§77p Additional Remedies; Limitation on Remedies

Summary

Gives extra legal remedies on top of any other rights, except for a limit on certain class lawsuits. Private groups cannot keep a state-law class suit in state or federal court if the suit claims either a false or missing important fact, or that the defendant used a trick or scheme, in connection with buying or selling a covered security. Any such state class suit can be moved to federal court and then is subject to that limit. Allows some exceptions. A class suit based on the law of the State where the issuer is incorporated or organized is allowed in state or federal court when it only involves sales by the issuer or its affiliate to the issuer’s own equity holders, or communications from the issuer or its affiliate to those equity holders about voting, tender or exchange offers, or appraisal/dissenters’ rights. A State, its political subdivisions, or a State pension plan may sue on its own behalf or as part of a class made only of other States, subdivisions, or State pension plans. A class suit to enforce a contract between an issuer and an indenture trustee may proceed. If a removed case qualifies for these exceptions, a federal court must send it back to state court. State securities regulators keep their power to investigate and enforce state law. Definitions: “affiliate of the issuer” = a person that controls, is controlled by, or is under common control with the issuer; “covered class action” = a lawsuit seeking damages for more than 50 people or joined suits with common questions where common issues predominate; derivative suits are excluded; entities count as one if not formed to join; “covered security” = a security meeting the tests in section 77r(b)(1) or (2) at the time of the conduct, excluding debt securities exempt under rules under section 77d(2).