In re Sanofi-Aventis Securities Litigation (US District Court, S.D.N.Y., Mar. 20, 2013)

The defendant corporation’s common shares were not traded or listed on any domestic exchange. Although the plaintiff in this Securities Exchange Act suit did not dispute that its purchases were made outside of the US, it argued that it incurred “irrevocable liability” in the US—and thus US law applied—because the defendant corporation’s common shares are eligible for clearing through a domestic clearing broker and some of the shares purchased were cleared domestically.

A district court in New York held that the point of “irrevocability” occurs at the time and place when the parties enter into a binding contract. Because a trade is cleared only after the parties have agreed to the terms of the trade (price and quantity), the court concluded that the plaintiff’s securities purchases did not constitute domestic transactions covered by the statute.