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WASHINGTON-Lloyd's of London is not yet out of the woods when it comes to avoiding litigation over alleged securities law violations from recruiting U.S. members.The U.S. Supreme Court last week declined to review a decision by the 4th U.S. Circuit Court of Appeals that member disputes should be heard in U.K. courts. Although that was not bad news for Lloyd's, an opinion by the 9th U.S. Circuit Court of Appeals allowing such a suit to proceed remains to be r esolved.Altogether, the Supreme Court has refused to hear four cases involving choice of law and forum, and federal appeals courts have upheld five such cases, said a Lloyd's spokesman. These decisions have upheld clauses in member s' contracts maintaining that U.K. laws and courts should govern any membership disputes.However, as long as the 9th Circuit's decision stands, Lloyd's can't breathe a sigh of relief.In March, the 9th Circuit ruled in Alan Richards vs. Lloyd's that choice of law and forum clauses in members' contracts are void because investors cannot waive U.S. securities law under Securities and Exchange Commission regulati ons (BI, March 17). That cleared the way for 350 members to sue Lloyd's for alleged securities violations.As a result of that ruling, some members who have had their claims against Lloyd's rejected in other U.S. courts are looking to see whether they can have their cases reheard in light of the 9th Circuit decision, according to Richard S. Rosenblatt, chairman of the American Names Assn.Lloyd's and California Insurance Commissioner Chuck Quackenbush recently filed petitions to the 9th Circuit panel to get the case reheard or to get it reheard en banc, court papers show.If the 9th Circuit decision stands, Lloyd's says the lawsuit would impair its insurance business, according to court papers. Lloyd's argues that allowing such a lawsuit would contravene federal policy against interference with the insurance business.Lloyd's and Commissioner Quackenbush also predict in their petitions to the 9th Circuit that if th e U.S. members are allowed to proceed with their securities claims, they ultimately could rescind their obligations under their Lloyd's contracts, which "would have catastrophic consequences" on policyholders, third-party claiman ts and ceding insurers.The SEC, however, argues that the 9th Circuit's decision should stand.Lloyd's doomsday predictions may have some merit, the SEC acknowledges in a brief filed with the court. However, "the proper solution is not to be found in ignoring the antiwaiver provisions (in securities law), upholding the choice clauses, and preventing the assertion of securities claims," the SEC states.Such a decision could deprive investors in any foreign ins urance company the right to protection under federal securities law, argues the SEC.It is up to a U.S. court to decide whether Lloyd's membership can be considered a security, the SEC says. Although the SEC has not issued an opinio n on whether Lloyd's membership may be considered a security, as alleged, it contends the case must be heard under U.S. law, as there is nothing similar under British law that offers the same protection.Indeed, the 9th Circuit's de cision is almost in direct conflict with the 4th Circuit's decision on choice of law that the Supreme Court declined to review last week.The 4th Circuit overturned a district court judge's decision in Louis F. Allen vs. Lloyd's tha t the case should be heard under U.S. securities law.The 4th Circuit concluded-contrary to amicus briefs filed by the SEC in the proceedings-that the case should be thrown out because "the contractual provisions among the parties selecting the law of, and a forum in, the United Kingdom should be enforced."Although the Supreme Court declined to review the 4th Circuit decision, it might hear the 9th Circuit case because it would be petitioned on different gr ounds, according to Mr. Rosenblatt.Any appeal on the 9th Circuit case would be on the choice of law issue, whereas in the 4th Circuit case the 93 plaintiffs unsuccessfully petitioned the Supreme Court on the grounds that the appeal s court usurped its judicial power by throwing the case out. The plaintiffs contend that the 4th Circuit had been asked only to hear an emergency motion to stay a preliminary injunction and not asked to decide on the merits of the district court's decision at all.The plaintiffs had filed a preliminary injunction to block Lloyd's reconstruction and renewal program-scheduled to be completed on Aug. 28, 1996-until they received more financial information requir ed by SEC regulations. On Aug. 23, a federal judge granted the injunction, and set a Nov. 4 trial date.Lloyd's appealed to the 4th Circuit, which ruled in Lloyd's favor on Aug. 27, the day before R&R was to be completed.Meanwhile, Lloyd's awaits another forum selection decision from the 5th U.S. Circuit Court of Appeals in regard to Charles Robert Leslie vs. Lloyd's and R.W. Sturge & Co. In that case, Lloyd's is appealing a decision by the U.S. District Cour t in Houston that the Leslie case could be heard in the U.S. because Mr. Leslie signed the members contract under fraudulent pretenses (BI, Sept. 18, 1995).