Merrill Lynch moved to dismiss the class action, arguing that it was preempted by the Securities Litigation Uniform Standards Act, which bars class action lawsuits from bringing state law claims for fraud "in connection with the purchase or sale" of securities. The District Court agreed that SLUSA preempted Dabit's claims based on the purchase of stock, and dismissed with leave to amend so he could separate out the "holder" claims, based on the retention of stock.
Merrill Lynch sought to dismiss the class action lawsuit, arguing that it was preempted by the Securities Litigation Uniform Standards Act (SLUSA), which prohibits class action lawsuits from bringing state law claims related to securities fraud "in connection with the purchase or sale" of securities. The District Court agreed that SLUSA preempted Dabit's claims based on the purchase of stock and dismissed them with permission to amend so he could separate out the "holder" claims, based on the retention of stock.