SUPREME COURT
Denial of Certiorari in Stoyas v. Toshiba Corp.
Key Issue
While all circuits agree that a domestic transaction is
necessary for the Exchange Act to apply, there is a split between
the Second and Ninth circuits as to whether a domestic transaction
is sufficient for its application, without more. Toshiba sought
certiorari to resolve this split; in denying certiorari, the
Supreme Court has left the question open.
Background & Decision
In July of 2018, the Ninth Circuit revived a securities class
action against Toshiba,1 a Japanese company whose
Japanese disclosures had been exposed as incorporating fraudulent
accounting practices, on the theory that U.S. purchasers of Toshiba
ADRs could assert claims against Toshiba under the Exchange Act.
The Ninth Circuit held that this result was consistent with the
Supreme Court's ruling in Morrison v. National Australia
Bank Ltd.2 that the Exchange Act does not apply
extraterritorially, but only to
