New York Law Journal
Primary jurisdiction and preemption issues arise in securities class action litigation when alleged violations of state law arise from conduct that is either explicitly or implicitly regulated by the federal securities laws.
These are two distinct theories: one is a matter of administrative law and judicial economy (primary jurisdiction); the other is a matter of constitutional law involving the Supremacy Clause (preemption). To date, there has not been extensive case law involving preemption and the federal securities laws (other than in the blue sky and tender offer areas) and there has been almost no case law on primary jurisdiction and the federal securities laws.
This article discusses these issues in the context of the order flow cases. In the eight ongoing order flow cases pending in state courts in Illinois, Massachusetts, Minnesota and New York, the plaintiffs have challenged the practice of certain broker-dealers that make monetary and non-monetary payments to retail brokers, particularly discount brokers, for the purpose of inducing the retail brokers to send orders to the defendants for execution.
Stone, Richard L. and Facciolo, Francis J., "Order Flow Cases: Jurisdiction, Preemption and Securities Laws" (1995). Faculty Publications. 253.