Block on Trump's Asylum Ban Upheld by Supreme Court
The Second Circuit Court of Appeals has upheld the dismissal of the E*Trade customer class action case alleging the company broke state laws when it steered customer business to its partners that paid it the most, rather than what was in the best interest of their customers.
Though the allegations are rather troubling, it's somewhat comforting to know that E*Trade reformed their practices years ago, after this controversy initially broke and FINRA investigated. Unfortunately for the plaintiff(s) in the civil case, the federal courts have ruled that federal law preempts the state law claims entirely.
The heart of the plaintiff's claims in Rayner v. E*Trade involves E*Trade not acting in the best interest of its users who place limit trades. It was alleged that rather than execute at the best time for the traders, E*Trade was executing the limit trades at the best time for E*Trade by executing the trades when it would receive the most amount of money in rebates, or as the plaintiff called it, kickbacks.
However, as the court explained, under SLUSA (Securities Litigation Uniform Standards Act of 1998), private parties cannot file state law claims of "alleging that defendants made a misrepresentation or omission of a material fact or used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of covered securities."
And despite the logistical gymnastics Rayner employed to get around SLUSA, neither district nor appellate court were convinced that E*Trade's conduct fell outside it.