preclude state law claims when for requirements are met you need a covered class action plaintiff alleges misrepresentations and omissions in connection with the purchase or sale of covered security the first and last requirements are cut and dry and  the in connection with requirement was addressed head on by the supreme court in the chad born case the context there what was because lucilla does not reach any common law claim that happens to involve securities where does it stop and where's that stop is not clear looking at in connection with as it is in connection with the standing alone is the indeterminate standard as justice thomas stated in connection with like relations stops nowhere so where does in connection with stop for purposes of sluices the chad born in court drew the line at materiality and i'm going to use the court's words it will be better than my own talking about in connection with the chad born court said how broad is that scope does it extend further than misrepresentations that are material to the purchase for sale of covered security in our view the scope of this language does not lead to further depicting the matter more specifically a fraudulent misrepresentation or omission is not my in connection with a purchase or sale of a coverage born also said look we're not creating a new standard here the materiality standard is what this court has always used it looked back to dab it it looked back to  rulings looking at in connection with under sluicing and it said what we have always used is that there has to be or there was a material connection between a fraud fraudulent conduct and someone's decision buy or sell a covered security so the standard chad born is a better articulated but it's not different than the supreme court ever used so dab it is not modified by tackling what is modified is lower court decisions that used a more or fists they definition of in connection with which was to cope coincide it merely coincide that is changed by chad born use in connection with to cover holders our case has nothing to do with the holders in addition if you look at the chad borne case an argument was made there by the department justice and the f c c they said supreme court in chad bourne your definition of in connection with is going to tie our hands we will be able to prosecute things or in a will have litigation as broadly as we did before  fiduciary duty claim based upon best execution but that they do the best execution were alleging is parallel to the finra regulations but we do not allege a violation of finra if i can talk briefly about where the district court aired here in its application of in connection with the district court here believe that it was sufficient if the misconduct  connected with mr lewis's choice of a broker and then to chad bourne that's not that's not that's not the correct connection chad bourne makes you ask what is the misconduct material to if it's material to the decision to buy a security you have a sluice a problem if it's material to who you choose as a broker you don't have a sleep's a problem those kinds of claims can still go forward as state law claims i'd like to move on to the other prong sluice at issue here and that's the misrepresentation an omission requirement  there the question is how do you determine if a case is really about fraud really about misrepresentations and omissions the majority approach is used by the second third and ninth circuit and also by the concurrence and dissent in the recent seventh circuit opinion which is that the bank of america what you do in the majority approach and also this approach was previewed by the eighth circuit in in the green case green ameritrade what you do in the majority pro choice is you look at the complaint as alleged not what was alleged in a prior complaint not what could have been alleged well not what might have been alleged what was actually alle however you don't stop with the face of the pleadings you look underneath and you say this plaintiff to win their case have to prove a misrepresentation or a mission in no you don't have a sluice a problem if  not infinite means that that's their sole or primary consideration the amount that money that the trades are going to get from a choice of a trading venue they can consider that but not if it means others w well in all of those cases plaintiffs were asking that the payments themselves be stopped or the practice itself was wrong we're not challenging the practice excel or their ability to accept the payments it's a violation of best it's a violation of a fiduciary duty that they were obligated when they selected a trading venue for mr lewis they had to take thirteen steps take steps to make and every transaction which of course otherwise would require them not the resources that they can yes group trades they don't have to look at each individual trade they can group trades but when they group those trades they still have to consider the best interest of the purchaser of of their client before they consider how much payment they get and i would like to reserve the rest of my time pl thank your honour's me please the court chris hone for epeli scottrade inc as the poet playwright james whitcomb riley famously stated if it walks like a duck and quacks like a duck in swims like a duck it's a duck despite the public council's protestations to the contrary and her clear disagreement with the actual content of the complaint and that's what we see here is the statements by counsel that were just made are inherently inconsistent with what's in the complaint despite that what's alleged here is actually that scottrade deployed a manipulative or deceptive device or engaged in a material omission in connection counsel already noted the two factors at issue are the in connection factor and the material misrepresentation or a mission or manipulative or deceptive device or contrivance i don't believe counsel mentioned that but i think that's also important and something the district court considered as well intentionally deciding it was not even going to attempt best execution and not telling the plaintiff in an effort to and this is their words not ours in in an intentional effort consciously wrongful intentional effort to maximize kickback revenue and they use the word kickback was not used by opponents counsel senior but it's it's replete throughout the complaint in this conduct related to scott trades directing of standing limit orders to national securities exchanges for execution this necessarily means that the conduct occurred in connection with the purchase or sale of covered securities again counsel does not contest that purchases or sales related to actual covered securities and indeed if we look at the complaint seven times in the complaint seven times the plaintiffs allege that scottrade alleged wrongful failure to pursue best execution was quote unquote in connection with the routing of standing limit orders to national markets such as nasdaq and direct they've admitted it they admitted in the complaint and now they run from it they say that they want to say that it's not in connection with when they allege diametrically the opposite in the complaint they also allege diametrically the opposite in the complaint that this was a fraud or a mission they clearly allege that point that the plaintiff and other investors were quote relying upon brokers like scott trade to send their trades to the correct venues are the proper venue revenue and they say scottrade did not disclose to anyone the amounts of that kickback revenue that they say scottrade received so first i'd like to focus on the in connection with requirement the district court properly held lewis's precluded in the district court first found that the core of lewis's complaint was that scottrade failed to disclose that it was operating under a conflict of interest again their words conflict of interest and that it was not attempting to achieve  as the courts this court's precedents trucks as well we have to look at the substance of the action and in this action they've already acknowledged that this activity of not attempting to achieve best execution was in fact in connection with bribing the trades for execution and as judge easterbrook said encourage versus for belly management best execution getting the optimal combination of price speed and liquidity affects the net price investors pay or receive for securities and is therefore widely understood as a subject to regulation under the securities and exchange act of one nine hundred thirty four and you see in the complaint actually the plaintiffs cite to italia study that talks about this fact of result of price being less not as favorable to people like the pla s judge easterbrook concluded in that same case curbs that any argument that best execution is not in connection with the purchase or sale of securities is frivolous given the supreme court's decision in  in damages on point in controlling as judge loken i believe you are indicating and judge easterbrook recognize that in and in and babbitt the fundamental policy concerns are what are what's driving that decision and that result justice steven began his opinion stating the magnitude of the federal interest in protecting the integrity in a fission operation of the market for national trade securities cannot be overstated in congress acted salusa to  make sure federal courts are the exclusive venue for class actions asserting fraud in connection with the purchase or sale publically trade securities and to make federal securities law the exclusive source of substantive law governing such class act court held that the in connection with language in salissa should be given broad interpretation and be satisfied where the complaint of conduct coincides with a security transaction and that's that coincide language is important if you look at claims just similar of similarly to here and even though the holding of sharers was not actionable in a private ten b five action the supreme court found the claims precluded under salusa and this court i operating under a conflict of interests and in its own interest by purchasing securities and receiving fees it did not share with its customers and did not disclose to its customers very similar conduct in the pellet is not really talked about siebel in their achieve best execution and again you go back you look at the complaint in that says the plaintiff was relying relying on scottrade to persue best execution but scottrade set up its systems in advance in including its computerized smart order router a device under and their terms to route trades not to achieve best execution but to achieve maximum kickback revenue and kickback obviously connotes an illicit secret payment and that's again that's in the language of curves i think is is particularly is particularly helpful there scottrade was operating under a conflict secret conflict of interest that it was receiving under the table payments essentially from third party exchangers the broker that broker dealer that fails to achieve best execution for a customer by arranging a trade whose terms favor the dealer rather than the client has a securities problem not just a state law contract or fiduciary problem so if you look at the best execution cases that have looked at this they have specifically found that receiving these kinds of payments and failure failing to disclose them and in that type of situation involves either of an omission or a deceptive  device it's important also the plaintiffs mentioned below in their motion to dismiss proving that this was a kickback scheme i mean they're a scheme they're actually using that that very term now we're not changing you know all these words aren't talismanic but obviously pursuant to this court's authorities we look to the gravel men of the allegations and even if you do that decision from this very court is also very instructive because in due to the court said even if it's implicit allegation implicit allegation relating to an omission in connection with the purchase for sale securities that's sufficient so i want to talk briefly just go back to the in connection with element in indicate very quickly distinguished jabot by by looking at basically three different elements number one in chad born it was the purchase of an uncovered security namely certificates of deposit number two it was it was those the purchase of any covered security was so remote and tangential not material that it didn't matter and any purchase of securities was done by not by the plain dos but by the fraudster and also that there was no ownership interest in securities we don't have any of that here we have the plaintiffs actually purchasing or selling securities they have an ownership interest in the purchases were made by them by the supreme court statement that the that it would not impact brokers like scott trade quote the only issuers investment advisors or accountants that today's decision will continue to subject to state law liability are those who do not sell or participate in selling securities traded on u s national exchanges well that's exactly what we have here scott trade was sending trades to national exchanges as they had met so jadwin was very clear that it was not trying to exempt these types of claims from solutia preclusion and if you look at the post you had borne cases that that lewis cites i mean they all relate to uncovered securities where the purchase of a covered security was remote recognized that a failure to achieve best execution can be a fraudulent or deceptive device that's in connection with the purchase or sale of securities and i think again going back to appellants claim here in fro court is that they're not trying to foreclose this activity they're not trying to require that these funds not be collected payment for order flow that's it's false and all you have to look have to do is look at paragraph one again again exactly what the the what lewis is seeking in this case and dol recognize that this is such a matter of of of national import and also one that's heavily regulated by the f c c that attempting to allow state law standards on what best execution is and how payment for order flow a fast effect execution stands as an obstacle to the f c c is regulation here because the f c c could very well conclude that particular broker's conduct and receiving payment for flow is it does not violate the duty of best execution whereas here in this case they're trying to set up a state law standard that it could very well so i do believe the whole fundamental premise of plaintiff's complain exactly as we are so i would ask the court to look at the first circuit into a reading of chad born in the head aldo case it is what we say under defense counsel's reading of dab it we would have two standards of in connection with we'd have a dab at standard and a chat board standard and that that's not the way the works you've got one standard it's articulated to cha born and as the chad one court said it's the same standard we used in dab it there's one standard it's articulated chad born it's used in that it as to the kirk's case from the seventh circuit that's pretty chad borne it uses the amorphous coincide standard it does not apply as to the misrepresentations and omissions he's looking at the complaint that i and i don't see