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*1 Avariable annuity policy holder brought a putative class action in state court alleging a breach of contract by an insurance company when it introduced a volatility management strategy to the policies without full compliance with state law. The insurance*2

company, citing an alleged misrepresentation to a state regulator, removed the case to federal court where it sought dismissal. The United States District Court for the Southern District of New York, (Broderick, J.), granted dismissal, concluding that the Securities Litigation Uniform Standards Act (SLUSA) precluded the suit. The variable annuity holder appeals. We conclude that a holder’s passive retention of a security following a misrepresentation of which the holder is unaware lacks the “in connection with” requirement for SLUSA preclusion. Accordingly, we REVERSE the judgment of the District Court and REMAND with instructions to remand the case to Connecticut state court.BARRINGTON D. PARKER, C.J.The Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) precludes plaintiffs from bringing certain class actions in state court that allege fraud in connection with the purchase or sale of nationally traded securities. 15 U.S.C. §78bb(f)(1). In this putative class action, plaintiff-appellant Richard T. O’Donnell sues on behalf of himself and other variable annuity holders as customers of defendant-appellee AXA Equitable Life Insurance Co. (“AXA”). O’Donnell alleges that AXA implemented a volatility management

 
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