KENNETH H. GUICE, RESPONDENT, v. CHARLES SCHWAB & CO., INC., APPELLANT.
FRANK J. EVANGELIST, JR., RESPONDENT, v. FIDELITY BROKERAGE SERVS., INC.,
APPELLANT.
89 N.Y.2d 31, 674 N.E.2d 282, 651 N.Y.S.2d 352 (1996).
October 15, 1996
(Case Commentary by Editorial Board)
1 No. 200, 201 (1996 N.Y. Int. 193)
Decided October 15, 1996
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This opinion is uncorrected and subject to revision before publication
in the New York Reports.
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No. 200:
Catherine A. Ludden, for Appellant.
Richard M. Meyer, for Respondent.
Securities Industry Association, amicus curiae.
No. 201:
A. Robert Pietrzak, for Appellant.
Richard M. Meyer, for Respondent.
LEVINE, J.:
The plaintiffs in these appeals are former retail customers of
defendants Charles Schwab & Co., Inc. (Schwab) and Fidelity Brokerage
Services, Inc. (Fidelity). Schwab and Fidelity are "discount" stock
brokerage houses, operating nationwide, who charge reduced commissions
for effecting securities transactions for their clientele and hold
themselves out as offering quicker executions of orders on behalf of
customers who have already decided upon what securities to buy or
sell. Plaintiffs have brought these class actions on behalf of all
similarly-situated (unrestricted by geographical location) clients of
the defendants who used their brokerage services during the 1990-1994
putative class period.
In their respective complaints, which are identical in all pertinent
respects, plaintiffs seek a return of commissions, compensatory and
punitive damages, an accounting and injunctive relief based on
common-law theories of breach of fiduciary duty and conversion arising
out of the agent/principal relationships between defendants and the
putative class members, and upon alleged statutory violations.1
SNIPPETS:
KENNETH H. GUICE, RESPONDENT, v. CHARLES SCHWAB & CO., INC., APPELLANT.
The plaintiffs in these appeals are former retail customers of defendants Charles Schwab &
Schwab and Fidelity are "discount" stock brokerage houses, operating nationwide, who charge
All of the plaintiffs' causes of action arise out of defendants' receipt of what is known in
The practice of order flow payment consists of remuneration in the form of monetary or other
Plaintiffs' complaints allege that the defendants' acceptance of order flow payments breached
Plaintiffs also allege that the acceptance of order flow payments itself is illegal and
They also allege illegality of the acceptance of order flow payments as a form of commercial
Schwab and Fidelity moved to dismiss the complaints on grounds, inter alia, that enforcing
In each case, the complaint was dismissed by Supreme Court under the Supremacy Clause, on the
The Court in Guice noted that plaintiff "as limited by his brief, does not seek to bar
We reverse, concluding that the plaintiffs' remaining common-law causes of action, even as
The pre-emption question is ultimately one of congressional intent (see, Barnett Bank of
The bill was designed to give the SEC power to "eliminate all unnecessary or inappropriate
Acting under the foregoing legislative directions and delegation of authority, in 1977 the
It is uncontested that Schwab and Fidelity complied with the applicable disclosure
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