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a straightforward test: If a complaint alleges a claim that necessarily depends on a breach of a requirement created by the Act, §27 confers exclusive federal jurisdiction over that suit. Because the complaint here does not allege such claims—and because no other statute confers federal jurisdiction—this suit should return to state court."
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wrote a concurring opinion, stating that
Section 27 establishes a straightforward textual test. Since the complaint did not allege any such claims in that test, he agreed that the case should be decided in state court. Thomas wrote that Section 27 of the Securities Exchange Act of 1934 "establishes
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regulates short sales at the federal level: Regulation SHO, issued under the
Exchange Act, prohibits short sellers from intentionally failing to deliver securities and thereby curbs market manipulation. However, Manning and the shareholders did not make a claim under federal law (i.e. the Exchange
691:
In 2012 shareholders of Escala Group, a global federation of companies in the collectibles market, sued
Merrill Lynch Inc., Knight Capital Americas, UBS Securities, E-Trade Capital Markets, National Financial Services and Citadel Derivatives Group in New Jersey state court, alleging the brokerages
436:
wrote the majority decision where she engaged in a statutory interpretation of the 1934 Securities Act and held that
Section 27 of the Act allows the state court to hold jurisdiction over the case. The court's majority decision did not rule on the merits of the Manning or the shareholders' case,
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The plaintiffs initially brought suit in New Jersey state court, asserting claims arising under New Jersey law alleging that the naked short sales constituted illegal market manipulation, causing the value of their shares to decline. The complaint contained extensive allegations that defendants'
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In a unanimous 8-0 ruling issued today, the
Supreme Court permitted a securities fraud action to remain in state court. The case is the latest round in a multi-decade battle fought by corporations seeking to reduce their legal liabilities by transferring state actions to federal
308:
state court, alleging that
Merrill Lynch's actions violated New Jersey law. Merrill Lynch made a motion to have the case moved to federal court, where Merrill Lynch and the other petitioners believed they would receive better treatment than in state court.
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allows state courts to handle claims filed under their own investor-protection laws even if the litigation might involve some issues under federal securities law. The judgment of the Court of
Appeals for the Third Circuit is
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Manning and other shareholders say the firms -- a group that also includes units of KCG Holdings Inc., UBS AG and E*Trade
Financial Corp. -- made money through a scheme that used naked shorts to manipulate the Escala stock
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The case invokes the general federal question statute, 28 U. S. C. §1331, which grants district courts jurisdiction of “all civil actions arising under” federal law. It also invoked §27 the
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Kagan wrote that
Section 27 confers exclusive federal jurisdiction under the Exchange Act in the same manner that "aris under" confers exclusive federal jurisdiction pursuant to
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Act) and they did not file in federal court. They only referred to allegations of federal violations of
Regulation SHO. They made only a state law claim of
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statute). Kagan also wrote that Manning's claims all arose under state law and did not necessarily raise any federal issues, affirming the decision of the
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the common stock of a public company of which Manning owned two million shares. Manning and other former shareholders of the public company filed suit in
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The court ruled unanimously that the case could be decided in state court even though there was an invocation of federal law, specifically the
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held that no federal jurisdiction existed, and directed that the case be remanded to state court. The Third Circuit's decision deepened a
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Act, New Jersey Criminal Code, and New Jersey Uniform Securities Law. Manning's complaint also charged violations of the New Jersey
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Manning and the shareholders sued under New Jersey state law, claiming the naked short sales constituted illegal
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Manning and the other shareholders sued several financial services firms, which included Merrill Lynch,
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is the same as 28 U.S.C. § 1331's test for deciding if a case "arises under" a federal law.
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Merrill Lynch, Pierce, Fenner & Smith Inc., et al., Petitioners v. Greg Manning, et al.
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630:"Investors Win at U.S. Supreme Court on Securities-Fraud Suit Sites"
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715:"Supreme Court's Manning Decision Leaves Questions Unanswered"
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illegally engaged in "naked" short-selling of Escala shares.
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Manning v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
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Kagan, joined by Roberts, Kennedy, Ginsburg, Breyer, Alito
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Manning v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
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Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning
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Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning
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Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning
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Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning
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Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning
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510:Securities regulation in the United States
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802:Supreme Court (slip opinion) (archived)
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418:interference with contractual relations
18:2016 United States Supreme Court case
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490:Commodity Futures Trading Commission
385:Securities & Exchange Commission
570:Bobelian, Michael (May 16, 2016).
144:. granted, 135 S. Ct. 2938 (2015).
36:Supreme Court of the United States
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845:United States Supreme Court cases
840:United States securities case law
779:___ (2016) is available from:
713:Frischer, Harry (May 17, 2016).
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437:only on jurisdictional issues.
430:Securities Exchange Act of 1934
361:National Financial Services LLC
338:Securities Exchange Act of 1934
278:Securities Exchange Act of 1934
255:Securities Exchange Act of 1934
156:Securities Exchange Act of 1934
820:2016 in United States case law
664:Hamner, Peter (May 16, 2016).
336:over the scope of § 27 of the
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450:federal question jurisdiction
432:and Regulation SHO. Justice
392:in a New Jersey state court.
268:, 578 U.S. ___ (2016), was a
628:Stohr, Greg (May 16, 2016).
390:illegal market manipulation
270:United States Supreme Court
243:Thomas, joined by Sotomayor
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276:established by §27 of the
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113:Motion to remand denied,
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720:The National Law Review
456:court (772 F. 3d 158).
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350:Knight Capital Americas
43:Argued December 1, 2015
505:Securities Commission
85:136 S. Ct. 1562; 194
612:772 F.3d 158
495:Financial regulation
424:Opinion of the Court
99:Opinion announcement
95:Opinion announcement
45:Decided May 16, 2016
377:market manipulation
302:naked short selling
274:jurisdictional test
195:Ruth Bader Ginsburg
119:No. 12-cv-04466-JLL
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410:negligence
406:common law
344:Defendants
324:among the
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284:Background
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159:affirmed.
125:1164838 (
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582:New York
468:See also
459:Justice
232:Majority
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685:May 17,
680:Ontario
676:Toronto
645:May 17,
616:3d Cir.
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149:Holding
140:2014);
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121:, 2013
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