Bank of New York Mellon, as a trustee of 530 trusts holding residential mortgage backed securities (RMBS), settled claims, including putative class claims, with Countrywide and Bank of America, a mortgage originator and its successor, for $8.5 billion, subject to court approval. As a condition of the settlement, to obtain the court’s approval, the bank initiated a proceeding under Article 77 of the New York Civil Practice Law to determine if the trust had the authority to enter into the settlement and if the settlement violated its duties. Numerous investors intervened – they claim the settlement was improper, lacked sufficient notice, and the parties had conflicts of interest – and removed the matter to federal court under CAFA. The district court refused to remand. On appeal, the Second Circuit found that the case fell within CAFA’s securities exception, which exempts from federal jurisdiction claims relating to the rights, duties, and obligations created by or pursuant to a security, and directed that the case be remanded to state court. BlackRock Fin. Mgmt. Inc. v. Segregated Account of Ambac Assurance Corp., 673 F.3d 169 (2d Cir. 2012) (No. 11-5309). While CAFA expanded federal jurisdiction over class actions and mass actions, Congress created exceptions to this expanded jurisdiction. One exception excludes claims relating to the terms of instruments that create or define securities, or the duties imposed on persons who administer securities. Here, the proceedings sought a declaration authorizing the exercise of the trustee’s powers, and a construction of the Pooling and Servicing Agreement (PSA), including whether the bank had complied with the PSA. Applying its prior decision in Greenwich Financial, that a suit by securities holders attempting to enforce the terms of a PSA fit within the securities exception, the court declined jurisdiction. The claim in the article 77 proceeding concerned the relationship between the entity which administers the securities, the trustee, and the certificate holders. As a result, it addresses duties imposed upon those persons who administer securities, and fell within the securities exception to CAFA jurisdiction.