{"id":5620,"date":"2012-01-22T10:01:28","date_gmt":"2012-01-22T15:01:28","guid":{"rendered":"http:\/\/www.journals.law.harvard.edu\/ilj\/?p=5620"},"modified":"2013-10-05T13:36:24","modified_gmt":"2013-10-05T17:36:24","slug":"issue_53-1_boehm","status":"publish","type":"post","link":"https:\/\/journals.law.harvard.edu\/ilj\/2012\/01\/issue_53-1_boehm\/","title":{"rendered":"Private Securities Fraud Litigation after <em>Morrison v. National Australia Bank<\/em>"},"content":{"rendered":"<p>In June 2010, the U.S. Supreme Court issued a momentous decision in\u00a0<em>Morrison v. National Australia Bank<\/em>, upending decades of federal appeals\u00a0court precedent in transnational securities law. The Court established a\u00a0bright line, transaction-based test for when Section 10(b) (\u201cSec. 10(b)\u201d) of\u00a0the Securities Exchange Act of 1934 (\u201cExchange Act\u201d) can apply extraterritorially.\u00a0<em>Morrison<\/em> essentially requires that the fraud-related transactions at issue be conducted in the United States to allow a claim for relief in U.S.\u00a0courts. This has had a significant impact on securities litigation because\u00a0Sec. 10(b) and its implementing regulation, Rule 10b-5, provide the most\u00a0common cause of action for securities fraud in the United States.<\/p>\n<p>This new test has resulted in a narrower field for private Sec. 10(b) litigation\u00a0than that available under the dominant regime before <em>Morrison<\/em>, the\u00a0Second Circuit\u2019s conducts and effects test (\u201cconducts-effects\u201d). Lower federal\u00a0courts, principally the Southern District of New York (\u201cSDNY\u201d), have\u00a0already cited <em>Morrison<\/em> to dismiss multiple Sec. 10(b) cases with a transnational element. But this effect may well be short-lived. In July 2010, with\u00a0the Dodd-Frank Wall Street Reform and Consumer Protection Act (\u201cDodd-Frank Act\u201d or \u201cDFA\u201d), Congress restored conducts-effects for transnational\u00a0securities fraud suits brought by the U.S. government, while also directing\u00a0the Securities and Exchange Commission (\u201cSEC\u201d) to conduct a study on\u00a0whether and to what extent a private right of action should be extended\u00a0beyond <em>Morrison<\/em>\u2019s transactional test.<\/p>\n<p>For years before <em>Morrison<\/em>, the conducts-effects test was consistently criticized on the grounds that it was overly broad and unevenly applied. While\u00a0<em>Morrison<\/em> answered those who called for predictability, the Dodd-Frank Act\u2019s\u00a0partial overruling of the decision has, at least for the moment, infused this\u00a0area of law with more ambiguity than it had pre-<em>Morrison<\/em>. Courts, shareholders,\u00a0and companies will continue to operate in this uncertain state until\u00a0at least early 2012, when Congress will receive the SEC\u2019s report on private<br \/>\nrights of action and decide how to finalize the extraterritorial scope of that\u00a0realm of law.<\/p>\n<p>The financial, legal, and even diplomatic implications of these developments\u00a0are immense. Yet all ultimately relate to a fundamental tension arising\u00a0from the goal of ensuring that the United States is neither a \u201cBarbary\u00a0Coast\u201d for \u201cinternational securities pirates\u201d nor a \u201cShangri-La of class-action\u00a0litigation representing those allegedly cheated in foreign securities markets.\u201d Reconciling such aims requires consideration of the ever-internationalizing\u00a0nature of corporate activity and securities markets, as well\u00a0as class-action litigation trends, the availability of securities fraud remedies\u00a0abroad, and coherence with other areas of law in which presumptions of<br \/>\nextraterritoriality are made.<em><br \/>\n<\/em><\/p>\n<p><a href=\"https:\/\/journals.law.harvard.edu\/ilj\/wp-content\/uploads\/sites\/84\/2012\/01\/HILJ_53-1_Boehm.pdf\">Read full article (PDF)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In June 2010, the U.S. Supreme Court issued a momentous decision in <em>Morrison v. National Australia Bank<\/em>, upending decades of federal appeals court precedent in transnational securities law. The Court established a bright line, transaction-based test for when Section 10(b) (\u201cSec. 10(b)\u201d) of the Securities Exchange Act of 1934 (\u201cExchange Act\u201d) can apply extraterritorially. . . .This has had a significant impact on securities litigation because Sec. 10(b) and its implementing regulation, Rule 10b-5, provide the most common cause of action for securities fraud in the United States.<\/p>\n","protected":false},"author":2,"featured_media":5628,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[123],"tags":[4],"class_list":["post-5620","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-print-archives","tag-featured"],"jetpack_featured_media_url":"https:\/\/journals.law.harvard.edu\/ilj\/wp-content\/uploads\/sites\/84\/2012\/01\/Wall_Street_Sign.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/peZu3S-1sE","jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts\/5620","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/comments?post=5620"}],"version-history":[{"count":0,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/posts\/5620\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/media\/5628"}],"wp:attachment":[{"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/media?parent=5620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/categories?post=5620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.harvard.edu\/ilj\/wp-json\/wp\/v2\/tags?post=5620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}