Securities and Exchange Act Section 10(b) Does Not Provide Cause of Action Concerning Foreign Exchanges

Morrison v. Nat'l Australia Bank Ltd., No. 08-1191, involved a securities fraud action by Australian citizens claiming that defendant corporation and its officers manipulated financial models to make the company's mortgage-servicing rights appear more valuable than they really were.  The Court affirmed the Second Circuit's affirmance of the dismissal of the action, holding that 1) the Second Circuit erred in considering Securities and Exchange Act section 10(b)'s extraterritorial reach to raise a question of subject-matter jurisdiction, thus allowing dismissal under Fed. R. Civ. P. 12(b)(1); and 2) section 10(b) did not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges.

As the Court wrote:  "We decide whether §10(b) of the Securities Exchange Act of 1934 provides a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges."

Related Resources

• Full Text of Morrison v. Nat'l Australia Bank Ltd., No. 08-1191