Term: 2009
Docket: 08-1191
Robert Morrison, Et Al. v. National Australia Bank Ltd. Et Al.
- Pro
08-1191 MORRISON V. NATIONAL AUSTRALIA BANK DECISION BELOW: 547 F.3d 167 JUSTICE SOTOMAYOR TOOK NO PART CERT. GRANTED 11/30/2009 QUESTION PRESENTED: I. Whether the antifraud provisions of the United States securities laws extend to transnational frauds where: (a) the foreign-based parent company conducted substantial business in the United States, its American Depository Receipts were traded on the New York Stock Exchange and its financial statements were filed with the Securities Exchange Commission ("SEC"); and (b) the claims arose from a massive accounting fraud perpetrated by American citizens at the parent company's Florida-based subsidiary and were merely reported from overseas in the parent company's financial statements. II. Whether this Court, which has never addressed the issue of whether subject matter jurisdiction may extend to claims involving transnational securities fraud, should set forth a policy to resolve the three-way conflict among the circuits (i.e., District of Columbia Circuit versus the Second, Fifth and Seventh Circuits versus the Third, Eighth and Ninth Circuits). III. Whether the Second Circuit should have adopted the SEC's proposed standard for determining the proper exercise of subject matter jurisdiction in transnational securities fraud cases, as set forth in the SEC's amicus brief submitted at the request of the Second Circuit, and whether the Second Circuit should have adopted the SEC's finding that subject matter jurisdiction exists here due to the "material and substantial conduct in furtherance of” the securities fraud that occurred in the United States. LOWER COURT CASE NUMBER: 07-0583
The U.S. Supreme Court case Robert Morrison, et al. v. National Australia Bank Ltd., et al., 2009 revolved around the issue of extraterritorial application of U.S securities laws. The plaintiffs were Australian shareholders who filed a class-action lawsuit against the National Australia Bank (NAB) and its American subsidiary, HomeSide Lending Inc., alleging fraudulent conduct that led to significant losses in NAB's share value. However, the primary deceptive conduct occurred outside America; thus, it raised questions about whether U.S federal courts had jurisdiction over such cases under Section 10(b) of Securities Exchange Act of 1934 and Rule 10b-5 issued by SEC. In a unanimous decision delivered by Justice Scalia, the court held that Section 10(b) does not apply extraterritorially and only applies to transactions in securities listed on domestic exchanges or domestic transactions in other securities. Therefore, since all aspects related to purchase happened outside United States - even though some fraudulent activity may have occurred within US borders - this did not give rise to an actionable claim under section 10(b). This ruling significantly limited foreign investors' ability to sue for frauds committed abroad but affecting their investments.
The dissenting opinion in the Morrison v. National Australia Bank case, delivered by Justice Stevens, argued that the majority's decision to limit the application of U.S. securities laws only to transactions occurring within United States or involving American-registered securities was overly restrictive and inconsistent with past precedent. He contended that this ruling could potentially undermine investor protection and encourage fraudulent behavior on a global scale. Furthermore, he criticized the majority for failing to adequately consider Congress' intent when it enacted these laws - which was primarily aimed at maintaining fair and honest markets - instead focusing too narrowly on issues of territoriality.
