Even though it is now more than a decade since Congress imposed stricter requirements on securities fraud actions in the federal courts, tension remains between those requirements and plaintiffs’ efforts to sidestep them by bringing securities-related claims in the state courts. A recent U.S. Court of Appeals for the Second Circuit decision, Romano v. Kazacos,1 addresses this tension.
Romano broadly interpreted the preclusion provision of the Securities Litigation Uniform Standards Act of 1998 (SLUSA), which bars plaintiffs from filing certain state-law-based class actions in state courts where the claims involve securities transactions.2 Romano upheld dismissal of claims premised solely on state law, and the decision will make it much harder to use the state courts for bringing class actions involving securities fraud.
State Law Claims
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