Merrill Lynch — Securities Victory

Greg Manning and other investors
Type of Engagement
Subject Matter
Securities Law
Civil Procedure
U.S. Supreme Court

The Challenge

Protecting the authority of state courts to enforce their own laws governing market misconduct.

The Engagement

In a case of extraordinary importance to state authorities and the investing public, we were retained to represent before the United States Supreme Court a group of investors who lost over $50 million when the stock of a company called Escala declined by more than $800 million. The complaint accused several major financial institutions of engaging in improper short-selling practices, and sought relief in New Jersey state court for violations of New Jersey law. Led by Merrill Lynch, the financial institutions argued that the federal securities laws required the case to be brought exclusively in federal court. We argued that longstanding principles of jurisdiction entitled state courts to hear disputes concerning their own laws.

The Result

The Court issued an 8-0 decision in our clients’ favor, holding that the lawsuit could proceed in New Jersey state court. Our victory was described by the press as “the most significant securities decision of the term.”

Key Case Materials

Opinion (May 16, 2016)

Oral Argument Audio (December 1, 2015)

Merrill Lynch’s Reply Brief (November 23, 2015)

Our Brief for Respondents (October 23, 2015)

Merrill Lynch’s Opening Brief (September 3, 2015)

Our Brief in Opposition to Petition for Writ of Certiorari (June 5, 2015)

Merrill Lynch’s Petition for Writ of Certiorari (March 17, 2015)

Media Coverage

Supreme Court Shields Shareholder Access To State Court (Law360, May 16, 2016) (subscription required)

Justices Say Federal Securities Laws Don’t Limit State Suits (Law360, May 16, 2016) (subscription required)

Supreme Court Says No to Federal Jurisdiction in Short-Selling Spat (Thompson Reuters, May 16, 2016)

SCOTUS Send Merrill Lynch Case to NJ State (Courthouse News Service, May 16, 2016)

Justices Wary Of Moving 'Naked Shorts' Suit Out Of NJ Court (Law360, December 1, 2015) (subscription required)

Groups Tell Justices To Send Naked Short-Selling Suit To NJ (Law360, November 9, 2015) (subscription required)

Justices' Business Docket Heating Up Next Term (National Law Journal, July 8, 2015) (subscription required)

High Court To Hear Merrill Lynch Naked Short Selling Suit (Law360, June 30, 2015) (subscription required)

Merrill Lynch Blasted For High Court Bid In Short-Selling Suit (Law360, June 12, 2015) (subscription required)