Appealed from the United States Court of Appeals for the Second Circuit (Jan. 11, 2010)
Oral argument: Mar. 29, 2010
SUBJECT MATTER JURISDICTION, SECURITIES, COMITY, FOREIGN TRANSACTIONS
Respondent National Australia Bank (“NAB”) is an Australian corporation with significant U.S. operations. In 2001, NAB acknowledged flaws in the method that its Florida subsidiary, HomeSide Lending, had used in calculating the value of its mortgages and recording this value on its balance sheet. This recognition led to a drop both in NAB’s stock and ADR values. Petitioners, who represent a class of Australian and American shareholders, brought suit against NAB for alleged violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934. The Second Circuit dismissed the case for lack of subject matter jurisdiction. On appeal, Petitioners argue that the Securities and Exchange Act applies to foreign commerce, while NAB argues that there is a presumption against extraterritorial application of Congressional acts. The Supreme Court’s decision in this case will strike a balance between providing a U.S. forum for litigation between international parties and furnishing a recourse for international shareholders who fall victim to the fraudulent activity of international corporations with significant American operations.