[18570]
February 23, 2005
TO: CLOSED-END INVESTMENT COMPANY COMMITTEE No. 8-05
PRIMARY CONTACTS - MEMBER COMPLEX No. 10-05
BOARD OF GOVERNORS No. 9-05
CEOS
SEC RULES COMMITTEE No. 16-05
SMALL FUNDS COMMITTEE No. 5-05
UNIT INVESTMENT TRUST COMMITTEE No. 2-05
RE: CLASS ACTION REFORM LEGISLATION
On February 18, 2005, President Bush signed into law the Class Action Fairness Act
(“Act”). The Act generally allows defendants to move any large interstate class action – one
with at least 100 plaintiffs and more than $5 million at stake – from state to federal court. The
Act also places limits on the amount of plaintiffs’ attorneys’ fees under certain circumstances.
Finally, the Act imposes a duty on defendants to notify federal and state officials of the
settlement of every class action.
Under the Act, certain types of suits are expressly excluded from the Act’s provisions
allowing removal of an action from state court to federal court. These include “any class action
that solely involves a claim concerning a covered security.” “Covered security” is defined to
mean exchange-listed securities and securities issued by a registered investment company. As a
result, the Institute will seek opportunities to pursue other initiatives in this area.
Jane G. Heinrichs
Assistant Counsel