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Friday, September 9, 2011

Statement from Dr Kachroo Regarding SLUSA Ruling by Judge Godbey

From Kachroo Legal Services:
9th September 2011

Last week, Judge Godbey ruled that a particular federal statute precludes many, if not all, of the class action lawsuits filed against certain financial institutions sued in connection with the Stanford Ponzi scheme. This will result in the dismissal of the majority of class actions filed by the Investor Committee and the Receiver. This will not, however, preclude a class action lawsuit against the SEC or affect any individual Stanford-related lawsuits that were not brought as a class action. There is a maximum number of plaintiffs that can now bring an action under state law claims, even separately.

The particular statute at issue is the Securities Litigation Uniform Standards Act (“SLUSA”). SLUSA generally bars any class action lawsuit which is based on state law (not federal law) and involves allegations of misrepresentations in connection with the purchase or sale of securities. Although there was a lengthy debate over whether the Stanford Ponzi scheme involved the purchase or sale of “securities,” as defined by SLUSA, the Court ultimately ruled that even though the SIB issued CDs were not “securities,” the SLUSA preclusion applies for either of two reasons. First, SLUSA applies because investors were defrauded in connection with the purchase or sale of what they believed were securities. Second, SLUSA also applies because many investors sold securities in order to purchase the SIB CDs. Under either scenario, the Court ruled that SLUSA precludes class actions against such financial institutions which are based on state law. Because the majority of class actions filed by the Investor Committee and the Receiver are based on state law, these lawsuits will be dismissed with prejudice.

However, a class action lawsuit against the SEC is not the type of action precluded by SLUSA because it does not involve allegations of misrepresentations by the SEC in connection with the purchase or sale of securities. There is a chance if there is enough support for the same that Kachroo Legal Services, will contemplate an appropriate way to take measures against the financial institution (s) implicated in the Stanford debacle. If you have questions about this lawsuit or about seeking legal representation, you may contact Gaytri Kachroo directly, who is also handing the class action against the SEC on behalf of all investors.

Dr. Gaytri D. Kachroo
PRINCIPAL
KLS-Kachroo Legal Services, P.C.
219 Concord Ave.
Cambridge, MA 02138
Direct: 1-617-864-0755
Facsimile: 1-617-864-1125
Mobile: 774-232-2865

1 comment:

  1. Wouldn't it make more sense to file suits in Antigua where the fraud occurred? Don't they have lawyers and courts in Antigua?

    ReplyDelete