split among the circuits and closed a significant loophole in the coverage of SLUSA, which it based on the broad language used in the Act and the policies behind it.
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit | |
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Argued January 18, 2006 Decided March 21, 2006 | |
Full case name | Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Petitioner v. Shadi Dabit |
Docket no. | 04-1371 |
Citations | 547 U.S. 71 (more) 126 S. Ct. 1503; 164 L. Ed. 2d 179; 2006 U.S. LEXIS 2497; 74 U.S.L.W. 4167 |
Case history | |
Prior | Dismissed with leave to amend, W.D. Okla.; dismissed, sub nom., In re Merrill Lynch & Co., Inc. Research Reports Sec. Litig., 2003 WL 1872820 (S.D.N.Y. Apr. 10, 2003); affirmed in part, vacated and remanded in part, sub nom., Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25 (2d Cir. 2005); cert. granted, 126 S.Ct. 34 (2005) |
Holding | |
The Securities Litigation Uniform Standards Act of 1998 preempts state law securities holder class actions, even though such claims cannot be brought under federal securities laws. Second Circuit Court of Appeals vacated and remanded. | |
Court membership | |
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Case opinion | |
Majority | Stevens, joined by Roberts, Scalia, Kennedy, Souter, Thomas, Ginsburg, Breyer |
Alito took no part in the consideration or decision of the case. | |
Laws applied | |
15 U.S.C. § 78bb(f)(1)(A) (section 101(b) of the Securities Litigation Uniform Standards Act of 1998) |