(dissenting). More than 50 bondholders of Reliance Group Holdings, Inc. (RGH) assigned claims to The RGH Liquidating Trust, which agreed to distribute to those bondholders the net proceeds resulting from any recovery on those claims. The Trust then brought this action asserting the claims of the bondholders (among others) against Deloitte & Touche and a Deloitte principal under New York law. The Trust alleges that Deloitte, as RGH’s auditor, fraudulently caused RGH’s financial condition to be misstated, thus inducing the bondholders to buy, or to refrain from selling, RGH bonds. The reason for bringing the case under state law is apparent: a federal securities law claim against Deloitte would have been time-barred (see Lampf, Pleva, Lipkind, Prupis & Petigrow v Gilbertson, 501 US 350, 364 [1991]; 28 USC § 1658 [b]).
Congress enacted the Securities Litigation Uniform Standards Act of 1998 (15 USC § 78bb [SLUSA]) to prevent exactly this kind of evasion of federal securities law barriers to suit. The majority nevertheless finds the Trust’s action on behalf of the bondholders permissible under SLUSA. It does so through a narrow reading of the statute that is inconsistent with the approach taken to similar questions by the federal courts.
SLUSA says: “No covered class action based upon the statutory or common law of any State . . . may be maintained in any State or Federal court . . . alleging ... a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security” (15 USC § 78bb [f] [1] [A]). It is undisputed that RGH’s bonds are covered securities; the issue here is whether the Trust’s lawsuit is a “covered class action.” SLUSA defines that term, in relevant part, as:
“any single lawsuit in which—
“(I) damages are sought on behalf of more than 50 persons . . . and questions of law or fact common to those persons . . . , without reference to issues of individualized reliance on an alleged misstatement or omission, predominate over any questions affecting only individual persons” (15 USC § 78bb [f] [5] [B] [i]).
This is a covered class action if the Trust is seeking damages “on behalf of more than 50 persons.” In common sense, of course it is: it is the assignee of more than 50 bondholders, and any damages it recovers will be distributed to those bondholders. Indeed, the Trust’s amended complaint says that it is suing *416“on behalf of the general unsecured creditors” of RGH, a term that includes the bondholders.
But the Trust argues, and the majority holds, that the action may be treated as though it were brought on behalf of only one person, the Trust, because of the following SLUSA provision, captioned “Counting of certain class members”: “For purposes of this paragraph, a corporation, investment company, pension plan, partnership, or other entity, shall be treated as one person . . . but only if the entity is not established for the purpose of participating in the action” (15 USC § 78bb [f] [5] [D]).
Deloitte argues, persuasively it seems to me, that this provision is not relevant to this case, because even if the Trust is “treated as one person” it is still suing “on behalf of’ more than 50 others — just as a class representative may be one person, but a class action will still be barred by SLUSA. If the “counting” provision is controlling here, however, that should not change the result.
The counting provision means, as the United States Court of Appeals for the Third Circuit has explained, “that the court is to follow the usual rule of not looking through an entity to its constituents unless the entity was established for the purpose of bringing the action, i.e., to circumvent SLUSA” (LaSala v Bordier et Cie, 519 F3d 121, 132-133 [3d Cir 2008]). The record makes clear that bringing actions like this one — and thus circumventing SLUSA — was an important part of the reason for the Trust’s creation. That was not, it is true, the Trust’s sole purpose. According to the Plan of Reorganization that brought the Trust into existence, it was “established . . . for the purposes of receiving the Trust Property and assuming the Assumed Liabilities, and liquidating and distributing the Trust Property for the benefit of the Trust Beneficiaries.” But the bondholders are “Trust Beneficiaries” and the “Trust Property” includes what the Plan calls “Creditor Litigation Claims”— among them the claims that the Trust is now asserting. Indeed, Creditor Litigation Claims, and the resulting proceeds, were viewed as a very significant part of the Trust’s assets. The Disclosure Statement prepared in connection with the Plan of Reorganization says: “on the Effective Date, the primary assets of the Liquidating Trust will consist of: (i) Causes of Action, including, but not limited to, the D&O Litigation Proceeds and the Creditor Litigation Proceeds.”
In short, bringing lawsuits like this one was one of the major purposes of the Trust. To treat the Trust as a single person *417when it is implementing that purpose, and to ignore the obvious fact that it is acting on behalf of more than 50 other persons, simply invites evasion of SLUSA. That, as I view it, is all there is to this case.
The majority reaches another conclusion through what seems to me a confused reading of SLUSA’s legislative history. It is true, as the majority says, that the legislative history shows that SLUSA’s authors did not want to bar litigation by trustees in bankruptcy and similar entities “duly authorized by law ... to seek damages on behalf of another person or entity” (S Rep 105-182, at 8 [quoted in majority op at 407]). That is why language in the draft legislation that might have been read to bar an action by a trustee in bankruptcy was deleted. But the majority ignores the difference, critical for SLUSA purposes, between a trustee in bankruptcy — who sues, ordinarily, on behalf of a single entity, the debtor — and a liquidating trust like this one, which is bringing claims assigned to it for the purpose of suit by more than 50 potential plaintiffs. Nothing in either the language or the legislative history of SLUSA suggests that Congress meant to grant an exemption to any “liquidation vehicle” that is doing precisely what SLUSA was enacted to prevent.
The federal cases dealing with this sort of question are consistent with the distinction I have made between the successor in interest to a single entity (e.g. a trustee in bankruptcy) and the assignee of many (e.g. the Trust here). That distinction is explicitly drawn by Judge Pollak’s opinion for the Third Circuit in LaSala.
LaSala was, in a critical way, the mirror image of this case: the claims being litigated there had originally belonged not to many entities, but to one, a bankrupt company called AremisSoft. The claims had passed, as the court explained, “from a corporation to its bankruptcy estate to a trust” (519 F3d at 126). That was the critical fact supporting the Third Circuit’s holding that the case was not barred by SLUSA. The court concluded, after a careful analysis, that the claims it was analyzing “originally belonged to AremisSoft, not to the purchasers of AremisSoft stock” (id. at 132). If the claims had originally belonged to the purchasers (of whom there were more than 50) the LaSala court would have come out differently. Interpreting the words of SLUSA that are critical here — “on behalf of more than 50 persons” — the court explained that that phrase
*418“seems to refer to someone bringing a claim on behalf of 50 injured persons. In other words, the phrase refers to the assignors of a claim, not to the assignee . . . Under this reading, the Trust is not bringing its claims ‘on behalf of the Purchasers, as SLUSA uses the term, because the Purchasers are not the injured parties; rather, the Trust is bringing the claims ‘on behalf of AremisSoft.” (Id. at 134.)
It is apparent that the LaSala court would have held the present case to be barred by SLUSA. Here, it is undisputed that “the assignors” were not a bankrupt corporation, but more than 50 bondholders. It is they, in LaSala’s terms, who are the “injured parties,” and this action is brought on their “behalf.” The majority takes a contrary view of LaSala’s application to this case, based, apparently, on the majority’s belief that the claims of the bondholders here were momentarily included in “the bankruptcy estate’s assets” (majority op at 414) — i.e., that the claims passed through the estate’s hands on their way from the bondholders to the Trust, rather than being directly assigned to the Trust by the bondholders. Even if true, that would be irrelevant under the LaSala court’s reasoning: it would not alter the fact that the bondholders were the injured parties. But I believe the majority is factually wrong: I see nothing in the record to support the assertion that the RGH bankruptcy estate ever owned these claims. The majority is correct in saying that the assignment of the claims from the bondholders to the Trust was effected in RGH’s Plan of Reorganization — but why this purely formal distinction would change the LaSala court’s analysis is something the majority does not explain.
Other federal cases are consistent with the LaSala approach. In Smith v Arthur Andersen LLP (421 F3d 989 [9th Cir 2005]), the action was brought by a trustee in bankruptcy, the successor in interest to a single entity, Boston Chicken, Inc. The court held the action not barred by SLUSA, observing that a contrary holding “could potentially deprive many bankruptcy trustees of the ability to pursue state-law securities fraud claims on behalf of an estate” (id. at 1008). By contrast, in Cape Ann Invs. LLC v Lepone (296 F Supp 2d 4 [D Mass 2003]), the court dismissed under SLUSA claims that had been assigned to a litigation trust by shareholders who claimed they had been induced to purchase, or to refrain from selling, stock in a company that went bankrupt. The trustee, as the court pointed out, had a duty to act “for the benefit of the . . . Shareholders. In that respect, his *419role is no different than that of any shareholder class representative” (id. at 10).
The Smith and Cape Ann opinions, like the majority opinion here, speak of the “primary purpose” for which a particular entity is formed. But unlike today’s majority, these federal cases address the “primary purpose” question with reference to the particular purpose being carried out in the lawsuit at hand— i.e., they in substance ask whether the lawsuit is an evasion of SLUSA or not. The Third Circuit in LaSala adopted what seems to me a more useful interpretation of SLUSA’s “established for the purpose of participating in the action” language: “when the corporation is established for the purpose of litigation, i.e., when plaintiffs try to avoid SLUSA by running their securities claims through a corporate entity, the court should look to the corporation’s constituents” (519 F3d at 134). Because that is exactly what happened here — the bondholders have tried to avoid SLUSA by running their claims through a liquidation trust — I would affirm the Appellate Division’s order dismissing those claims.
Chief Judge Lippman and Judges Ciparick, Graffeo, Pigott and Jones concur with Judge Read; Judge Smith dissents and votes to affirm in a separate opinion.
Order, insofar as appealed from, reversed, etc.