US Supreme Court addresses SLUSA preclusion. State law fraud claims against the third parties who allegedly assisted R. Allen Stanford’s Ponzi scheme can proceed, the US Supreme Court ruled. Service providers to Stanford sought dismissal of the suits by arguing that the Securities Litigation Uniform Standards Act (SLUSA) precluded the claims of Stanford’s victims. But the Court concluded that SLUSA did not apply here. (2/26/2014) Chadbourne & Parke LLP v. Troice.
SEC rebuts general partnership presumption. The US Court of Appeals for the Tenth Circuit has reinstated a SEC enforcement action against the promoters of an oil and gas general partnership venture. The district court had dismissed the suit because it found that the joint venture interests were not securities. The Tenth Circuit, however, found that the SEC raised a fact issue concerning whether the investors were relying on defendants’ efforts. It further found that the complaint raised a fact issue as to whether the investors actually had the type of control reserved under the agreements to obtain access to information necessary to protect, manage, and control their investments at the time they purchased their interests. It therefore reversed the dismissal of the SEC’s suit. (2/24/2014) SEC v. Shields.