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Home Archive Volume 65 Volume 65, Issue 2 COMMENT: The Halfway Point Between Barbary Coast and Shangri-La: Extraterritoriality and the Viability of the Economic Reality Method Post-Parkcentral Global Hub Ltd. v. Porsche Automobile Holdings SE
COMMENT: The Halfway Point Between Barbary Coast and Shangri-La: Extraterritoriality and the Viability of the Economic Reality Method Post-Parkcentral Global Hub Ltd. v. Porsche Automobile Holdings SE

By Kaitlin A. Bruno │ 65 Am. U. L. Rev. 435 (2015)

In the increasingly globalized world, courts have struggled with how to best determine whether a security transaction is sufficiently domestic for § 10(b) of the Securities and Exchange Act of 1934 to apply.  The leader in securities regulation jurisprudence, the U.S. Court of Appeals for the Second Circuit, held in Parkcentral Global Hub Ltd. v. Porsche Automobile Holdings SE that, although satisfying the location-based transactional test the Supreme Court established in Morrison v. National Australia Bank is required, it is not, on its own, dispositive of § 10(b) liability.

This Comment argues that post-Parkcentral courts should use a new, two-step test to analyze the extraterritoriality of securities transactions.  Courts should first perform the Morrison transactional test followed by the sufficiency test the Second Circuit established in Parkcentral.  In so doing, courts should evaluate a variety of factors and, based on the totality of the circumstances, determine whether § 10(b) applies.  The test advocated by this Comment will strengthen Morrison’s presumption against extraterritoriality by providing courts with more tools to analyze cases with foreign elements.

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