Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit
Supreme Court
547 U.S. 71 (2006)
Shadi Dabit (plaintiff), a former Merrill Lynch (defendant) broker, brought a state-law class action alleging Merrill Lynch disseminated false research, causing investors who held (rather than bought or sold) securities based on that research to suffer losses. Dabit's suit and many similar claims were removed to federal court and consolidated. The district court held Dabit's claim was preempted by the Securities Litigation Uniform Standards Act (SLUSA); the court of appeals vacated, holding SLUSA only covers class actions involving the purchase or sale of securities, not their mere holding.
Whether the Securities Litigation Uniform Standards Act of 1998 applies to all class actions involving the misstatement of financial information, including those based on holding rather than buying or selling securities.