Tuesday, March 30, 2010

U.S. Supreme Court and "Foreign-Cubed" Securities Fraud Class Actions

US Supreme Court Six justices of the Canadian Supreme Court were present in the audience yesterday at the U.S. Supreme Court, where oral arguments were held in Morrison v. National Australia Bank

The case they were watching involved a suit by Australian investors to challenge statements made by Australia's largest bank.

Got that?  The plaintiffs are Australian, the defendants are Australian, and the fraud alleged took place in Australia.  The case was described as a "Foreign-Cubed" Securities Fraud Class Action.  

Although it seems everything happened in Australia, the suit was filed in the United States. 

The federal district court and the U.S. Court of Appeals for the Second Circuit both ruled in favor of the bank, holding that there was no federal jurisdiction.

The plaintiffs argued that there is a connection to the United States because the inaccurate information that misled Australian investors was from Florida, where a bank allegedly overvalued mortgages that were part of the portfolio that the subject of the case.

Click here to read more about the case in an article published by Tony Mauro in the National Law Journal

Justice Sotomayor recused herself because she was sitting on the Second Circuit when the case was decided there.

We don't know what the Canadian justices thought of it all, but it certainly was an interesting case for them to watch.  A decision is expected before the end of June.



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