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Securities – SLUSA — class actions

United States Court of Appeals For the Seventh Circuit


Securities – SLUSA — class actions

SLUSA does not preempt state law claims that a broker’s handling, postage, and insurance fees are excessive.

“Appert alleges that Morgan Stanley breached the Agreement by charging an HPI fee that was disproportionate to its actual costs. The Agreement at issue here doesn’t create or define any particular security; its terms govern generally Morgan Stanley securities accounts for the purpose of buying and selling securities. Compare Lincoln Nat’l Life Ins. Co. v. Bezich, 610 F.3d 448, 449-51 (7th Cir. 2010) (finding variable life insurance policy was security because it allowed insured to allocate funds between general account and investment account and thus, exception applied to plaintiffs’ claim involving cost-of-insurance charges deducted from funds). We have already found that Morgan Stanley’s alleged breach of contract by charging an HPI fee that disproportionately exceeds actual costs is not material to any security transaction and following the limiting construction of subsection (d)(9)(C) in Cardarelli and Greenwich, we too find that it is not sufficient that the plaintiff’s claim merely relates to a security.”


11-1095 Appert v. Morgan Stanley Dean Witter, Inc.

Appeal from the United States District Court for the Northern District of Illinois, Coar, J., Tinder, J.

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