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 inconsistently.

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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.