Supreme Court backs Merrill in class action test
WASHINGTON (Reuters) – The U.S. Supreme Court on Tuesday
ruled unanimously in favor of Wall Street investment bank
Merrill Lynch in a decision to limit shareholders’ rights to
bring certain kinds of securities class actions.
Finding that 1998′s Securities Litigation Uniform Standards
Act (SLUSA) does cover certain kinds of lawsuits, the court
ruled in Merrill’s favor, said Skadden Arps Slate Meagher &
Flom, attorneys for the investment bank, in a statement.
The ruling “is of great significance to all publicly traded
companies and financial services firms as securities class
action plaintiffs will no longer have the ability to bring
so-called ‘holders’ class action suits,” Skadden said.
“Holders” suits are brought by shareholders alleging that
they were misled by being convinced not to sell stock they
already owned, or not to buy shares they did not already own.
Merrill argued that these actions should be limited by
SLUSA, a law that sought to stem a shift of securities class
actions to state from federal courts. The court agreed.