5th Circuit reversed the district court’s ruling finding SLUSA preemption in Stanford state class action cases.  The case involved the purchase of Stanford securities (CDs).  The issue was whether the sale of unspecified securities, even though they were not identified as part of the claim, constituted a “misrepresentation or omission” in connection with the purchase or sale of a “covered security” for the purposes of SLUSA preemption.

Excerpt from the Opinion:

This consolidated appeal arises out of an alleged multi-billion dollar Ponzi
scheme perpetrated by R. Allen Stanford through his various corporate entities.
These three cases deal with the scope of the preclusion provision of the
Securities Litigation Uniform Standards Act (“SLUSA”). That provision states:
“No covered class action based upon the statutory or common law of any State
or subdivision thereof may be maintained in any State or Federal court by any
private party alleging a misrepresentation or omission of a material fact in
connection with the purchase or sale of a covered security.” 15 U.S.C.
§ 78bb(f)(1)(A). All three cases seek to use state class-action devices to attempt
to recover damages for losses resulting from the Stanford Ponzi scheme.
Because we find that the purchase or sale of securities (or representations about
the purchase or sale of securities) is only tangentially related to the fraudulent
scheme alleged by the Appellants, we hold that SLUSA does not preclude the
Appellants from using state class actions to pursue their recovery and
REVERSE