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
