A recent judgment in Morrison v National Australia Bank (US Supreme Court 2010), provides important clarification on the extra-territorial application of US securities laws.

Although the parties, issuer and transactions took place outside the US, the issuer had American Depository Receipts traded on the New York Stock Exchange and the claim arose from accounting fraud which took place at the Australian company's Florida subsidiary.

On June 24, 2010, the Supreme Court decided that:

  • the relevant provisions of the Securities Exchange Act 1934 do not have extraterritorial application; and
  • they would have extraterritorial application only if either the purchase or sale of a security involves a security listed on a US securities exchange or is made in the US.  

For further information, see: opinion.