The Securities Litigation Reform Act ("SLUSA") grants exclusive federal jurisdiction to securities actions where plaintiffs have purchased or sold securities. Similarly, the Supreme Court case, Blue Chip Stamps v. Manor Drug Stores, requires that only purchasers and sellers of securities may bring private securities actions under federal securities law. This article discusses the cases of Kircher v. Putnam Funds Trust and Putnam Investment Management, LLC, et al., where the Seventh Circuit held that the purchaser-seller rule announced in Blue Chip Stamps did not affect SLUSA's coverage and that therefore a claim brought by a plaintiff class comprised entirely of non-traders would still be preempted by SLUSA. Because a plaintiff class that neither bought nor sold stock during the class period could not bring a claim in state court, it would be compelled to either file a derivative action or commit the case to public prosecutors.
Stacy A. Manning,
Dismissing How the Purchaser-Seller Rule Affects SLUSA,
Seventh Circuit Rev.
Available at: https://scholarship.kentlaw.iit.edu/seventhcircuitreview/vol1/iss1/14