Procedural Posture

Plaintiff investor brought the instant securities action against defendant investment bank. The bank moved to dismiss the action as barred by the Securities Litigation Uniform Standards Act (SLUSA), Pub.L. No. 105-353. The only issue presented by the bank’s motion was whether the investor’s complaint qualified as a covered class action.

Overview

The investor denied that he sought to recover damages for anyone other than himself. The investor did not filed his suit as a class action, and he nowhere sought to proceed on behalf of any third parties. The bank argued that the investor nonetheless sought recovery on a “representative basis” and that the investor’s complaint was nothing more than a class action in disguise. As support for this proposition, the bank first pointed to various allegations in the investor’s complaint where the investor either claimed that the bank’s conduct deceived “purchasers” of certain stock or deceived the investor as one among such purchasers or investors. The court did not find that these allegations converted the investor’s case into a class action. In fact, these allegations simply articulated the investor’s theory of the case: that the bank’s allegedly unlawful actions artificially inflated the market price of the stock and that the investor, as one investor in that market, suffered specific harm. The court did not find that the investor’s phrasing of his restitution and disgorgement claim transformed his case into a class action bringing the investor’s case within the reach of the SLUSA. The California litigation lawyer made a motion to protect the party’s interest.

Outcome

The bank’s motion to dismiss was denied.