It is well known that the securities field, and particularly securities trading, is highly regulated by federal law. But state legislatures have also imposed their own regulatory frameworks on securities trading through specific securities-law statutes, as well as state Racketeer Influenced and Corrupt Organizations (RICO) provisions. State common law relating to claims of fraud, unjust enrichment, breach of contract, and the like may also touch the securities realm.
The question can therefore arise whether a lawsuit asserting only state-law claims, but also implicating federal securities regulations, can be brought in federal court. In Merrill Lynch, Pierce, Fenner & Smith v. Manning,1 the U.S. Supreme Court affirmed a Third Circuit decision holding that the test for federal jurisdiction under the exclusive jurisdiction provision of the Securities Exchange Act of 1934 (the Exchange Act) is the same as for “arising under” jurisdiction under 28 U.S.C. §1331, the general federal-jurisdiction statute. The court was not asked to apply §1331, however, and so it left open the question of whether and when a state-law claim may “arise under” federal law. This case highlights several complex jurisdictional questions, which we survey below.
The Complaint’s Allegations
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
