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Supreme Court Limits Application of Section 10(b) and Rule 10b-5 of the Exchange Act to Domestic Transactions

30 June 2010

SEC Update

On 24 June the U.S. Supreme Court held in Morrison v. National Australia Bank Ltd. that the principal antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, do not apply to transactions that occur outside the United States. According to the court, the place in which a securities transaction occurs is decisive when determining the jurisdiction of lawsuits under the antifraud provisions, regardless of the fact that the transaction may have some effects within the United States.

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