Opinion ID: 719604
Heading Depth: 2
Heading Rank: 1

Heading: Federal law applies.

Text: 13 The federal courts have consistently determined that federal law governs the assignability of claims under the federal securities laws. See, e.g., In re Nucorp Energy Securities Litig., 772 F.2d 1486, 1489 (9th Cir.1985) (Trust Indenture Act); Lowry v. Baltimore & O. R.R., 707 F.2d 721, 727 (3d Cir.) (in banc) (Garth, J., concurring) (Securities Exchange Act), cert. denied, 464 U.S. 893, 104 S.Ct. 238, 78 L.Ed.2d 229 (1983); Huddleston v. Herman & MacLean, 640 F.2d 534, 557 & n. 40 (5th Cir.1981) (same), rev'd on other grounds, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983); In re Saxon Securities Litig., 644 F.Supp. 465, 473-74 & n. 16 (S.D.N.Y.1985) (same); see also Drachman v. Harvey, 453 F.2d 722, 727 (2d Cir.1971) (applying federal law to determine standing to bring a shareholder derivative action under the Securities Exchange Act), rev'd on other grounds, 453 F.2d at 736 (in banc); cf. Phelan v. Middle States Oil Corp., 154 F.2d 978, 1000-01 (2d Cir.1946) (applying federal law to determine assignability of bondholder's claims against a federal receiver). 14 The Trust Indenture Act was enacted because previous abuses by indenture trustees had adversely affected the national public interest and the interest of investors in notes, bonds [and] debentures, 15 U.S.C. § 77bbb(a), and Congress sought to address this national problem in a uniform way, S.Rep. No. 248, 76th Cong., 1st Sess. 3 (1939). The Act is designed to vindicate a federal policy of protecting investors. Nucorp, 772 F.2d at 1489 (internal citations omitted) (emphasis added). Applying state law would mean that this federal statute could be interpreted differently in all 50 states. In Zeffiro v. First Pennsylvania Banking & Trust Co., 623 F.2d 290 (3d Cir.1980), cert. denied, 456 U.S. 1005, 102 S.Ct. 2295, 73 L.Ed.2d 1299 (1982), which established a private cause of action under the Act, the Third Circuit pointed out: 15 It is hard to believe that Congress would have established uniform standards to govern indentures and then paradoxically have allowed the application of those standards to depend on the law of the state of the suit. The interpretation of the indenture provisions mandated by the Act does not depend on ordinary contract principles--the intent of the parties--but depends on an interpretation of the legislation. It would be contrary to the purposes of the Act to have the trustee held to certain standards in one state court and potentially different standards in another. 16 Id. at 299 (footnote omitted). We agree with those observations. 17 Bluebird emphasizes that the choice of law provision in the Indenture states that New York law governs its interpretation. But we do not have to interpret the Indenture (and thus apply New York law) to decide whether a federal claim under the Act is automatically assigned to a subsequent purchaser. See Nucorp, 772 F.2d at 1489. 18