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North American Securities Administrators Association Calls on U.S. Supreme Court to Protect Investors from Fraud and Abuse

March 7, 2017

Arguing on Behalf of the North American Securities Administrators Association, Cohen Milstein Urges Supreme Court to Preserve Investor Protections in CalPERS v. ANZ Securities

WASHINGTON – Urging the U.S. Supreme Court to preserve investors’ ability to exercise important securities fraud claims, the North American Securities Administrators Association, Inc. (“NASAA”), the non-profit association of state, provincial and territorial securities regulators in the United States, Canada and Mexico, has filed a brief supporting petitioners in CalPERS v. ANZ Securities, Inc., Cohen Milstein Sellers & Toll PLLC announced today.  Formed in 1919, NASAA is the oldest international organization devoted to protecting investors from fraud and abuse in the offer and sale of securities.

The amicus curiae (“friend of the court”) brief filed Monday by Cohen Milstein on behalf of NASAA urges the Supreme Court to overturn rulings by the Second U.S. Circuit Court of appeals that “impose significant burdens on institutional investors and the courts, and leave small, retail investors with reduced protections.”

At issue in ANZ is how the Supreme Court will interpret its own 1974 decision, known as American Pipe. Applying the “American Pipe rule,” courts agreed that filing a class-action lawsuit effectively stopped the clock on statutory deadlines under federal securities laws, protecting the ability of all purported class members – even investors who had not yet formally joined the lawsuit – to bring individual claims if they were not satisfied with a class settlement or if the class was not certified. In ANZ and another case known as IndyMac, however, the Second Circuit employed a more narrow interpretation of American Pipe, holding that filing a class action did not suspend the three year “statute of repose” deadline to file claims under Section 13 of the Securities Act of 1933. The Supreme Court’s decision would resolve a split among appeals courts that has widened since the Second Circuit’s 2013 IndyMac ruling.

The California State Employees’ Retirement System, known as CalPERS, is asking the Supreme Court to overturn the Second Circuit and restore investors’ longstanding ability to wait until class actions are resolved before deciding whether they should “opt out” of the class and file their own cases.  Oral arguments are scheduled for next month.

If the Second Circuit’s narrower interpretation of American Pipe is allowed to stand, investors will likely be forced to file preemptive lawsuits whenever they may be affected by a fraud, clogging the courts and greatly reducing the efficacy of securities class actions, the primary mechanism for investor compensation, according to the NASAA brief. The Second Circuit’s decision would also render virtually meaningless laws designed to protect members of the class and which direct state securities regulators to evaluate the relative value of class-action settlements, since individual remedies would no longer be available, according to the brief.

ANZ and IndyMac impose significant burdens on institutional investors and the courts, and leave small, retail investors with reduced protections,” the NASAA amicus brief states. “Retail investors need class action lawsuits to protect themselves from fraud.  For class actions to be robust, the interests of retail and institutional investors need to be aligned.  Requiring investors to decide early-on whether to proceed with a class or opt-out and pursue an independent claim in order to avoid the running Section 13 of the Securities Act’s statute of repose undermines the continuing viability of class actions for all investors.

“Furthermore, the ANZ and IndyMac decisions undermine the ability of the courts to evaluate the superiority of class actions and state securities regulators to evaluate the reasonableness of potential class action settlements under the Class Action Fairness Act of 2005,” the brief says.

NASAA’s membership includes securities regulators in all 50 U.S. states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.  The overriding mission of the group and its members is to protect investors, particularly retail investors, from fraud and abuse.  The brief was written by a group of attorneys including Cohen Milstein Partner Laura H. Posner, a former NASAA member who joined the firm recently after serving as Bureau Chief of the New Jersey Bureau of Securities for three years.

NASAA said it was prompted to support CalPERS in its petition to the Supreme Court because the decision will profoundly affect the ability of investors to obtain redress in cases where unscrupulous companies and individuals commit fraud, noting that “the resolution of this case will have a significant impact on the integrity of the securities markets and the remediation of securities fraud in those markets.”

The brief was submitted by A. Valerie Mirko, Zachary T. Knepper, Christopher Staley and Mark J. Stewart of the North American Securities Administrators. Cohen Milstein Washington, D.C.-based Partner Daniel S. Sommers was counsel of record on the brief, which was also signed by Ms. Posner and Michael Eisenkraft, Cohen Milstein partners based in New York City.

About Cohen Milstein Sellers & Toll PLLC
Founded in 1969, Cohen Milstein Sellers & Toll PLLC is a national leader in plaintiff class action lawsuits and litigation. As one of the premier firms in the country handling major complex cases, Cohen Milstein, with 90 attorneys, has offices in Washington, D.C., Chicago, New York City, Philadelphia, Palm Beach Gardens, Fla., and Raleigh, N.C. For more information, visit or call (202) 408-4600.