Private Securities Fraud Litigation after Morrison v. National Australia Bank: Reconsidering a Reliance-Based Approach to Extraterritoriality

摘要

In June 2010, the U.S. Supreme Court issued a momentous decision in Morrison v. National Australia Bank, 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) ("Sec. 10(b)") of the Securities Exchange Act of 1934 ("Exchange Act") can apply extraterritorially. Morrison essentially requires that the fraud-related transactions at issue be conducted in the United States to allow a claim for relief in U.S. courts. 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. This new test has resulted in a narrower field for private Sec. 10(b) litigation than that available under the dominant regime before Morrison, the Second Circuit's conducts and effects test ("conducts-effects"). Lower federal courts, principally the Southern District of New York ("SDNY"), have already cited Morrison to dismiss multiple Sec. 10(b) cases with a transnational element. But this effect may well be short-lived. In July 2010, with the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act" or "DFA"), Congress restored conducts-effects for transnational securities fraud suits brought by the U.S. government, while also directing the Securities and Exchange Commission ("SEC") to conduct a study on whether and to what extent a private right of action should be extended beyond Morrison's transactional test.