Second Circuit Extends Supreme Court Ruling on Extraterritorial Unavailability of Exchange Act Claims
On May 6, 2014, the United States Court of Appeals for the Second Circuit held, in a case of first impression, that the U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank precludes claims brought under the Securities Exchange Act of 1934 (“Exchange Act”) that arise out of foreign-issued securities purchased on foreign exchanges but cross-listed on a domestic exchange. The landmark Morrison decision found that Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder do not provide a cause of action relating to the purchase of foreign-issued securities listed and bought on foreign exchanges. In City of Pontiac Policemen’s and Firemen’s Retirement System v. UBS AG, the Second Circuit found Morrison to apply to purchases of UBS shares on foreign exchanges, despite the fact that UBS is cross-listed on the New York Stock Exchange.