United States First Circuit

In a putative class action asserting both direct claims on behalf of investors and shareholder derivative claims on behalf of an investment fund, alleging that the fund did not comply with the investment policies promised in the prospectus and that the strategy it did pursue violated Puerto Rico Law, the district court's denial of plaintiffs' motion to remand is reversed and remanded, and the judgment dismissing the suit is vacated, where: 1) under Chadbourne & Parke LLP v. Troice, 134 S. Ct. 1058 (2014), a misrepresentation in connection with the purchase of an uncovered security, by itself, is insufficient to bring a claim within the Securities Litigation Uniform Standards Act of 1998 (SLUSA); 2) the main purpose of the fun was investments in uncovered securities; and 3) the link between the misrepresentations alleged and any incidental covered securities in the fund's portfolio is simply too fragile to support a finding of SLUSA preclusion under Troice.

Appellate Information

• Decided 07/10/2014
• Published 07/10/2014

Judges

• SELYA

Court

• United States First Circuit

Counsel