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U.S. Code as of:
01/19/04
Section 77p. Additional remedies; limitation on remedies
(a) Remedies additional
Except as provided in subsection (b) of this section, the rights
and remedies provided by this subchapter shall be in addition to
any and all other rights and remedies that may exist at law or in
equity.
(b) Class action limitations
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 -
(1) an untrue statement or omission of a material fact in
connection with the purchase or sale of a covered security; or
(2) that the defendant used or employed any manipulative or
deceptive device or contrivance in connection with the purchase
or sale of a covered security.
(c) Removal of covered class actions
Any covered class action brought in any State court involving a
covered security, as set forth in subsection (b) of this section,
shall be removable to the Federal district court for the district
in which the action is pending, and shall be subject to subsection
(b) of this section.
(d) Preservation of certain actions
(1) Actions under State law of State of incorporation
(A) Actions preserved
Notwithstanding subsection (b) or (c) of this section, a
covered class action described in subparagraph (B) of this
paragraph that is based upon the statutory or common law of the
State in which the issuer is incorporated (in the case of a
corporation) or organized (in the case of any other entity) may
be maintained in a State or Federal court by a private party.
(B) Permissible actions
A covered class action is described in this subparagraph if
it involves -
(i) the purchase or sale of securities by the issuer or an
affiliate of the issuer exclusively from or to holders of
equity securities of the issuer; or
(ii) any recommendation, position, or other communication
with respect to the sale of securities of the issuer that -
(I) is made by or on behalf of the issuer or an affiliate
of the issuer to holders of equity securities of the
issuer; and
(II) concerns decisions of those equity holders with
respect to voting their securities, acting in response to a
tender or exchange offer, or exercising dissenters' or
appraisal rights.
(2) State actions
(A) In general
Notwithstanding any other provision of this section, nothing
in this section may be construed to preclude a State or
political subdivision thereof or a State pension plan from
bringing an action involving a covered security on its own
behalf, or as a member of a class comprised solely of other
States, political subdivisions, or State pension plans that are
named plaintiffs, and that have authorized participation, in
such action.
(B) "State pension plan" defined
For purposes of this paragraph, the term "State pension plan"
means a pension plan established and maintained for its
employees by the government of the State or political
subdivision thereof, or by any agency or instrumentality
thereof.
(3) Actions under contractual agreements between issuers and
indenture trustees
Notwithstanding subsection (b) or (c) of this section, a
covered class action that seeks to enforce a contractual
agreement between an issuer and an indenture trustee may be
maintained in a State or Federal court by a party to the
agreement or a successor to such party.
(4) Remand of removed actions
In an action that has been removed from a State court pursuant
to subsection (c) of this section, if the Federal court
determines that the action may be maintained in State court
pursuant to this subsection, the Federal court shall remand such
action to such State court.
(e) Preservation of State jurisdiction
The securities commission (or any agency or office performing
like functions) of any State shall retain jurisdiction under the
laws of such State to investigate and bring enforcement actions.
(f) Definitions
For purposes of this section, the following definitions shall
apply:
(1) Affiliate of the issuer
The term "affiliate of the issuer" means a person that directly
or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with, the issuer.
(2) Covered class action
(A) In general
The term "covered class action" means -
(i) any single lawsuit in which -
(I) damages are sought on behalf of more than 50 persons
or prospective class members, and questions of law or fact
common to those persons or members of the prospective
class, without reference to issues of individualized
reliance on an alleged misstatement or omission,
predominate over any questions affecting only individual
persons or members; or
(II) one or more named parties seek to recover damages on
a representative basis on behalf of themselves and other
unnamed parties similarly situated, and questions of law or
fact common to those persons or members of the prospective
class predominate over any questions affecting only
individual persons or members; or
(ii) any group of lawsuits filed in or pending in the same
court and involving common questions of law or fact, in which
-
(I) damages are sought on behalf of more than 50 persons;
and
(II) the lawsuits are joined, consolidated, or otherwise
proceed as a single action for any purpose.
(B) Exception for derivative actions
Notwithstanding subparagraph (A), the term "covered class
action" does not include an exclusively derivative action
brought by one or more shareholders on behalf of a corporation.
(C) Counting of certain class members
For purposes of this paragraph, a corporation, investment
company, pension plan, partnership, or other entity, shall be
treated as one person or prospective class member, but only if
the entity is not established for the purpose of participating
in the action.
(D) Rule of construction
Nothing in this paragraph shall be construed to affect the
discretion of a State court in determining whether actions
filed in such court should be joined, consolidated, or
otherwise allowed to proceed as a single action.
(3) Covered security
The term "covered security" means a security that satisfies the
standards for a covered security specified in paragraph (1) or
(2) of section 77r(b) of this title at the time during which it
is alleged that the misrepresentation, omission, or manipulative
or deceptive conduct occurred, except that such term shall not
include any debt security that is exempt from registration under
this subchapter pursuant to rules issued by the Commission under
section 77d(2) of this title.
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