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Section 929Y of the Dodd-Frank Act directed the SEC to solicit public comment and then conduct a study to consider extending a private right of action for transnational securities fraud.  The SEC has published the resulting study.

The provision was in response to the Supreme Court decision in Morrison v. National Australia Bank which concluded that there is no “affirmative indication” in the Exchange Act that Section 10(b) applies extraterritorially. Finding no affirmative indication of an extraterritorial reach, the Court adopted a new transactional test under which Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.

In connection with release of the study, Commissioner Luis A. Aguilar released the following statement:  “Today the Commission has authorized that a Study expressing the views of the Staff be sent to Congress. However, my conscience compels me to write separately to record my views on the Study. I write to convey my strong disappointment that the Study fails to satisfactorily answer the Congressional request, contains no specific recommendations, and does not portray a complete picture of the immense and irreparable investor harm that has resulted, and will continue to result, due to Morrison v. National Australia Bank, Ltd.

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