Alison Frankel says on her blog: “At this rate, anyone selling a complex financial instrument should just insist that buyers complete transactions outside of the borders of the United States.” She is describing the effect of a 2010 Supreme Court decision, Morrison v. National Australia Bank, that held that foreign plaintiffs had no cause of action against an American defendant under Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Frankel was commenting on the recent dismissal of a case based on Goldman Sachs’ infamous Timberwolf deal that made headlines (see also video below) and provided a major impetus in the Dodd-Frank Act becoming law. Here is Goldman’s Morrison brief, and here is the plaintiffs’ response. In June 2011, the same judge dismissed on Morrison grounds certain SEC claims against Goldman’s Fabrice (“Fab”) Tourre in connection with the same deal (here is the Reuters story). Here’s an article discussing another Morrison dismissal last October.

Is Frankel correct about the impact of Morrison? Congress intended to reverse Morrison as to SEC and DOJ actions in Section 929P of the Dodd-Frank Act, but some critics argue that the statutory text failed to accomplish the task. How do the securities laws need to be amended to accomplish Congress’s purpose?

Mortgage Win for Goldman 7/22/11 (WSJ subscription req’d)
Australian Hedge Fund Takes Goldman Back to Court 10/28/11 (WSJ subscription req’d)

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