Citation: Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010)
Facts of the Case:
In 1998, the National Australia Bank (NAB) purchased HomeSide Lending, a Florida-based mortgage servicing company In 2001, NAB had to write down the value of HomeSide’s assets, causing a significant drop in NAB’s share prices. Australian investors who had purchased NAB shares before the write-downs sued NAB and its officers, alleging that HomeSide and its officers had manipulated financial models to inflate the value of mortgage-servicing rights, and that NAB and its CEO were aware of this deception.
Issue:
The main issue was whether Section 10(b) of the Securities Exchange Act of 1934 applied to securities transactions that took place outside the United States.
Parties:
Plaintiffs: Robert Morrison and other Australian investors
Defendants: National Australia Bank Ltd., HomeSide Lending, and various officers of both companies
Judgment:
The Supreme Court of the United States held that Section 10(b) of the Securities Exchange Act of 1934 does not apply to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges. The court ruled that U.S. securities laws have no extraterritorial reach.
Detailed Judgment:
The court, in an opinion delivered by Justice Antonin Scalia, stated that the presumption against extraterritoriality applies to Section 10(b). The court rejected the “conduct and effects” tests previously used by lower courts and adopted a new rule focusing on the location where the securities were purchased and sold. The court concluded that Section 10(b) does not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges
Facts of the Case:
In 1998, the National Australia Bank (NAB) purchased HomeSide Lending, a Florida-based mortgage servicing company In 2001, NAB had to write down the value of HomeSide’s assets, causing a significant drop in NAB’s share prices. Australian investors who had purchased NAB shares before the write-downs sued NAB and its officers, alleging that HomeSide and its officers had manipulated financial models to inflate the value of mortgage-servicing rights, and that NAB and its CEO were aware of this deception.
Issue:
The main issue was whether Section 10(b) of the Securities Exchange Act of 1934 applied to securities transactions that took place outside the United States.
Parties:
Plaintiffs: Robert Morrison and other Australian investors
Defendants: National Australia Bank Ltd., HomeSide Lending, and various officers of both companies
Judgment:
The Supreme Court of the United States held that Section 10(b) of the Securities Exchange Act of 1934 does not apply to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges. The court ruled that U.S. securities laws have no extraterritorial reach.
Detailed Judgment:
The court, in an opinion delivered by Justice Antonin Scalia, stated that the presumption against extraterritoriality applies to Section 10(b). The court rejected the “conduct and effects” tests previously used by lower courts and adopted a new rule focusing on the location where the securities were purchased and sold. The court concluded that Section 10(b) does not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges
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