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The purpose of this paper is to survey the landscape of recent federal securities class actions filed in state court and explore arguments for removal of those cases to federal courts under the Securities Litigation Reform Act (SLUSA) or the Class Action Fairness Act (CAFA).

The paper discusses: US Congressional legislation designed to bring the bulk of securities class actions back into federal courts, including the Private Securities Litigation Reform Act (PSLRA) and SLUSA; CAFA, another law designed to redirect class action litigation away from state courts; recent cases that have tested the limits of SLUSA and CAFA for removal from state to federal courts; and arguments for removal under SLUSA and CAFA.

Legislative history for both SLUSA and CAFA suggests that these statutes should be read as evidence of Congressional intent to return most securities class actions to federal court. Nonetheless, plaintiffs have continued to devise legal schemes to litigate class actions in what they perceive to be friendlier forums in state courts.

Although the arguments discussed in this paper are not exhaustive, they are a starting point for defendants seeking removal once litigation arises.

The purpose of this paper is to examine the impact the US Supreme Court's Tellabs decision has had on Section 10 (b) cases generally and on cases related to subprime mortgage‐backed securities.

The paper provides background including provisions of Section 10(b) of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act (PSLRA) of 1995. Analyzes the decision in Tellabs, Inc. v. Makor Issue & Rights, Ltd, recent decisions since Tellabs by the the Second, Seventh, and Ninth Circuits, and decisions in two recent subprime securities cases in which defendants moved to dismiss pursuant to Tellabs; and draws preliminary conclusions from cases that have applied Tellabs so far.

The PSLRA raised the bar for pleading scienter by requiring a “strong inference”, but the courts of appeals have differed in applying the standard. The Tellabs decision asserted that the PSLRA requires consideration of competing inferences in determination of whether scienter is adequately pleaded. The Supreme Court's “prescription” said the inference of scienter must be more than merely “reasonable” or “permissible”; it must seem to a reasonable person to be at least as cogent and compelling as any opposing inference. One lesson of Tellabs and the Seventh Circuit's decision on remand is that the “plausibility” of scienter allegations requires a fact‐specific inquiry. The Ninth Circuit court found that “deliberate recklessness” is sufficient to allege scienter. In one of the subprime cases, In re 2007 Novastar Financial, Inc., a district court found that a deterioration of a company's business was not evidence of wrongdoing. It is difficult – and premature – to draw firm conclusions from cases that have applied Tellabs so far, but requiring courts to consider competing inferences, requiring the pleadings in question to satisfy more “adjectives”, and requiring the “weighing” of inferences at the pleadings stage would all appear to help defendants. However, Tellabs could help plaintiffs by reversing previous practice in which a “tie” between competing inferences automatically resulted in a victory for the defendant.

The paper offers practical guidance by experienced securities lawyers.