Wednesday, July 20, 2011
Professor Linda Silberman (NYU) has posted on SSRN a copy of her article, Morrison v. National Australia Bank: Implications for Global Securities Class Actions, which appears in the Swiss Yearbook of Private International Law. The article concludes:
The bright-line rule in Morrison is the right proxy for application of the securities laws and best accommodates the regulatory interests of the U.S. and other countries. In a class-action lawsuit, a significant U.S. investor presence generates necessary incentives for private plaintiffs’ attorneys to bring a class-action lawsuit, irrespective of the presence of foreign investors in the class. Indeed, an exchange-based rule aligns the appropriate incentives for plaintiffs’ lawyers that will allocate litigation resources to fraud most likely to harm U.S. investors. Under this approach, plaintiffs’ lawyers will pursue suits where there is a significant U.S. trading presence rather than one where there is only limited U.S. trading but a large global class. It is also consistent with the expectations of the parties.
Whether this result should be mirrored globally is less clear. Perhaps transnational global classes that are able to take into account the substantive standards of different regulatory regimes are workable internationally, perhaps on a regional basis where greater harmonization and consensus about procedures exist. What is undoubtedly called for, however, is greater international cooperation, which could take the form of increased regulatory cooperation or perhaps even an international treaty.