| | | Subject: Naked short cases can be brought in State Courts,
FYI..
This momentous decision by the US Supreme Court means that companies
and shareholders can sue Wall St. firms at the state level and not be
overruled by the Federal Courts. The RICO statutes can be applied on
a state by state basis. It will ONLY TAKE 1 WIN in any state to set
precedent that Wall St. conspires to defraud the investing public by
shorting stock without locating or borrowing the shares. Once that
case is won it will open the floodgates for thousands of lawsuits that
could potentially put an end to the practice of naked short selling!
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*BREAKING: High Court Says Federal Securities Laws Don’t Limit State
Suits* Share us on: By *Carmen Germaine* Law360, New York (May 16,
2016, 10:11 AM ET) -- The U.S. Supreme Court unanimously ruled Monday
that federal securities laws do not preempt certain claims from being
brought in state court, in a decision that allows a shareholder suit
against a Merrill Lynch unit and other Wall Street firms to proceed in
New Jersey state court on claims they engaged in a manipulative
short-selling campaign against them.
Voting unanimously, the justices said the Securities Exchange Act does
not block shareholders in Escala Group Inc. from bringing their claims
in a New Jersey court under the state's securities and
anti-racketeering laws. The decision upholds a Third Circuit ruling
that remanded the claim back to the Garden State.
Justice Elena Kagan wrote the opinion for the majority. Justice
Clarence Thomas authored a concurring opinion, which was joined by
Justice Sonia Sotomayor.
The decision in Merrill Lynch et al. v. Manning et al., will give
plaintiffs an easier time bringing securities suits in state courts, a
potentially friendlier forum than federal court. It came to the
Supreme Court on an appeal from the Third Circuit, which held that
Merrill Lynch Pierce Fenner & Smith Inc. and others couldn’t keep the
shareholder suit in federal court even though it references rules the
U.S. Securities and Exchange Commission put in place around short selling stocks.
The underlying lawsuit alleges Merrill Lynch and others about a decade
ago had manipulated the market for Escala shares through a naked
short-selling campaign. As part of their suit, the plaintiffs
referenced the requirements of Regulation SHO, the SEC rules governing short selling.
In their petition to the Supreme Court, the financial firms argued
that Section 27 of the Securities Exchange Act gives federal courts
exclusive jurisdiction over all suits that seek to enforce any duty
created by the act or its regulations, even if the suit is also
brought to enforce state law. They asked the court to resolve a circuit split on the issue.
But the plaintiffs countered that their suit is perfectly placed in
New Jersey state court because at its core is a claim about
manipulative and deceptive practices, “the kind of behavior that has
been long prohibited under New Jersey common law and statutes.” |
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