Noteworthy US Securities Law Litigation

United States v. Vilar: Court Limited Prosecution under Section 10(b) of the Exchange Act for Securities Fraud Outside the US

In September 2013, a federal appeals court extended the holding of the US Supreme Court's landmark decision in Morrison v. National Australia Bank to criminal cases and ruled that a defendant could not be prosecuted under Section 10(b) of the Exchange Act for fraud in connection with securities transactions outside of the United States.

In Vilar, two investment managers who ran both US-based and foreign-based investment funds were convicted of securities fraud for lying to their clients about the nature and quality of certain investments. On appeal, the defendants argued that their convictions should be overturned because the transactions underlying their convictions occurred outside the United States and, under Morrison, the extraterritorial transactions could not support a criminal conviction under Section 10(b). The federal appeals court