CAPITAL RESEARCH AND MANAGEMENT COMPANY et al., Plaintiffs and Respondents, v. EDMUND G. BROWN, JR., as Attorney General, etc., Defendant and Appellant. THE PEOPLE ex rel. EDMUND G. BROWN, JR., as Attorney General, etc., Plaintiff and Appellant, v. AMERICAN FUNDS DISTRIBUTORS, INC., et al., Defendants and Respondents. , 147 Cal. App. 4th 58

Summary

At issue was whether the National Securities Markets Improvement Act of 1996's (NSMIA) savings clause, 15 U.S.C. § 77r(c)(1), was sufficiently broad to permit the Attorney General to pursue injunctive relief and penalties against a covered security's investment advisor and wholesale broker-dealer who allegedly made inaccurate or inadequate representations to purchasers. The court noted that although NSMIA's preemption provision expressly prohibited any state from imposing conditions on the use of a covered security's offering documents, the savings clause gave the Attorney General authority to bring enforcement actions with respect to fraud or deceit, or unlawful conduct by a broker or dealer, in connection with securities or securities transactions (15 U.S.C. § 77r(c)(1)). That meant that the Attorney General could not sue the mutual fund complex to force it to change its disclosure documents, but it could sue the wholesale distributor and the investment advisor to force them to ...