On May 16, 2016, the Supreme Court issued its opinion in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Manning, in which the Court resolved a Circuit split concerning the jurisdictional provision of the Securities Exchange Act of 1934. The Court held that the test for federal court jurisdiction under § 27 of the Exchange Act should be the same as the test governing “federal question” jurisdiction under 28 U.S.C. § 1331, i.e., whether the case “arises under” federal law. Based on this conclusion, and the Third Circuit’s unchallenged finding that the claims did not “arise under” the federal securities laws, the Court held that the case should be allowed to proceed in state court.
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