Rayner v. E*TRADE Financial Corp., No. 17-1487 (2d Cir. 2018)Annotate this Case
Best execution claims alleging misrepresentations or omissions relating to: (1) a broker's receipt of "kickbacks" from trading venues; and (2) the execution of trades so as to take advantage of such arrangements, satisfy the third element of the Securities Litigation Uniform Standards Act of 1998 (SLUSA), by alleging securities claims based on fraudulent conduct.
The Second Circuit affirmed the district court's dismissal of plaintiff's action alleging that defendant violated its duty of best execution. The court held that the claims were precluded by the Securities Litigation Uniform Standards Act of 1998 (SLUSA). In this case, plaintiff filed a covered class action based on state law claims involving covered securities; the gravamen of plaintiff's complaint was that defendant made material misrepresentations and omissions that were designed to induce clients to execute non‐directed, standing limit orders with defendant even though it allegedly had no intention of fulfilling its purported fiduciary obligations; and defendant's alleged fraudulent conduct arose in connection with the purchase or sale of covered securities.