Extraterritorial Application of Criminal Securities Fraud Liability: Second Circuit Extends Morrison v. National Australia Bank Ltd. to Criminal Cases; Rules that Section 10(b) Does Not Reach Fraud Committed Abroad Involving Non–U.S. Listed Securities

Sullivan & Cromwell LLP - September 11, 2013
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On August 30, 2013, the Second Circuit answered a question left open in the Supreme Court’s landmark decision in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010): do the limits imposed in Morrison on extraterritorial civil liability encompass criminal and SEC enforcement cases? In United States v. Vilar, et al., 2013 WL 4608948 (2d Cir. Aug. 30, 2013), the Second Circuit held that in criminal cases, Section 10(b) of the Securities Exchange Act of 1934 does not extend to extraterritorial purchases or sales of non–U.S. listed securities. As we discuss below, however, the decision may have limited effect on authorities’ enforcement efforts because of jurisdiction-conferring provisions of Dodd-Frank.