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The Second Circuit held today that putative securities class actions involving transactions in non-U.S.-listed securities require careful scrutiny to determine whether the class members’ claims can be litigated on a classwide basis. The court’s ruling in In re Petrobras Securities (No. 16-1914) will likely increase the difficulty of certifying securities…

On June 26, the U.S. Supreme Court ruled that the pendency of a securities class action does not allow individual class members to opt out of the class and file separate actions under the Securities Act of 1933 more than three years after the relevant securities offering took place. The…

The U.S. District Court for the Central District of California held on May 20, 2016 that the federal securities laws do not apply to U.S. transactions in unlisted, unsponsored American Depositary Receipts (ADRs) for a foreign issuer’s shares. The decision in Stoyas v. Toshiba Corporation also held that principles of…

The U.S. Supreme Court’s decision yesterday in Merrill Lynch v. Manning clarified the scope of federal jurisdiction under the Exchange Act in certain important respects, but also left open critical issues that may arise in future cases.  Although the Court rejected federal jurisdiction in resolving the sole issue that was before it, the Court also stated that federal courts might well have jurisdiction over state law claims that “necessarily raise” substantial issues under federal law.

The decision, however, provides little guidance as to how that standard may be applied. Future cases involving securities trading, and the extensive body of federal regulation governing that activity, may well require future courts to determine that issue.

On May 16, 2016, the U.S. Supreme Court ruled that the provision of the Securities Exchange Act of 1934 granting federal district courts exclusive jurisdiction over suits brought to enforce the Exchange Act is subject to the same jurisdictional test established by the general federal-question jurisdictional statute. The Court held in Merrill Lynch v. Manning that, under both statutes, the question is whether the case “arises under a federal law.” The Court thus rejected the defendants’ effort to remove a case from state court by asserting a broader theory of federal jurisdiction under the Exchange Act.

On Monday April 25, the U.S. Supreme Court granted certiorari in United States v. Shaw, a closely watched case out of the Ninth Circuit addressing the bank fraud statute, 18 U.S.C. § 1344.  That statute has two subsections, the first of which criminalizes schemes “to defraud a financial institution.”  The question presented in Shaw is whether that subsection requires that a financial institution be the principal victim of a fraudulent scheme, or whether deceiving a financial institution in the course of victimizing a third party is enough for a violation.  In its decision, the Ninth Circuit joined the Sixth and Eighth Circuits in holding that a violation does not require that a fraudulent scheme victimize a financial institution.  The other nine circuits have all held the opposite.