The Supreme Court Limits the Extraterritorial Application of the Antifraud Provisions of the U.S. Securities Laws
Yesterday, in its much-anticipated decision in Morrison v. National Australia Bank, No. 08-1191, the Supreme Court held that Section 10(b) of the Exchange Act of 1934 applies only to fraud that is alleged to have arisen in connection with purchases and sales of securities listed on a domestic exchange or domestic transactions in other securities. In setting forth this bright-line, transaction-based rule, the Court held that “foreign-cubed” cases—in which the investors are foreign, the issuers are foreign, and the securities are listed on foreign exchanges—are not covered by the antifraud provisions of the U.S. securities laws absent a domestic purchase or sale.