Authored by Maor Berdicevschi, James K. Goldfarb, Daniel T.
Brown, Stephen J. Crimmins*
How far is the reach of the United States Securities and
Exchange Commission? Unquestionably, the Commission may enforce
U.S. securities laws against Israeli companies whose securities
trade in the U.S. But what if none of the company's securities
trades there? The Commission claims it may enforce U.S. securities
law in that situation, too, so long as alleged misconduct related
to the securities transaction occurred in the U.S. or has a
foreseeable, substantial effect within the U.S. That claim will be
tested before a U.S. appeals court this month, and the court's
decision has potentially far-reaching consequences, literally. In
this article, we discuss the case, S.E.C. v. Traffic
Monsoon, LLC, evaluate the Commission's claim,
and suggest how Israeli companies can minimize the risk of adverse
Commission scrutiny if the appeals court sides with the
Commission.
