In a precedent-setting opinion, the Sixth Circuit recently held that mutual fund shareholders are barred from asserting state-law fraud claims for periods when the plaintiffs held their shares, versus fraud that occurred during the purchaseof those shares. This decision also foreshadows the Sixth Circuit’s view that improper class actions must be dismissed in their entirety under SLUSA (not just selected counts) when they include improper state-law claims – an issue that has been the subject of a circuit split for many years. As noted by Britt Latham and Jason Hale in their article for Thomas Reuters, this ruling will likely be cited extensively as other Circuits deal with these issues.
In Atkinson v. Morgan Asset Mgmt. (09-6265), the Sixth Circuit addressed who can bring certain claims for securities fraud. SLUSA (Securities Litigation Uniform Standards Act of 1998) applies to claims that “involve…the purchase or sale of securities” and bars class actions with more than 50 members that involve state-law claims of untrue statements or omissions “in connection with the purchase or sale” of a nationally-listed security. 15 U.S.C. 77p(b), (f)(2)(A), (f)(3). Instead, plaintiffs must bring federal securities fraud claims under the heightened pleading standards set...
