Concerned by the overwhelming presence of vexatious federal securities-fraud class actions, Congress passed the Private Securities Litigation Reform Act of 1995 to increase the procedural burden plaintiffs would face in filing these nonmeritorious suits. Instead of being deterred, plaintiffs simply brought their suits in state court. Congress responded with the Securities Litigation Uniform Standards Act of 1998 (SLUSA), making federal court the exclusive venue for securities-fraud class actions. However, Congress expressly saved from SLUSA's reach claims that were traditionally brought in state court under corporate law through the Delaware carve-out.

Though this exemption was meant to protect the historic dual federal-state securities-regulation regime, recent appellate court opinions have stretched SLUSA's reach too far, leaving plaintiffs incapable of bringing many traditional state-law claims essential to the proper policing of corporate law regardless of the forum. This Note addresses the implications of such a broad reading of SLUSA and advocates a two-pronged approach that will simultaneously effectuate SLUSA's purpose while still preserving these important state-law claims. By looking to the heart of a complaint, courts can best effectuate congressional intent both to limit problematic litigation practices and to preserve the important role federalism plays in the securities-law context.

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