White Collar Roundup - February 2015

Limiting the Impact of Morrison

The U.S. Court of Appeals for the Third Circuit in United States v. Georgiou analyzed a matter of first impression regarding the application of the Supreme Court's ruling in Morrison v. National Australia Bank Ltd. In Morrison, the Supreme Court held that Section 10(b) of the Securities Exchange Act of 1934 did not apply to wholly foreign securities transactions. In Georgiou, the court determined that the involvement of a U.S. market maker brought otherwise wholly foreign transactions within the scope of Section 10(b) liability. The court also joined other circuits in holding that "irrevocable liability establishes the location of a securities transaction." In the case, George Georgiou was convicted of engaging in a pump-and-dump scheme in which the conspirators opened brokerage accounts abroad to trade over-the-counter stocks. The conspirators traded the stocks among their various off-shore accounts, artificially inflating the