March 20, 2014 Articles

Foreign Law Securities Fraud Claims in U.S. Courts after Morrison

Despite the 2010 landmark case, there is still a role for the common law in the vindication of investor rights

By Matthew L. Mustokoff and Margaret E. Onasch

The U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010), dealt a landmark blow to investors who purchase securities on non-U.S. exchanges, holding that the antifraud provisions of the federal securities laws do not apply to losses suffered in overseas transactions. As a result, the U.S. courts have effectively been closed to these investors. Recently, however, one district court refused to cede its jurisdiction in a case involving foreign-listed securities given the case’s other connections to the United States. District Court Judge Keith Ellison of the Southern District of Texas issued a milepost decision in the BP Deepwater Horizon oil spill litigation in which the court sustained common-law fraud claims premised on shareholder losses on the London Stock Exchange. In re BP p.l.c. Secs. Litig., MDL No. 10-md-2185, Civ. Act. No. 4:12-cv-1837 (S.D. Tex. Sept. 30, 2013). The decision illustrates that there is still a role for the common law in the vindication of investor rights after Morrison.

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