Foreign Securities Class Actions in U.S. Federal Court

EU Recht
25.10.2010619 Mal gelesen

Der nachfolgende Artikel befasst sich mit den zunehmend dreisteren Versuchen von US-Anwälten, Sachverhalte, die keinen Bezug zu den USA aufweisen, vor US-Gerichte zu zerren - ein neues lukratives Geschäftsfeld mancher US-Prozessanwälte. Vorrangiges Ziel ist nicht, Recht zu suchen, sondern eine Möglichkeit, möglichst viel Geld zu verdienen. Recent years have seen a wave of securities class actions filed by foreign plaintiffs in U.S. courts seeking damages relating to securities that they purchased on non-U.S. exchanges in companies incorporated outside the U.S.. What brought these cases to the United States? The entrepreneurial activity of plaintiffs? lawyers seeking to expand their "market.?  Not content with bringing cases involving purchases of securities within the United States, these lawyers want to represent the entire world - and inflict on already-crowded United States courts lawsuits that have little or nothing to do with this country.

Recent Supreme Court Decision:

The U.S. Supreme Court recently dealt with this issue in Morrison v. National Australia Bank, LTD. The Court correctly held that Section 10(b) of the Exchange Act does not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges.

The Supreme Court highlighted the longstanding principle of American law "that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States."

That means ordinary Americans who trade in the United States are fully protected - the decision protects Americans trading in the U.S. against fraudulent conduct from abroad:  "the focus of the Exchange Act is not upon the place where the deception originated, but upon purchases or sales of securities in the United States.?

Some say that U.S. pension funds will be harmed by this rule.  But if that is true it is only because they chose to purchase securities outside the U.S. instead of investing in U.S. markets.  By deciding to do business outside the U.S., those pension funds subjected themselves to the laws of other countries - just as an investment by G.M. or any other company in France or Germany is governed by the laws of that country, not by the laws of the United States.

Foreign Countries and Their Reaction

It also means that the United States will not infringe on the right of other countries to decide how to regulate sales of securities that occur within these borders.  Several countries filed legal arguments in the Supreme Court explaining that expanding U.S. law beyond our countries borders would interfere with the ability of other countries to adopt their own regulatory approaches:

  • The United Kingdom filed a brief explaining in detail the regulatory and enforcement system that it has adopted to police securities markets in that country.  It said: "Nations have a strong interest in regulating their own capital markets, developing disclosure rules to govern their own issuers, deciding how and when class action shareholder litigation should occur and determining the penalties for violations of such laws. Such decisions vary among countries with different regulatory, legislative and financial concerns.?  And it went on to explain in detail how its system would be disrupted by application of U.S. rules to securities transactions in the United Kingdom.  It concluded:

"sovereign nations, such as the U.K. and Australia, should be allowed and expected to use their own well-developed legal and regulatory regimes to address alleged securities fraud. A failure to recognize that other valid enforcement regimes exist as an alternative to the expansion of the Rule 10b-5 private right of action threatens the legitimacy of the U.S. legal system, as well as that of the legal and regulatory regimes of other sovereign nations.?

  • Similar arguments were made by Australia and France.

The friend-of-the-court briefs favoring the export of United States law to foreign countries were all filed by foreign pension funds seeking to circumvent their own countries? laws.  There is no reason for U.S. taxpayers to support the cost of providing sufficient U.S. judges to hear these huge cases that involve purchases of securities in other countries - especially when those countries themselves are arguing that United States law should not apply.

Expanded Powers to the SEC and DOJ

Finally, the Supreme Court's common-sense rule is even more logical in view of the expanded authority given to the SEC and Justice Department in the recently-enacted Dodd-Frank Act.  Included in a long list of new regulatory powers is authority to take action against securities fraud involving trading outside the United States, as long as conduct within the United States "constitutes significant steps in furtherance of the violation" and against any fraud in which there was a "foreseeable substantial effect within the United States."

These government agencies - which act in the national interest (unlike plaintiffs? lawyers motivated by the prospect of multi-million dollar attorneys? fees) - won?t try to stretch the law inappropriately and will take into account the impact of an enforcement action on the legal rules of other nations.  Their broad authority to act against fraudulent activity eliminates any possibility that a fraud could somehow "fall between the cracks? because the purchases of securities were outside the U.S.  There simply is no reason to give broader power to plaintiffs? lawyers when the SEC and Justice Department can punish wrongdoers and, in addition, use their civil penalty authority to obtain compensation for any injured parties.

by Law Goes Global