In a recent shareholder class action against UBS AG, the Second Circuit ruled against the plaintiffs, citing a 2010 U.S. Supreme Court (SCOTUS) decision which deterred American courts from foreign securities claims.
Even though Second Circuit set constraints for plaintiffs attorneys to overcome, Christopher noted that other circuits have yet to weigh in.
He said questions remain regarding how the SCOTUS ruling should apply in some cross-border transactions, such as when a broker acting on behalf of an institutional investor places an order for a New York-listed security but finds a better price for the same security in Canada. “Half of it can get filled in Toronto, half of it can get filled on the New York Stock Exchange, and you don’t have control over that,” he said.
While the Supreme Court was clear when it said suits under the Exchange Act of 1934 should only be available to domestic transactions, Christopher said, “when you’re talking about capital flows, it almost becomes unworkable.”