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Professors Argue Against U.S. Courts Hearing Foreign Securities Claims
The Harvard Law School Forum on Corporate Governance and Financial Regulation
August 28, 2011
A group of professors of American and German securities law submitted an amicus brief to the Second Circuit Court of Appeals in Elliott Associates v. Porsche, on Wednesday August 3, 2011. Amici urged the Court to prevent private parties from using U.S. courts to litigate claims that exceed the subject matter that Congress intended to regulate in Section 10(b) of the Securities Exchange Act as held by the Supreme Court in Morrison v. National Australia Bank. 130 S. Ct. 2869 (2010).
The case was brought by a group of hedge funds and other investors who took short positions in security based swap agreements that referenced the stock of Volkswagen (VW), which is traded in Germany but not in the United States. The plaintiffs sued Porsche for allegedly manipulating the price of VW stock in Germany and for allegedly misrepresenting Porsche’s intentions concerning takeover of VW. The United States District Court for the Southern District of New York (Judge Baer) held that these claims were precluded under Morrison because the plaintiffs’ transactions were the functional equivalent of transactions in VW stock, which was not traded in the United States. Amici urged affirmance of the holding below.
Read the full post at harvard.edu.