Brown

NSMIA, the National Securities Markets Improvement Act of 1996, prohibits the states from limiting or imposing any conditions upon the use of “any offering document that is prepared by or on behalf of’ the issuer of a covered security (15 U.S.C. § 77r(a)(2)(A)) but permits certain state officers to “bring enforcement actions with respect to fraud or deceit, or unlawful conduct by a broker or dealer, in connection with securities or securities transactions” (15 U.S.C. § 77r(c)(1)). The issue on this appeal is whether NSMIA’s savings clause is sufficiently broad to permit the Attorney General of California to pursue injunctive relief and penalties against a covered security’s investment advisor and wholesale broker-dealer who allegedly made inaccurate or inadequate representations to purchasers. We conclude that the savings clause applies, and therefore reverse a judgment based on a finding that this action is preempted by federal law.

FACTS

A. The Declaratory Relief Action

Capital Research and Management Company (CRMC, an investment advisor) and American Funds Distributors, Inc. (AFD, a registered broker-dealer and wholesale distributor), sued the Attorney General of…