U.S. Supreme Court

Case Status


Docket Number



2005 Term

Oral Argument Date

January 18, 2006


Questions Presented

Whether, as the Seventh Circuit held in direct conflict with the decision below, SLUSA preempts state law class action claims based upon allegedly fraudulent statements or omissions brought solely on behalf of persons who were induced thereby to hold or retain (and not purchase or sell) securities.

Case Updates


March 21, 2006

The Supreme Court found that federal law takes supremacy over state law in cases involving allegations of securities fraud.

U.S. Chamber files amicus brief

November 14, 2005

Describing the background to the enactment of the Securities Litigation Uniform Standards Act (SLUSA), NCLC urged the Supreme Court to overrule the Second Circuit’s determination that SLUSA does not preempt state law claims brought by plaintiffs who merely held their securities during the applicable time period rather than purchasing or selling them. In this case, stockbroker Shadi Dabit filed suit on behalf of himself and other investors claiming they were fraudulently induced to hold underperforming stocks, and that SLUSA only pertained to investors induced to buy or sell stock. NCLC pointed out in its amicus brief that so-called “holder” class action lawsuits are often used to extract large settlements by alleging speculative injuries, which are typically proven through unsupported oral testimony. Congress could not have intended to allow national class actions asserting such claims to survive SLUSA.

Case Documents