15 U.S.C. § 78bb — Effect on existing law

(a) Limitation on judgments This part limits how much money you can collect in lawsuits under this law and protects state authority. If you're allowed to sue for damages under this law, you might win more than one judgment about the same wrongdoing. But no matter how many judgments you collect on, the total money you actually receive can't be more than your actual losses from the act you sued over. Except where this law specifically says something different, nothing here takes away a state securities commission's power (or any state agency doing that job) over a security or a person — as long as the state's rules don't conflict with this law or its regulations. Unless subsection (f) says otherwise, the rights and remedies this law gives you are extra: they add to any other rights and remedies you already have under other law, whether court-made or written into a statute. State laws that ban or regulate wagering or gaming contracts, or that ban "bucket shops" (illegal off-exchange trading operations) or similar activities, cannot cancel out puts, calls, straddles, options, or other securities covered by this law — unless the security has a payout tied to race-track-style betting odds ("pari-mutuel"), or the SEC decides by rule that a specific security should still be subject to those state laws. These state laws also can't apply to activity connected with offering, buying, selling, exercising, settling, or closing out such a security. The same protection covers security-based swaps between "eligible contract participants," and security-based swaps traded on a registered national securities exchange. No state law about offering, selling, or distributing securities applies to transactions in security-based swaps or security futures products — except that general state antifraud laws still apply. And no state may regulate a security-based swap as if it were an insurance contract. (b) Modification of disciplinary procedures This law does not change existing rules about when disciplinary settlements are binding. If a self-regulatory organization (like a stock exchange) settles a dispute between its own members or participants, that settlement stays binding on them the same way it always did. The same goes for the Municipal Securities Rulemaking Board settling disputes between municipal securities dealers and brokers. And if anyone else has separately agreed to be bound by one of these settlement procedures, this law doesn't change that either. (c) Continuing validity of disciplinary sanctions Sometimes a court stays, sets aside, or modifies a disciplinary sanction that a self-regulatory organization gave to one of its members, an associated person, or a participant (under section 78s(e)). When that happens, it does not erase the validity of actions the organization already took because of that sanction, before the court's change — as long as those earlier actions don't conflict with this law or its rules. Anyone who acted in good faith relying on those earlier actions keeps their rights fully protected; the later court change doesn't touch them. (d) Physical location of facilities of registered clearing agencies or registered transfer agents No state or local government may tax a change in who owns securities just because that change happened through the facilities of a registered clearing agency or registered transfer agent (or their nominee or custodian) — unless the state or locality could have taxed that same change anyway, even if the clearing agency's or transfer agent's facilities weren't physically located there. The same rule applies to taxing securities simply because they are deposited with or held by such an agency or agent. (e) Exchange, broker, and dealer commissions; brokerage and research services If you manage an account with investment discretion — meaning you decide what trades to make — and you cause the account to pay a broker or dealer a higher commission than another broker or dealer would have charged for the same trade, that alone does not make you break the law or breach your fiduciary duty, under either state or federal law. This protection applies unless a law passed by Congress or a state after June 4, 1975 specifically says otherwise. To get this protection, you must have honestly believed the commission was reasonable for the value of the "brokerage and research services" you received, judged either by that one trade or by your overall responsibilities managing the accounts. This rule is the complete and final word on this kind of conduct, unless a contract says something different — but it doesn't limit any other power the SEC has under this law. If you exercise this kind of investment discretion, you must disclose your commission policies and practices — when and how the appropriate regulator requires, if that regulator decides disclosure is necessary to protect investors or serve the public interest. "Brokerage and research services" means: giving advice, in person or in writing, about a security's value, whether to invest in it, and who is buying or selling it; providing analysis and reports about companies, industries, securities, the economy, portfolio strategy, or account performance; or actually carrying out securities trades and the related work — like clearing, settling, and safekeeping — required by SEC or self-regulatory organization rules. None of this subsection applies to security futures products. (f) Limitations on remedies This part limits big state-law lawsuits about securities and says which ones can still go forward. No large class action based on a state's statutory or common law can be brought in any state or federal court by a private party if it claims that someone misrepresented or left out an important fact when buying or selling a "covered security," or that someone used a manipulative or deceptive scheme in connection with buying or selling a "covered security." If someone files this kind of blocked class action in state court anyway, it can be moved ("removed") to the local federal district court, where the same rule against it still applies. But some class actions are allowed to continue despite that block. First, a class action based on the law of the state where the issuer — the company that issued the security — is incorporated or organized can go forward in state or federal court, but only if it's about the issuer or an affiliate buying or selling securities exclusively with people who already hold that issuer's equity securities, or about a recommendation, position, or communication that the issuer or an affiliate sent to its own equity holders about voting, responding to a tender or exchange offer, or exercising dissenters' or appraisal rights. Second, nothing here stops a state, a political subdivision of a state, or a state pension plan from bringing its own lawsuit about a covered security, or joining a class made up only of other states, political subdivisions, or state pension plans that are named plaintiffs and have authorized joining in. A "state pension plan" here means a pension plan that a state or local government, or one of its agencies, sets up and runs for its own employees. Third, a class action that tries to enforce a contract between an issuer and an indenture trustee can still be brought by a party to that contract or their successor. Fourth, if a case gets removed to federal court and the federal court decides it actually qualifies for one of these allowed categories, the federal court must send the case back to state court. Separately, state securities regulators keep their full power under state law to investigate wrongdoing and bring their own enforcement actions — none of this subsection takes that away. Finally, several terms used in this subsection are defined. An "affiliate of the issuer" is anyone who controls the issuer, is controlled by it, or is under common control with it, directly or through other companies. A "covered class action" means either a single lawsuit seeking damages for more than 50 people where common legal or factual questions — not counting individual reliance on a misstatement — outweigh individual ones, or where named plaintiffs sue on behalf of themselves and similar unnamed people with predominating common questions; or a group of related lawsuits in the same court, for more than 50 people total, that are joined or otherwise proceed together. A purely derivative lawsuit — one brought by shareholders on behalf of the corporation itself, not on their own behalf — does not count as a "covered class action." When counting class members, a corporation, investment company, pension plan, partnership, or similar entity counts as just one person or class member, unless it was created specifically to take part in the lawsuit. A "covered security" is a security that meets the standard set out in section 18(b)(1) or (2) of the Securities Act of 1933, measured at the time of the alleged wrongdoing — except this does not include debt securities that are exempt from registration under that Act's rules issued under its section 4(2). And nothing in this subsection limits a state court's own discretion over whether to join, consolidate, or otherwise combine cases filed there.