Chadbourne & Parke LLP v. Troice, 134 S. Ct. 1058

Allen Stanford and Stanford International Bank (SIB) sold certificates of deposit (CDs) that were not traded on any national exchange; investors alleged a multibillion-dollar Ponzi-style fraud.
Plaintiffs (investors) sued various secondary actors (investment advisers, brokers, law and accounting firms) under state securities fraud laws, claiming they aided SIB's fraud by marketing the CDs as backed by highly marketable, nationally traded securities.
The Securities Litigation Uniform Standards Act of 1998 (SLUSA) bars certain private "covered class actions" based on state law that allege a "misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security," where "covered security" means a security listed on a national exchange.
District Court dismissed the state-law class actions under SLUSA, reasoning plaintiffs’ complaints alleged misrepresentations about holdings in covered securities; the Fifth Circuit reversed, treating those statements as tangential to the CD fraud.
The Supreme Court granted certiorari to decide whether SLUSA precludes class actions where plaintiffs bought uncovered securities but allege misrepresentations that the uncovered securities were backed by covered securities.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether SLUSA's phrase "in connection with the purchase or sale of a covered security" reaches misrepresentations about covered securities that induced purchases of uncovered securities (CDs)	SLUSA should not preclude state-law class actions because the CDs are uncovered securities and plaintiffs did not allege misrepresentations induced anyone to buy or sell covered securities	SLUSA bars the suits because the fraud involved false statements about ownership of covered (exchange-traded) securities, creating a connection to covered-security transactions	Held: SLUSA does not apply. A misrepresentation is "in connection with" a purchase/sale of a covered security only if it is material to someone’s decision (other than the fraudster) to buy or sell a covered security. Plaintiffs bought uncovered CDs, so SLUSA does not preclude the state-law class actions.

Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (private right under §10b limited to purchasers and sellers)
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (no private right for aider-and-abettor liability under §10b)
Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148 (limits on liability for secondary actors under §10b)
Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71 (broad construction of "in connection with" for SLUSA; SLUSA can pre-empt holder-class claims)
SEC v. Zandford, 535 U.S. 813 (fraud "coincided with" sales where broker sold client securities and misappropriated proceeds)
United States v. O'Hagan, 521 U.S. 642 ("in connection with" satisfied where insider trading used confidential information to trade)
Wharf (Holdings) Ltd. v. United Int'l Holdings, Inc., 532 U.S. 588 (§10b requires connection to securities transactions)
Superintendent of Ins. v. Bankers Life & Casualty Co., 404 U.S. 6 (fraud that induced sale of securities implicated §10b)
Affiliated Ute Citizens v. United States, 406 U.S. 128 (broad remedial construction for securities antifraud rules)