As most business leaders know, the United States enacted a comprehensive financial regulatory scheme this past summer in response to the recent financial meltdown. The law, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank”), has several provisions related to the ability of the U.S. government to prosecute fraud occurring outside the U.S. and the ability of whistleblowers to report that fraud. In terms of fraud related to conduct occurring outside the U.S., the U.S. Supreme Court recently issued an opinion that limited the ability of the U.S. Securities and Exchange Commission (“SEC”) to reach securities fraud not related to a company or stock traded on a U.S. stock exchange. In response to this decision, Congress inserted provisions into the Dodd-Frank law that restored the SEC’s ability to investigate fraud occurring outside the U.S. Specifically, the SEC has the ability to investigate and bring enforcement actions under the antifraud provisions of its securities law for “conduct occurring outside the U.S. that has a foreseeable substantial effect within the U.S.,” and “conduct within the U.S. that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the U.S. and involves only foreign investors.” Thus, cases can be brought against a company even if the company is not listed on a U.S. stock exchange, even if the transaction is not a transaction done on a U.S. stock exchange, and even if the investors are not U.S. investors.

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