Second Circuit Decision On Extraterritoriality

On August 30, the United States Court of Appeals for the Second Circuit handed down its decision in United States v. Vilar, which unequivocally limits the U.S. government's ability to use Section 10(b) of the Securities Exchange Act of 1934 in criminal prosecutions involving extraterritorial conduct. No. 10-521-CR (2d Cir. Aug. 30, 2013).  In so doing, the court made clear that the Supreme Court's territorial limitation on private securities fraud actions, originally set forth in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010), also applies to criminal prosecutions.  While the Dodd-Frank Act may in the future affect the scope and longevity of the Vilar decision, at least for the time being, Vilar makes it all the more difficult for U.S. prosecutors to pursue securities fraud where the purchase or sale of securities occurred outside the U.S.  For the complete Orrick alert, please click here.