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1 1 (March 29, 2018)

handle is hein.crs/crsmthzzaeo0001 and id is 1 raw text is: Congressional _______ Research Service I~nforming the leg iative debate s nce 1914 Clarifying Gibberish: Supreme Court Holds That State Courts Can Hear Securities Act Lawsuits Jay B. Sykes Legislative Attorney March 29, 2018 On March 20, in a case watched closely by the securities bar, the Supreme Court addressed the implications of the Securities Litigation Uniform Standards Act of 1998 (SLUSA)-a statute that Justices Alito and Gorsuch described during oral argument as gibberish. In Cyan, Inc. v. Beaver County Employees Retirement Fund, the Court unanimously held in a decision by Justice Kagan that SLUSA does not (1) strip state courts ofjurisdiction over class actions alleging violations of only the Securities Act of 1933 (the 1933 Act), or (2) allow defendants to remove such actions from state court to federal court. This Sidebar discusses the case's background, the Court's decision, and the decision's implications for securities litigation. Background The details of Cyan and the circuit split that preceded the Court's decision are discussed in a prior Sidebar. In short, the 1933 Act-which principally regulates initial offerings of securities-provides a cause of action against an issuer of securities and certain other persons if certain documents associated with a securities offering contain untrue or misleading statements or omissions of material fact. As originally enacted, the 1933 Act provided that (1) state courts had concurrent jurisdiction with federal courts to hear lawsuits to enforce the Act's provisions, and (2) if such lawsuits were brought in state court, defendants could not remove them to federal court. In 1995, Congress passed the Private Securities Litigation Reform Act (PSLRA) to combat perceived abuses in securities litigation. Among other things, the PSLRA provided certain defendant friendly requirements for large securities class actions involving claims under the 1933 Act. Some of these Congressional Research Service 7-5700 www.crs.gov LSB10107 CRS Legal Sidebar Prepared for Members and Committees of Conaress

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