Extraterritorial application of U.S. securities law for foreign plaintiffs


U.S. Supreme Court Limits Extraterritorial Application of

Securities Law by Disallowing Foreign Cubed §10(b) Class Actions—

Morrison v. National Australia Bank Ltd., 561 U.S. ____ (2010)

In a decision dated June 24, 2010, the U.S. Supreme Court held that Section 10(b) of the Securities Exchange Act of 1934 does not provide a cause of action to foreign plaintiffs for misconduct in connection with securities traded on a foreign exchange. In this case, which involved securities not listed on a U.S. exchange and in which all aspects of the purchases complained of occurred outside the U.S., the Court rejected all of the Solicitor General’s technical arguments, stressed the importance of the general presumption against extraterritoriality and held that the Exchange Act’s focus is not on the place where the deception originated, but on purchases and sales of securities in the United States. Specifically, Section 10(b) applies only to transactions in securities listed on domestic exchanges and domestic transactions in other securities.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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