Academic

Thanks for the welcome!  So, now I'm tempted to skip the case and talk about Cornell basketball instead.  What an excellent run that was -- I remember lots of great hockey from my time in Ithaca, but not so much basketball.  (And now I'm in Bloomington and IU didn't even make the tourney.  Hmm.)

Anyway.  On Monday, the Supreme Court will hear argument in Morrison.  The "foreign-cubed" aspect of the case is special (though certainly becoming less unique), but the question the case presents is a more general one: how to define the scope of application of U.S. securities law in cases with foreign elements.  The anti-fraud provisions have never been revised to address that question (unlike in antitrust), nor has the Court ever taken it up (unlike in antitrust) -- which makes it an interesting case even beyond the f-cubed context.  The claims were brought by plaintiffs who had purchased ordinary shares of National Australia Bank on foreign stock exchanges.  They alleged that a U.S. subsidiary of NAB had falsified certain financial data in Florida, which was then passed on to NAB in Australia and publicly disseminated from there.  So jurisdiction in the case would be based not on effects within the United States -- an easier case for regulation, since U.S. investors would be involved -- but on conduct within the United States.

The Second Circuit held that U.S. conduct could, under certain circumstances, justify the application of U.S. anti-fraud law, even in f-cubed situations (though foreign plaintiffs would have to show that the conduct in question "directly" caused their losses, which they were unable to do in the case itself).  NAB had argued for a bright-line rule to the contrary -- that conduct alone should never be sufficient as a basis for jurisdiction, and that effects on U.S. markets should be required.  In picking up this question, the Court will have to deal with the same problem it has addressed in the antitrust context, among others -- how to balance the interest in regulating cross-border misconduct with the interest in preserving harmony with foreign regulatory systems.

Almost as interesting as basketball.