Lawyr.Org

A panel of the 2nd Circuit split Wednesday over the scope of a federal law designed to funnel securities cases to the federal courts. Deciding a case of first impression, the majority ruled that an action over a company's failure to disclose it was insolvent should be heard in federal court, even though it was brought under New York state's consumer fraud law and did not involve nationally traded securities. A dissenting judge said the majority was engaged in a "judicial redrafting" of the law.