Addition of rights and remedies; recovery of actual damages;
State securities commissions
Except as provided in subsection (f), the rights and remedies
provided by this title shall be in addition to any and all other rights and
remedies that may exist at law or in equity; but no person permitted to maintain
a suit for damages under the provisions of this title shall recover, through
satisfaction of judgment in one or more actions, a total amount in excess
of his actual damages on account of the act complained of. Except as otherwise
specifically provided in this title, nothing in this title shall affect
the jurisdiction of the securities commission (or any agency or officer performing
like functions) of any State over any security or any person insofar as it
does not conflict with the provisions of this title or the rules and regulations
thereunder. No State law which prohibits or regulates the making or promoting
of wagering or gaming contracts, or the operation of "bucket shops" or other
similar or related activities, shall invalidate any put, call, straddle, option,
privilege, or other security subject to this title, or apply to any activity
which is incidental or related to the offer, purchase, sale, exercise, settlement,
or closeout of any such security. No provision of State law regarding the
offer, sale, or distribution of securities shall apply to any transaction
in a security futures product, except that this sentence shall not be construed
as limiting any State antifraud law of general applicability.
Modification of disciplinary procedures
Nothing in this title shall be construed to modify existing law with regard
to the binding effect (1) on any member of or participant in any self- regulatory
organization of any action taken by the authorities of such organization to
settle disputes between its members or participants, (2) on any municipal
securities dealer or municipal securities broker of any action taken pursuant
to a procedure established by the Municipal Securities Rulemaking Board to
settle disputes between municipal securities dealers and municipal securities
brokers, or (3) of any action described in paragraph (1) or (2) on any person
who has agreed to be bound thereby.
Continuing validity of disciplinary sanctions
The stay, setting aside, or modification pursuant to section
19(e) of any disciplinary sanction imposed by a self-regulatory organization
on a member thereof, person associated with a member, or participant therein,
shall not affect the validity or force of any action taken as a result of
such sanction by the self-regulatory organization prior to such stay, setting
aside, or modification: Provided, That such action is not inconsistent
with the provisions of this title or the rules or regulations thereunder.
The rights of any person acting in good faith which arise out of any such
action shall not be affected in any way by such stay, setting aside, or modification.
Physical location of facilities of registered clearing
agencies or registered transfer agents not to subject changes in beneficial
or record ownership of securities to State or local taxes
No State or political subdivision thereof shall impose any tax on any change
in beneficial or record ownership of securities effected through the facilities
of a registered clearing agency or registered transfer agent or any nominee
thereof or custodian therefor or upon the delivery or transfer of securities
to or through or receipt from such agency or agent or any nominee thereof
or custodian therefor, unless such change is in beneficial or record ownership
or such transfer or delivery or receipt would otherwise be taxable by such
State or political subdivision if the facilities of such registered clearing
agency, registered transfer agent, or any nominee thereof or custodian therefor
were not physically located in the taxing State or political subdivision.
No State or political subdivision thereof shall impose any tax on securities
which are deposited in or retained by a registered clearing agency, registered
transfer agent, or any nominee thereof or custodian therefor, unless such
securities would otherwise be taxable by such State or political subdivision
if the facilities of such registered clearing agency, registered transfer
agent, or any nominee thereof or custodian therefor were not physically located
in the taxing State or political subdivision.
Exchange, broker, and dealer commissions; brokerage and
No person using the mails, or any means or instrumentality
of interstate commerce, in the exercise of investment discretion with
respect to an account shall be deemed to have acted unlawfully or to have
breached a fiduciary duty under State or Federal law unless expressly
provided to the contrary by a law enacted by the Congress or any State
subsequent to June 4, 1975, solely by reason of his having caused the
account to pay a member of an exchange, broker, or dealer an amount of
commission for effecting a securities transaction in excess of the amount
of commission another member of an exchange, broker, or dealer would have
charged for effecting that transaction, if such person determined in good
faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such member,
broker, or dealer, viewed in terms of either that particular transaction
or his overall responsibilities with respect to the accounts as to which
he exercises investment discretion. This subsection is exclusive and plenary
insofar as conduct is covered by the foregoing, unless otherwise expressly
provided by contract: Provided, however, That nothing in this subsection
shall be construed to impair or limit the power of the Commission under
any other provision of this title or otherwise.
A person exercising investment discretion with respect
to an account shall make such disclosure of his policies and practices
with respect to commissions that will be paid for effecting securities
transactions, at such times and in such manner, as the appropriate regulatory
agency, by rule, may prescribe as necessary or appropriate in the public
interest or for the protection of investors.
For purposes of this subsection a person provides
brokerage and research services insofar as he--
furnishes advice, either directly or through
publications or writings, as to the value of securities, the advisability
of investing in, purchasing, or selling securities, and the availability
of securities or purchasers or sellers of securities;
furnishes analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and the performance of accounts; or
effects securities transactions and performs
functions incidental thereto (such as clearance, settlement, and custody)
or required in connection therewith by rules of the Commission or
a self-regulatory organization of which such person is a member or
person associated with a member or in which such person is a participant.
The provisions of this subsection shall not apply
with regard to securities that are security futures products.
Limitations on remedies
Class action limitations
No covered class action based upon the statutory or common law of any
State or subdivision thereof may be maintained in any State or Federal
court by any private party alleging--
a misrepresentation or omission of a material
fact in connection with the purchase or sale of a covered security;
that the defendant used or employed any manipulative
or deceptive device or contrivance in connection with the purchase
or sale of a covered security.
Removal of covered class actions
Any covered class action brought in any State court involving a covered
security, as set forth in paragraph (1), shall be removable to the Federal
district court for the district in which the action is pending, and shall
be subject to paragraph (1).
Preservation of certain actions
Actions under State law of State of incorporation
Notwithstanding paragraph (1) or (2), a covered class action described
in clause (ii) of this subparagraph that is based upon the statutory
or common law of the State in which the issuer is incorporated
(in the case of a corporation) or organized (in the case of any
other entity) may be maintained in a State or Federal court by
a private party.
A covered class action is described in this clause if it involves--
the purchase or sale of securities
by the issuer or an affiliate of the issuer exclusively from
or to holders of equity securities of the issuer; or
any recommendation, position,
or other communication with respect to the sale of securities
of an issuer that--
(aa) is made by or on behalf
of the issuer or an affiliate of the issuer to holders of
equity securities of the issuer; and
(bb) concerns decisions of
such equity holders with respect to voting their securities,
acting in response to a tender or exchange offer, or exercising
dissenters' or appraisal rights.
Notwithstanding any other provision of this subsection, nothing
in this subsection may be construed to preclude a State or political
subdivision thereof or a State pension plan from bringing an action
involving a covered security on its own behalf, or as a member
of a class comprised solely of other States, political subdivisions,
or State pension plans that are named plaintiffs, and that have
authorized participation, in such action.
State pension plan defined
For purposes of this subparagraph, the term "State pension plan"
means a pension plan established and maintained for its employees
by the government of a State or political subdivision thereof,
or by any agency or instrumentality thereof.
Actions under contractual agreements between
issuers and indenture trustees
Notwithstanding paragraph (1) or (2), a covered class action that
seeks to enforce a contractual agreement between an issuer and an
indenture trustee may be maintained in a State or Federal court by
a party to the agreement or a successor to such party.
Remand of removed actions
In an action that has been removed from a State court pursuant to
paragraph (2), if the Federal court determines that the action may
be maintained in State court pursuant to this subsection, the Federal
court shall remand such action to such State court.
Preservation of State jurisdiction
The securities commission (or any agency or office performing like functions)
of any State shall retain jurisdiction under the laws of such State to
investigate and bring enforcement actions.
For purposes of this subsection, the following definitions shall apply:
Affiliate of the issuer
The term "affiliate of the issuer" means a person that directly or
indirectly, through one or more intermediaries, controls or is controlled
by or is under common control with, the issuer.
Covered class action
The term "covered class action" means--
any single lawsuit in which--
damages are sought on behalf of
more than 50 persons or prospective class members, and questions
of law or fact common to those persons or members of the prospective
class, without reference to issues of individualized reliance
on an alleged misstatement or omission, predominate over any
questions affecting only individual persons or members; or
one or more named parties seek
to recover damages on a representative basis on behalf of
themselves and other unnamed parties similarly situated, and
questions of law or fact common to those persons or members
of the prospective class predominate over any questions affecting
only individual persons or members; or
any group of lawsuits filed in or pending
in the same court and involving common questions of law or fact,
damages are sought on behalf of
more than 50 persons; and
the lawsuits are joined, consolidated,
or otherwise proceed as a single action for any purpose.
Exception for derivative actions
Notwithstanding subparagraph (B), the term "covered class action"
does not include an exclusively derivative action brought by one or
more shareholders on behalf of a corporation.
Counting of certain class members
For purposes of this paragraph, a corporation, investment company,
pension plan, partnership, or other entity, shall be treated as one
person or prospective class member, but only if the entity is not
established for the purpose of participating in the action.
The term "covered security" means a security that satisfies the standards
for a covered security specified in paragraph (1) or (2) of section
18(b) of the Securities Act of 1933, at the time during which it is alleged that the misrepresentation,
omission, or manipulative or deceptive conduct occurred, except that
such term shall not include any debt security that is exempt from
registration under the Securities Act of 1933 pursuant to rules issued
by the Commission under section 4(2) of the Securities Act of 1933.
Rule of construction
Nothing in this paragraph shall be construed to affect the discretion
of a State court in determining whether actions filed in such court
should be joined, consolidated, or otherwise allowed to proceed as
a single action.
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