Northstar Decision on Remand: U.S. District Court Holds SLUSA Precludes State Law Claims Alleging Deviation from Mutual Fund’s Investment Objective

March 24, 2016

In a complete victory for the defendants, a federal district court dismissed with prejudice the final remaining claims in the Northstar case, which had been ongoing for nearly eight years. The court found that the plaintiff’s claims were precluded under a federal statute that forbids shareholders from filing state law claims based on alleged misrepresentations or omissions involving covered securities. In practice, the reasoning behind the court’s broad ruling should compel the dismissal of most similar state law claims premised on an alleged violation of a mutual fund’s fundamental investment objectives.

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