Supreme Court Holds That Section 10(b) of the Securities Exchange Act of 1934 Does Not Have Extraterritorial Application

June 29, 2010
The Supreme Court of the United States recently held in Morrison v. National Australia Bank that Section 10(b) of the Securities Exchange Act of 1934 does not provide a cause of action to foreigners who sue foreign and American defendants for misconduct regarding securities trading on a foreign exchange. A Section 10(b) claim may now only be asserted if “the purchase or sale is made in the United States, or involves a security listed on a domestic exchange.” This update examines the decision, which should effectively bar so-called “Foreign-Cubed” cases—Section 10(b) actions commenced by foreign plaintiffs against foreign issuers of securities based on foreign transactions.