Pathways Around 'Morrison': Supplemental Jurisdiction for Securities Fraud Claims | New York Law Journal - Law.com

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At first, the U.S. Supreme Court’s decision in Morrison v. National Australia Bank, 561 U.S. 247, 130 S. Ct. 2869 (2010), seemed to sound a death knell for U.S. securities fraud claims predicated on stocks purchased abroad. As Justice Antonin Scalia noted, the express language of §10b of the Exchange Act of 1934 limits claims to those arising from transactions for “any security registered on a national securities exchange.” Since “there is no affirmative indication in the Exchange Act that §10(b) applies extraterritorially [] we therefore conclude that it does not.”

Nonetheless, new pathways have emerged for pursuing claims based on foreign exchange purchases, i.e., where the applicable U.S. and foreign law governing securities fraud are substantially similar. In a decision issued Jan. 22, 2021 in In re Teva Sec. Litig., (2021 U.S. Dist. LEXIS 11905), the U.S. District Court of Connecticut permitted Teva investors to assert fraud claims for purchases on the Tel Aviv Stock Exchange (TASE). In so ruling, the court recognized that Israeli securities law expressly permits TASE stocks to be “dual listed” in Israel and the United States, and to apply U.S. securities law to any fraud related claims regardless of where purchased. In so ruling the Teva court followed decisions involving other TASE dual listed companies, i.e., Perrigo Co.-Roofer’s Pension v. Papa and Costas v. Ormat Technologies.

Published On: Tue, 16 Mar 2021 15:45:46 GMT