Morrison v. National Australia Bank Ltd

Morrison v. National Australia Bank
Supreme Court of the United States
Argued March 29, 2010 Decided June 24, 2010
Full case name	Robert Morrison, et al., Petitioners v. National Australia Bank Ltd., et al.
Citations	561 U.S. 247 (more) 130 S. Ct. 2869; 177 L. Ed. 2d 535; 2010 U.S. LEXIS 5257; 78 U.S.L.W. 4700; Fed. Sec. L. Rep. (CCH) ¶ 95,776; 76 Fed. R. Serv. 3d (Callaghan) 1330; 22 Fla. L. Weekly Fed. S 575
Holding
Section 10(b) of the Securities Exchange Act of 1934 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.
Court membership
Chief Justice John G. Roberts Associate Justices John P. Stevens · Antonin Scalia Anthony Kennedy · Clarence Thomas Ruth Bader Ginsburg · Stephen Breyer Samuel Alito · Sonia Sotomayor
Case opinions
Majority	Scalia, joined by Roberts, Kennedy, Thomas, Alito
Concurrence	Breyer (in part)
Concurrence	Stevens (in judgment), joined by Ginsburg
Sotomayor took no part in the consideration or decision of the case.
Laws applied
Securities Exchange Act of 1934 §10(b)
Superseded by
Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, sec. 292P(b)(2), § 27(b), 124 Stat. 1376, 1862 (2010)

Morrison v. National Australia Bank, 561 U.S. 247 (2010), was a United States Supreme Court case concerning the extraterritorial effect of U.S. securities legislation. Morrison extinguished two species of securities class-action claims that had proliferated in preceding years: “foreign-cubed” claims, in which foreign plaintiffs sued foreign issuers for losses on transactions on foreign exchanges, and “foreign-squared” claims, brought by domestic plaintiffs against foreign issuers for losses on transactions on foreign exchanges.

The Dodd–Frank Wall Street Reform and Consumer Protection Act, in its section 929P(b), allowed the SEC and DOJ extraterritorial jurisdiction, but this interpretation is contested in the courts. In its section 929Y, the Act commissioned the SEC to study extending the permission to private actors. The study indicated a number of options to be taken by Congress, which in varying degrees would mitigate the decision.

In late 2010, Fabrice Tourre of Goldman Sachs asked for dismissal of an SEC suit against him based on the repercussions of the Morrison v. National Australia Bank Ltd Supreme Court case, claiming his deals were outside the US and thus not subject to certain US laws.

The case concerned the 1998 purchase by National Australia Bank of a mortgage servicing company, HomeSide Lending, headquartered in Florida. In July 2001, NAB announced a USD 450 million write-down in assets due to losses associated with HomeSide Lending; and a further USD 1.75 billion write-down in September of that year. The root cause of the write-down, was that the modelling done by HomeSide Lending to determine future revenues from mortgage fees was based on overly optimistic assumptions. The plaintiffs claimed that this was part of an intentional scheme to defraud committed by HomeSide's management. By the time the case reached the US Supreme Court, only Australian investors remained as plaintiffs, although a US investor (Morrison, for whom the case was named) participated in earlier proceedings, but his case was thrown out for unrelated reasons.