Trezziova v. Kohn
753 F.3d 110
| 2d Cir. | 2014Background
- The court affirmed dismissal of the plaintiffs' state-law claims against JPMorgan Chase & Co. and Bank of New York Mellon Corporation as precluded by SLUSA.
- In re Herald, Primeo, and Thema held SLUSA precludes when fraud pertains to Madoff Securities-related transactions.
- A summary order affirmed the district court's dismissal on forum non conveniens grounds for remaining defendants.
- Trezziova and Davis sought panel rehearing and en banc review; petitions were held ripe after Troice's release.
- Troice clarified SLUSA's outer limit: fraud must be in connection with purchase or sale of a covered security; Stanford CDs were not covered securities.
- Madoff Securities’ victims allegedly sought ownership in covered securities via feeder funds, and banks allegedly aided that scheme, keeping the claims within SLUSA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of SLUSA after Troice | Troice excludes Madoff-type cases from SLUSA. | Troice confirms continued SLUSA coverage for Madoff-related claims. | Troice confirms scope; Madoff within SLUSA. |
| Effect of feeder funds on covered securities status | Feeder funds remove or insulate covered-securities status. | Fraud that induces ownership in covered securities via feeders remains within SLUSA. | Madoff victims attempted to own covered securities; case remains within SLUSA. |
Key Cases Cited
- Chadbourne & Parke LLP v. Troice, 134 S. Ct. 1058 (Supreme Court 2014) (clarifies SLUSA outer limit—fraud must relate to covered securities purchase/sale)
- In re Herald, Primeo, and Thema, 730 F.3d 112 (2d Cir. 2013) (SLUSA precludes state-law claims against banks tied to Madoff Securities)
- In re Herald, Pri-*113meo, and Thema, 540 Fed.Appx. 19 (2d Cir. 2013) (summary order on forum non conveniens)