Post-Morrison: The Global Journey Toward Asset Recovery

by Michael W. Stocker, Rachel A. Avan, Michael Korn, and members of the National Association of Public Pension Plan Attorneys (NAPPA) Working Group Morrison Sub-Committee

June 30, 2016

This paper provides the current state of some court interpretations of Morrison; practical considerations for institutional investors considering foreign actions; the current state of securities laws of foreign jurisdictions; and select case studies.

Six years ago the Supreme Court of the United States, by its decision in Morrison v. National Australia Bank, Ltd., 561 U.S. 247 (2010), launched the institutional investor’s odyssey into the developing world of non-U.S. securities law and regulation. Understanding the implications of Morrison on an investor’s ability to recover assets lost due to the malfeasance of others, NAPPA membership began to develop the tools and identify the resources necessary to conduct appropriate risk/reward analysis with respect to the uncharted waters of foreign securities litigation.

NAPPA’s working group: Securities Litigation, Including Remedies Outside the U.S. published, “Living in a Post-Morrison World: How To Protect Your Assets Against Securities Fraud” in June of 2012, which served as a first of its kind guide (the Morrison White Paper).

As institutional investors continue to look for opportunities to invest globally, and given the post-Morrison world, it is critical for institutions—particularly those of us who are fiduciaries and consider a litigation to be an asset of the fund to be treated just like any other asset of the fund in terms of risk, cost and return—to have a plan in place to consider how best to approach recovery of assets in the event of a loss. Institutional investors have witnessed an increase in foreign group actions abroad for purposes of asset recovery. A number of NAPPA members have participated in these cases. With the first of the post-Morrison foreign cases announcing settlements in very recent times, the working group thought this would be a good time to update the Morrison White Paper.

The Working Group has created this paper, which provides the current state of various courts’ interpretation of Morrison; practical considerations for institutional investors when considering foreign actions, the current state of securities laws of 15 foreign jurisdictions; and select foreign case studies, which show how some of the first foreign cases have been resolved and highlight those cases to watch. We hope that this paper will be a useful and educational tool.

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