Courts have long assumed the existence of exclusive federal jurisdiction over private actions implied from section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5. The result is not only to restrict forum choice for rule 10b-5 claimants but also to generate a host of questions concerning the extent of federal authority: whether rule 10b-5 actions are exempt from the claim and issue preclusive effects of state court decisions; whether state courts can hear defenses and state-created claims that involve rule 10b-5; and whether federal courts can stay rule 10b-5 actions in deference to state court litigation. In dividing on these questions, courts invariably fail to examine the underlying premise: that exclusive federal jurisdiction has a valid legal basis. The thesis of this Article is that exclusive federal jurisdiction over rule 10b-5 actions lacks a legitimate foundation and should be rejected. State courts should share with federal courts the adjudication of rule 10b-5 actions.
Margaret V. Sachs,
Exclusive Federal Jurisdiction for Implied Rule 10b-5 Actions: The Emperor Has No Clothes
Available at: http://digitalcommons.law.uga.edu/fac_artchop/631