The 2nd U.S. Circuit Court of Appeals discussed the Supreme Court’s Morrison decision on extraterritoriality. In that case, the Supreme Court held that Exchange Act Section 10(b) applied only to “transactions in securities listed on domestic exchanges” and “domestic transactions in other securities.” The 2nd Circuit held in a case involving foreign funds’ purchases and sales of securities issued by U.S. companies brokered through a U.S. broker-dealer that in order to sufficiently allege the existence of a “domestic transaction in other securities,” plaintiffs must allege facts suggesting that either irrevocable liability was incurred or title transferred within the United States. In this instance, however, the appellate court noted that "due to the significant ambiguity as to what constitutes a `domestic transaction in other securities'" that the plaintiffs should be given leave to amend the complaint so they can assert additional facts to suggest that irrevocable liability was incurred or title passed in the United States and show that the securities transactions at issue took place in the United States.
Absolute Activist Value Master Fund Ltd. V. Ficeto