06/06/2011 09:29:00 AM EST
One Year Later: The Reach of U.S. Securities Laws After Morrison
By James Wilson
In the year since the Supreme Court issued its decision in Morrison
regarding "foreign cubed" securities claims, where the Court held
that federal securities statutes do not apply, lower federal courts have
applied Morrison inconsistently. James M. Wilson Jr., partner at Chitwood
Harley Harnes LLP, which pursues securities class actions, dicusses issues that
have developed in different courts over the scope of Morrison.
The Supreme Court issued its decision in Morrison
v. National Australia Bank Ltd., 130 S.Ct. 2869, 177 L. Ed. 2d 535 (2010)
last year, finally resolving the issue of whether U.S. courts could hear
so-called "foreign cubed" (or "f-cubed") securities claims.
A "foreign cubed" lawsuit is a federal securities claim (1) asserted
in a U.S. court by foreign investors (2) against a foreign issuer of securities
for violations of American securities laws with respect to (3) securities that
were purchased abroad. In Morrison, the Court overruled nearly fifty years of
lower court precedent that allowed application of Section 10(b) of the
Securities Exchange Act of 1934 (the "1934 Act") to "foreign
cubed" cases if there was a showing of domestic "conduct" or
"effect" arising from the securities fraud.
The Supreme Court held that federal securities statutes do not apply to
f-cubed cases. U.S. courts can hear claims of federal securities laws
violations only with respect to securities "listed" on an American
exchange or otherwise purchased in the U.S. This decision goes beyond f-cubed
cases and has stripped U.S. investors also of the ability to file securities
fraud class actions in U.S. courts against companies whose shares were
purchased on foreign exchanges. Lower federal courts have applied Morrison
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James M. Wilson Jr.
is a partner in Chitwood Harley Harnes LLP, in the firm's Atlanta office. The
firm works closely with institutional funds to monitor their investments in
public companies and pursues securities class actions on behalf of institutions
and individuals under the Private Securities Litigation Reform Act
("PSLRA") when appropriate. The firm also is a leader in litigating
non-PSLRA securities cases in state and federal courts, including derivative and
corporate governance actions, as well as antitrust and consumer protection
class actions. Mr. Wilson previously practiced for many years in New York City
working on complex business litigation and securities arbitrations before the
New York Stock Exchange and the National Association of Securities Dealers. He
received his B.A. from Georgia State University in 1988, his J.D. from the
University of Georgia in 1991, and his LL.M. in Tax Law from New York
University in 1992. Mr. Wilson is admitted to practice law in the States of
Georgia and New York, before the United States District Courts for the Middle
and Northern Districts of Georgia, and before the Southern and Eastern
Districts of New York.