|  | | 2011 News and Press Releases | | |
HEADLINE NEWS:
Cheat Sheet: Cutting Through the Comments Submitted to SEC on an 'Extraterritorial Private Right of Action'
Bruce Carton
Compliance Week. March 14, 2011
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EXCERPT: Section 929Y of Dodd-Frank ("Study On Extraterritorial Private Rights Of Action") directed the SEC to solicit public comment and conduct a study to determine the extent to which private rights of action under the antifraud provisions of the Securities and Exchange Act of 1934 should be extended to cover: (1) conduct within the United States that constitutes a significant step in the furtherance of the violation, even if the securities transaction occurs outside the United States and involves only foreign investors; and (2) conduct occurring outside the United States that has a foreseeable substantial effect within the United States. Congress' directive for such a study followed the U.S. Supreme Court's decision in Morrison v. National Australia Bank, which held that the federal securities laws only apply “in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.” Following Morrison, many cases filed in U.S. federal courts by F-cubed investors (claims by foreign investors who purchased shares of foreign companies on foreign exchanges) have been dismissed outright. Comments have been pouring in to the SEC on this issue of whether a private right of action should be extended beyond what is currently allowed under Morrison […] and it is extremely easy to guess which way the comments will come out based on who is commenting. […] |
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