In re National Australia Bank Litigation (Sept)

[sandi66]

07-0583-cv
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
________________________________________________
ROBERT MORRISON, individually and on behalf of all others similarly situated,
RUSSELL LESLIE OWEN, BRIAN SILVERLOCK,
and GERALDINE SILVERLOCK,
Plaintiffs-Appellants,
MARIA KENNEDY, HARVARD B. KOLM, and NORMAN HAUGE,
Plaintiffs,
-v-
NATIONAL AUSTRALIA BANK LTD., HOMESIDE LENDING INC.,
FRANK CICUTTO, HUGH HARRIS, KEVIN RACE, and W. BLAKE WILSON,
Defendants-Appellees.
________________________________________________
On Appeal from the United States District Court
for the Southern District of New York
________________________________________________
BRIEF OF THE SECURITIES AND EXCHANGE COMMISSION
AS AMICUS CURIAE, IN RESPONSE TO THE COURT’S REQUEST
________________________________________________
BRIAN G. CARTWRIGHT
General Counsel
ANDREW N. VOLLMER
Deputy General Counsel
JACOB H. STILLMAN
Solicitor
MARK PENNINGTON
Assistant General Counsel
WILLIAM K. SHIREY
Senior Counsel
Securities and Exchange Commission
100 F St., N.E.
Washington, D.C. 20549-8010
[phone] (Shirey)
i
TABLE OF CONTENTS
PAGE
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF THE ISSUES ADDRESSED . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. General Background as to the Transnational Reach
of the Antifraud Provisions of the Securities Laws. . . . . . . . . . . . . . 4
1. Cases Involving Transnational Securities
Frauds Are Becoming More Prevalent and
Raise Difficult Questions Concerning the
Application of the Antifraud Provisions of
the Securities Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Courts Have Developed a Conduct Test and
an Effects Test for Resolving Questions of
the Transnational Application of the Antifraud
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Plaintiffs Rely Solely on the Conduct Test. . . . . . . . . . . . . . . 8
B. This Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1. The Allegations in the Complaint . . . . . . . . . . . . . . . . . . . . . 11
2. The District Court’s Order Dismissing the Case . . . . . . . . . . 13
ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ii
TABLE OF CONTENTS (Continued)
PAGE
I. The Second Circuit’s Case Law Relating to the Conduct Test
Has Proven Difficult to Apply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
A. Overview of the Relevant Second Circuit Case Law. . . . . . . . . . . 15
B. The Second Circuit’s Decisions Do Not Provide a
Clear Answer to the Correct Resolution of the
Jurisdictional Issue in this Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
II. Adoption of the Commission’s Proposed Articulation
of the Conduct Test Would Bring Needed Clarity and
Would Shift the Inquiry from a Case-By-Case Analysis
that Turns on “Very Fine Distinctions.” . . . . . . . . . . . . . . . . . . . . . . . . . . 22
III. Under the Commission’s Proposed Articulation of the
Conduct Test, the Antifraud Provisions Would Apply Here. . . . . . . . . . . 29
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
CERTIFICATE OF COMPLIANCE
CERTIFICATE OF SERVICE
iii
TABLE OF AUTHORITIES
CASES PAGE
AVC Nederland B.V. v. Atrium Investment Partnership, 740 F.2d 148
(2d Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Alfadda v. Fenn, 935 F.2d 475 (2d Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
In re Alstom SA Sec. Litigation, 406 F. Supp. 2d 346 (S.D.N.Y. 2005) . . . . 2, 3, 5
passim
Basic Inc. v. Levinson, 485 U.S. 224 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
In re Bayer AG Sec. Litig., 2004 WL 2189357 (S.D.N.Y. Sept. 30, 2004) . . . . . . 5
Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d Cir. 1975) . . . . . . . . . 4, 14, 15
passim
Continental Grain (Australia) Pty. Ltd. v. Pacific Oilseeds, Inc.,
592 F.2d 409 (8th Cir. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Europe and Overseas Commodity Traders, S.A. v. Banque Paribas
London, 147 F.3d 118 (2d Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . 7, 8, 20
passim
F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004) . . . . . . 27-28
Froese v. Staff, 2003 WL 21523979 (S.D.N.Y. July 7, 2003) . . . . . . . . . . . . . 5, 15
In re Gaming Lottery Sec. Litigation, 58 F. Supp. 2d 62 (S.D.N.Y. 1999) . . . 5, 15
Grunenthal GmbH v. Hotz, 712 F.2d 421 (9th Cir. 1983) . . . . . . . . . . . . . . . . 9, 24
IIT v. Cornfeld, 619 F.2d 909 (2d Cir. 1980) . . . . . . . . . . . . . . . . . . . . . . 15, 18, 19
iv
TABLE OF AUTHORITIES (Continued)
PAGE
ITT v. Vencap, Ltd., 519 F.2d 1001 (2d Cir. 1975) . . . . . . . . . . . . . . . . . . . 4, 8, 17
passim
Itoba Ltd v. LEP Group PLC, 54 F.3d 118 (2d Cir. 1995) . . . . . . . . . . . . . . 6, 7, 20
Kauthar SDN BHD v. Sternberg, 149 F.3d 659 (7th Cir. 1998) . . . . . . . . . . 7, 8, 9
passim
Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326
(2d Cir. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
North South Finance Corp. v. Al-Turk, 100 F.3d 1046 (2d Cir. 1996) . . . . . . . . 21
Psimenos v. E.F. Hutton & Co., 722 F.2d 1041 (2d Cir. 1983) . . . . . . . . . . 7, 9, 19
passim
Robinson v. TCI/US West Communications Inc., 117 F.3d 900 (5th Cir. 1997) . 9
Royal Dutch/Shell Transport Sec. Litigation, 380 F. Supp. 2d 334 (D.N.J. 2005) 5
SEC v. Berger, 322 F.3d 187 (2d Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 14
passim
SEC v. Kasser, 548 F.2d 109 (3d Cir. 1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9
Schoenbaum v. Firstbrook, 405 F.2d 200, rev'd on the merits,
405 F.2d 215 (2d Cir. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc.,
128 S. Ct. 761 (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Zoelsch v. Arthur Anderson & Co., 824 F.2d 27 (D.C. Cir. 1987) . . . . . . . . 6-7, 8
passim
v
TABLE OF AUTHORITIES (Continued)
PAGE
STATUTES AND RULE
Securities Exchange Act of 1934, 15 U.S.C. 78a, et seq.
Section 10(b), 15 U.S.C. § 10(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 21(a)(1), 15 U.S.C. § 78u(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Rule 10b-5 under the Securities Exchange Act of 1934, 17 C.F.R. 240.10b-5 . . 10
MISCELLANEOUS
John C. Coffee, Jr., Foreign Issuers Fear Global Class Actions,
The National Law Journal (June 14, 2007) . . . . . . . . . . . . . . . . . . . . . . . . 29
Restatement (Third) of Foreign Relations Law § 416, cmt. A (1987) . . . . . . . . . 28
1
No. 07-0583-cv
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
________________________________________________
ROBERT MORRISON, individually and on behalf of all others similarly situated,
RUSSELL LESLIE OWEN, BRIAN SILVERLOCK,
and GERALDINE SILVERLOCK,
Plaintiffs-Appellants,
MARIA KENNEDY, HARVARD B. KOLM, and NORMAN HAUGE,
Plaintiffs,
-v-
NATIONAL AUSTRALIA BANK LTD., HOMESIDE LENDING INC.,
FRANK CICUTTO, HUGH HARRIS, KEVIN RACE, and W. BLAKE WILSON,
Defendants-Appellees.
________________________________________________
On Appeal from the United States District Court
for the Southern District of New York
________________________________________________
BRIEF OF THE SECURITIES AND EXCHANGE COMMISSION
AS AMICUS CURIAE, IN RESPONSE TO THE COURT’S REQUEST
________________________________________________
INTRODUCTION
The Securities and Exchange Commission submits this brief amicus curiae
in response to the Court’s invitation to offer “the views of the [Commission] on
both the broader questions posed by this case and the case itself” as to whether
2
antifraud provisions of the United States securities laws apply to the alleged
transnational fraud. This case involves foreign purchasers who bought a foreign
issuer’s securities on a foreign exchange, but where significant aspects of the
fraudulent conduct occurred in the United States.
The Commission believes that this Court should expressly set forth the
following standard to assess whether the antifraud provisions apply to
transnational securities-fraud cases:
The antifraud provisions of the securities laws apply to
transnational frauds that result exclusively or principally
in overseas losses if the conduct in the United States is
material to the fraud’s success and forms a substantial
component of the fraudulent scheme.
That formulation is reflective of the Second Circuit’s present approach and it
provides an overall conceptual framework to guide lower courts as these confront
jurisdictional issues in future transnational securities fraud cases.
This Court’s case law can be read to set forth a series of “diverse
formulations” of the applicable legal standard. In re Alstom SA Sec. Litig., 406 F.
Supp. 2d 346, 373-74 (S.D.N.Y. 2005). For example, in the view of one district
court, there has been an “apparent shift in emphasis from a test of strict causation”
– one where the domestic conduct must be the immediate cause of the overseas
investors’ losses – “to one of materiality of the domestic acts.” Id. This has
3
created a “tension” in the case law, id., and, as a result, district courts have largely
resorted to engaging in a case-by-case comparison of the specific fact patterns to
those of existing Circuit precedent. As the district court here explained, “[t]he
complexity of th[is] required analysis means that individual cases are decided on
very fine distinctions.” (SPA-9 (2006 WL 3844465) (“This analytical
undertaking is complicated by the commercial realities that imbue modern
international securities transactions.”)).
The Commission believes that this Court could bring greater clarity to this
area by adopting the proposed formulation. Furthermore, because this
jurisdictional test would also be applied to Commission actions, see SEC v.
Berger, 322 F.3d 187, 193-94 (2d Cir. 2003), we believe that the proposed
standard would help preserve the Commission’s ability to bring an enforcement
action involving future transnational frauds such as the one alleged in this case.
Finally, the Commission believes that, applying that standard to the
allegations in plaintiffs’ complaint, material and substantial conduct in furtherance
of the alleged fraud occurred in the United States so as to support application of
the antifraud provisions (at least with respect to enforcement actions brought by
This Court has suggested on several occasions, 1 , based on additional policy
considerations unique to class actions, that a more jurisdictionally restrictive
standard may be warranted in the class-action context. See ITT v. Vencap, Ltd.,
519 F.2d 1001, 1018 n.31 (2d Cir. 1975); see, e.g., SEC v. Berger, 322 F.3d 187,
195 (2d Cir. 2003); Bersch v. Drexel Firestone, Inc., 519 F.2d 974, 987 (2d Cir.
1975). The Commission does not take a position on what, if any, additional
showing should be required for class actions. In this brief, therefore, we are only
discussing the application of the conduct test as it would apply to Commission
enforcement actions and private suits by named foreign plaintiffs.
4
the Commission or private actions brought by named foreign plaintiffs). 1
STATEMENT OF THE ISSUES ADDRESSED
1. Do the antifraud provisions of the securities laws extend to transnational
frauds that result exclusively or principally in overseas losses if the conduct
in the United States is material to the fraud’s success and forms a substantial
part of the alleged fraud ?
2. Do the plaintiffs’ allegations satisfy this standard?
BACKGROUND
A. General Background as to the Transnational Reach of the
Antifraud Provisions of the Securities Laws.
1. Cases Involving Transnational Securities Frauds Are
Becoming More Prevalent and Raise Difficult Questions
Concerning the Application of the Antifraud Provisions of
the Securities Laws.
This appeal involves the question of whether Congress, in the exercise of its
5
legislative or prescriptive jurisdiction, intended the antifraud provisions of the
securities laws to apply to securities frauds that take place in part in the United
States and in part overseas, but that principally or exclusively result in losses to
overseas investors. These types of suits have become more prevalent in recent
years. See, e.g., Royal Dutch/Shell Transp. Sec. Litig., 380 F. Supp. 2d 334
(D.N.J. 2005); In re Bayer AG Sec. Litig., 2004 WL 2190357 (S.D.N.Y. Sept. 30,
2004); Froese v. Staff, 2003 WL 21523979 (S.D.N.Y. July 7, 2003); In re Gaming
Lottery Sec. Litig., 58 F. Supp. 2d 62 (S.D.N.Y. 1999).
To apply our securities laws to these transnational securities frauds
necessarily involves some extraterritorial application of United States laws
because, by definition, not all of the fraudulent conduct occurs in the United
States, nor are all the wrongdoers or victims necessarily in the United States. See,
e.g., In re Alstom SA Sec. Litig., 406 F. Supp. 2d 346, 380 (S.D.N.Y. 2005)
(describing transnational securities frauds). The issue becomes, therefore, how
and where to draw the line with respect to application of the antifraud provisions
of the United States securities laws.
Complicating this inquiry are the commercial realities associated with
modern international securities trading. Often these transactions
involve multiple components, participants and events centered in
several countries. The executives and directors of the company
answerable for the wrongdoing may be headquartered in one country.
6
The false representations may be contained in securities disclosure
statements registered or in public announcements published in
various other nations. The lawyers, accountants and underwriters
who prepared the prospectuses and related documents may have
coordinated their drafting activities and structuring of the transaction
in yet a different jurisdiction. The marketing of the investments may
take place in exchanges around the world. Hence, the conduct
constituting the charged fraud causing the asserted financial losses is
rarely a single act readily traceable in its entirety to a discrete time
and place. Rather, more commonly, the alleged misdeeds may
comprise but one aspect of a scheme on a larger scale, a link in a
transactional chain forming a continuum that spreads out to multiple
jurisdictions. Identifying where the charged fraud starts and where it
culminates, and what comprises the numerous material points and
participants in the transactions in between, inevitably presents
formidable challenges.
Id. at 372 (footnote omitted).
2. Courts Have Developed a Conduct Test and an Effects Test
for Resolving Questions of the Transnational Application of
the Antifraud Provisions.
The text of the securities laws is silent as to the transnational reach of these
laws. See Itoba Ltd v. LEP Group PLC, 54 F.3d 118, 121 (2d Cir. 1995). In 1934,
“Congress did not consider how far American courts should have jurisdiction to
decide cases involving predominantly foreign securities transactions with some
link to the United States. The web of international connections in the securities
markets was then not nearly as extensive or complex as it has become.” Zoelsch
7
v. Arthur Anderson & Co., 824 F.2d 27, 30 (D.C. Cir. 1987). In the absence of
clear Congressional guidance, the courts have attempted “[t]o discern ‘whether
Congress would have wished the precious resources of the United States courts
and law enforcement agencies to be devoted to’” such transnational securities
transactions. Europe and Overseas Commodity Traders, S.A. v. Banque Paribas
London, 147 F.3d 118, 125 (2d Cir. 1998). As courts have acknowledged, this
inquiry has largely been guided by “policy considerations and the court’s best
judgment.” Kauthar SDN BHD v. Sternberg, 149 F.3d 659, 664 (7 th Cir. 1998).
Two tests have emerged to determine the reach of the antifraud provisions:
the effects test and the conduct test. See Alfadda v. Fenn, 935 F.2d 475, 478 (2d
Cir. 1991); Itoba Ltd., 54 F.3d at 121-22. Satisfaction of either test alone, or an
“admixture or combination of the two,” affords jurisdiction. Itoba Ltd., 54 F.3d at
122. The effects test centers its inquiry on whether domestic investors or markets
are affected as a result of actions occurring outside of the United States. Banque
Paribas, 147 F.3d at 125. See also Psimenos v. E.F. Hutton & Co., 722 F.2d 1041,
1045 (2d Cir. 1983). By contrast, the conduct test focuses “on the nature of [the]
conduct within the United States as it relates to carrying out the alleged fraudulent
scheme,” Psimenos, 722 F.2d at 1045, on the theory that “Congress would not
want the United States to become a base for fraudulent activity harming foreign
8
investors.” Banque Paribas, 147 F.3d at 125. A related purpose underlying the
conduct test is ensuring international reciprocity; by extending our securities laws
to prohibit fraudulent conduct here that injures overseas investors, the United
States can reasonably expect other countries’ laws to offer comparable protection
to prevent fraudulent conduct overseas that is directed towards our investors. See
IIT v. Vencap, Ltd., 519 F.2d 1001, 1017 (2d Cir. 1975). See also SEC v. Kasser,
548 F.2d 109, 116 (3d Cir. 1977).
3. Plaintiffs Rely Solely on the Conduct Test.
The parties agree that this case only implicates the conduct test. “The
chronic difficulty with [that test] has been describing, in sufficiently precise terms,
the sort of conduct occurring in the United States that ought to be adequate to
trigger American regulation of the transaction.” Kauthar, 149 F.3d at 665.
“Indeed, the circuits that have confronted the matter have articulated a number of
methodologies.” Id.
The District of Columbia Circuit, for example, has advanced the most
restrictive approach, requiring that the domestic conduct at issue must itself
constitute a securities violation. Zoelsch v. Arthur Anderson & Co., 824 F.2d 27,
31 (D.C. Cir. 1987) (“[J]urisdiction will lie in American courts where the domestic
conduct comprises all the elements of a defendant’s conduct necessary to establish
To the extent that any distinction can be discerned among the 2 e Circuits that
require materiality, it has been asserted that the Third, Eighth, and Ninth Circuits
require “some lesser quantum of conduct” than the Second, Fifth, and Seventh
Circuits. Kauthar, 149 F.3d at 666. See also Psimenos, 722 F.2d at 1046 n.6.
Recognizing that this Court is bound by prior precedent, in this brief we do not
address the standards followed by other Courts of Appeals.
3 Notably, the District of Columbia Circuit in Zoelsch appeared to believe it
was applying this Court’s test. Compare Zoelsch, 824 F.2d at 31 (“The Second
Circuit’s rule seems to be that jurisdiction will lie in American courts where the
(continued...)
9
.”). The other courts of appeals that have
considered the issue have, instead, required that the conduct in the United States
needs to be a material to the overseas’ investors losses, but have not required that
all the elements of the violation occur in the United States. 2 See, e.g., Kauthar,
149 F.3d at 666 (7th Cir.) (domestic conduct must be “material” and “substantial”);
Robinson v. TCI/US West Communications Inc., 117 F.3d 900, 905 & n.10 (5th
Cir. 1997) (same); Grunenthal GmbH v. Hotz, 712 F.2d 421, 425 (9th Cir. 1983)
(domestic conduct be “material” and “significant” to the furtherance of the
scheme); Continental Grain (Australia) Pty. Ltd. v. Pacific Oilseeds, Inc., 592 F.2d
409, 421 (8th Cir. 1979) (same); Psimenos v. E.F. Hutton & Co., Inc., 722 F.2d
1041, 1045 (2d Cir. 1983) (domestic conduct must be “material” and
“substantial”); SEC v. Kasser, 548 F.2d 109, 114, 115 (3d Cir. 1977) (“some
activity” in the United States that is “essential to the plan to defraud”). 3
(...continue3 d)
domestic conduct comprises all the elements of a defendant’s conduct necessary to
establish a violation [of the antifraud provisons].”), with Kauthar, 149 F.3d at 665
n.10 (“We share the reservations of the Fifth Circuit as to whether the District of
Columbia Circuit accurately portrayed the Second Circuit’s jurisprudence.”).
4 As originally styled, this class action included United States residents who
purchased ADR interests (see infra note 5) in defendant NAB during the class
period. In the same order in which jurisdiction was held lacking as to the foreign
class members’ claims, the district court dismissed the lead domestic plaintiff
because he did not suffer a loss during the statutory look-back period.
10
As discussed below, the Second Circuit’s decisions have developed the law
on a case-by-case basis without explicitly articulating the generally applicable
standard. As a result, there has been uncertainty in the district courts. See, e.g., In
re Alstom SA Sec. Litig., 406 F. Supp. 2d 346, 372-76 (S.D.N.Y. 2005). For that
reason, the Commission recommends that this Court adopt the standard that we
propose.
B. This Litigation
This is a class action on behalf of non-U.S. shareholders of National
Australia Bank who purchased stock between April 1, 1999, and September 3,
2001. 4 The complaint alleges that the defendants violated section 10(b) of the
Exchange Act and Rule 10b-5. As explained below, the complaint alleges that the
defendants made false and misleading statements overseas to the class members
concerning the operations of a United States subsidiary, but that the fraudulent
An ADR is a negotiable certificate issued by 5 a United States depository
bank that represents a specified number of shares of a foreign security that have
been deposited with a foreign branch of the depository.
11
scheme was hatched in the United States and the fraudulent data was generated
here. The complaint further alleges that the false and misleading statements
artificially inflated the prices of NAB’s securities trading overseas and eventually
caused losses to the class members.
1. The Allegations in the Complaint
Defendant NAB is organized under the laws of Australia and is
headquartered in Melbourne, Australia, and its ordinary shares (the Australian
equivalent of common stock) trade on the Australian securities exchanges. A very
limited number of NAB’s American Depository Receipts (representing less than
1.1% of NAB’s ordinary shares) traded on the New York Stock Exchange, but
none of the class members remaining in this suit are alleged to have purchased
these instruments. 5
At all relevant times, HomeSide Lending, Inc., located in Jacksonville,
Florida, was a wholly-owned subsidiary of NAB. HomeSide was a mortgage
service provider and its principal source of income was the fees that it generated
In addition to HomeSide, NAB owned other operations in the United State6 s,
including Michigan National Bank. NAB’s United States operations accounted
for not more than 13% of its assets at all times relevant to this suit.
12
for servicing mortgages. 6 The present value of those fees was calculated using an
internal valuation model, and was booked by NAB on its balance sheet as an asset
called Mortgage Servicing Rights.
The allegations of securities fraud in this suit stem from the calculation of
HomeSide’s MSR. In order to calculate the present value of the MSR, HomeSide
employed valuation models and software systems that sought to account for the
various economic forces that impact prepayment rates by factoring in projected
future interest rates and other projected future economic conditions. The
complaint alleges that between 1998 and 2001, HomeSide, under the direction of
its three principal executive officers (defendants Hugh Harris, Kevin Race, and W.
Blake Wilson), had been deliberately overvaluing HomeSide’s MSR by modifying
the various economic assumptions used to produce the MSR valuations,
purportedly overestimating the present value of the MSR by hundreds of millions
of dollars.
The complaint further alleges that this overvaluation scheme was hatched by
the HomeSide defendants in the United States and that the fraudulent
overvaluations were also generated in the United States and then transmitted to
NAB also purportedly included the false information in filings 7 gs with the
Commission with respect to the ADRs. The parties agree that these filings do not
form a part of the jurisdictional inquiry in this class action suit because none of the
overseas class members relied on these filings. The HomeSide defendants are also
alleged to have made several exaggerated statements in the United States, but here
again, the parties appear to agree that these statements were not relied upon by the
overseas class members, and thus these statements are not relevant to the
jurisdictional inquiry.
13
Australia for incorporation into NAB’s financials. Although not initially a
knowing party to the fraud, the NAB defendants (i.e., NAB and its CEO, Frank
Cicutto) are alleged to have learned in July 2000 that the HomeSide defendants
were manipulating the MSR valuation model. Nonetheless, the NAB defendants
proceeded to release this fraudulent information to investors in Australia through
NAB’s annual reports, as well as in press releases that asserted HomeSide’s
profitability and its contribution to NAB’s overall profitability. 7
In July 2001, and then again in September 2001, NAB announced that it
would book an approximately $2.1 billion writedown stemming from the
overvaluation of HomeSide’s MSR. Following the September writedown, NAB’s
ordinary shares fell by nearly 13% on the Australian market.
2. The District Court’s Order Dismissing the Case
On October 25, 2006, the district court dismissed the claims of the foreign
plaintiffs, holding that the antifraud provisions of the securities laws do not reach
It is assumed for purposes of resolving the subject matter jurisdiction 8 n issue
that the complaint states a cause of action, but there is a dispute between the
parties as to whether the conduct of the Florida subsidiary and the other American
defendants amounts to only aiding and abetting the violation allegedly committed
by the parent bank, in which case the subsidiary could be liable in an action
brought by the Commission but not in one for damages brought by a private party.
See Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 128 S. Ct.
761 (2008). We do not address that issue.
14
the foreign plaintiffs’ claims. 8 The district court applied the conduct test to the
allegations, comparing the conduct at issue here with the conduct at issue in two
earlier Second Circuit decisions that reached opposite conclusions about
jurisdiction: Bersch v. Drexel Firestone, Inc., 519 F.2d 974, 985 (2d Cir. 1975),
which rejected jurisdiction, and SEC v. Berger, 322 F.3d 187, 193 (2d Cir. 2003),
which upheld jurisdiction. The district court reasoned that, “[o]n balance, it is the
foreign acts – not any domestic acts – that ‘directly caused’ the alleged harm
here,” and thus held that jurisdiction is lacking with respect to the overseas class
members’ claims.
ANALYSIS
I. The Second Circuit’s Case Law Relating to the Conduct Test Has
Proven Difficult to Apply.
A review of a number of this Court’s cases applying the conduct test reveals
both the factors to which the court has looked, and the uncertainties of applying
15
those factors to specific fact patterns. This Court itself has cautioned that “‘the
presence or absence of any single factor which was considered significant in other
cases dealing with the question of federal jurisdiction in transnational securities
cases is not necessarily dispositive’ in future cases.” IIT v. Cornfeld, 619 F.2d
909, 918 (2d Cir. 1980).
Moreover, district courts in the Second Circuit have had difficultly
understanding and applying the case law. Compare Froese v. Staff, 2003 WL
21523979 (S.D.N.Y. July 7, 2003) with In re Gaming Lottery Secur. Litig., 58 F.
Supp. 2d 62 (S.D.N.Y. 1999). One district court, after examining the case law
beginning with Bersch, has asserted that this difficulty arises from an “apparent
shift in emphasis from a test of strict causation to one of materiality of the
domestic acts.” In re Alstom SA Sec. Litig., 406 F. Supp. 2d 346, 373 (S.D.N.Y.
2005).
A. Overview of the Relevant Second Circuit Case Law.
• Bersch – jurisdiction should be exercised only when United States conduct
“directly” causes investors’ losses, not when the conduct is merely preparatory or
is relatively small in comparison to the conduct abroad. Bersch v. Drexel
Firestone Inc., was a class action in which certain conduct in connection with
offerings of securities of a foreign issuer took place in the United States, including
Prior to this case, Bersch has been the only transnational securities-9 fraud
class action involving foreign class members that this Court (or any court of
appeals) has considered. Although the Bersch Court set forth the additional policy
considerations that might come into play in an transnational securities-fraud class
action, the court did not purport to apply any form of heightened standard in
deciding the case. See supra note 1.
16
such activities as meetings of various participants in the offering, drafting of parts
of offering documents, and retention of and consultation with accountants. 519
F.2d 974, 985 n.24 (2d Cir. 1975) (Friendly, J.) (listing activities). 9 Nevertheless,
the Court considered the transaction to be “predominantly foreign,” 519 F.2d at
985, in that the issuer was foreign, all the offering documents were finalized
overseas, and the offers and sales occurred there. 519 F.2d at 987. This Court
concluded that a United States court should not exercise jurisdiction over claims
brought by foreign plaintiffs when the underwriting related to a foreign issuer
clearly identified with a foreign country and the fraud was committed overseas. If
there was fraud, this Court explained, it “was committed by placing the allegedly
false and misleading prospectus in the purchasers’ hands,” and the “final
prospectus emanated from a foreign source.” Id. The Bersch Court saw no reason
to extend United States jurisdiction to “cases where the United States activities are
merely preparatory or take the form of culpable nonfeasance and are relatively
small in comparison to those abroad.” Thus, the antifraud provisions of the
17
securities laws do not apply “to losses from sales of securities to foreigners outside
the United States unless acts (or culpable failures to act) within the United States
directly caused such losses.” Id. at 993.
• Vencap – Congress did not intend for the United States to be used as a base
for manufacturing fraudulent devices. In IIT v. Vencap, Ltd., handed down the
same day as Bersch, a Luxembourg investment trust brought suit alleging fraud,
conversion and corporate waste by a Bahamian corporation and various individual
defendants. 519 F.2d 1001 (2d Cir. 1975) (Friendly, J.). The course of dealings
was complex, the precise nature of plaintiff’s allegations was unclear, and the
district court’s findings so deficient that the case was remanded for further
explanations, so this Court did not reach a definite holding on whether jurisdiction
was permissible. But the Vencap Court did lay out the broad principles under
which United States conduct injuring overseas investors could fall within the
ambit of the antifraud provisions. The Court reasoned that Congress did not
intend “to allow the United States to be used as a base for manufacturing
fraudulent security devices for export, even when these are peddled only to
foreigners,” observing that the United States would “surely look askance if one of
our neighbors stood by silently and permitted misrepresented securities to be
poured into the United States.” Id. at 1017. Echoing the holding in Bersch, the
18
Court cautioned that its ruling that jurisdiction might be found on the ground that
the United States should not be used as a base for manufacturing fraud was
“limited to the perpetration of fraudulent acts themselves and does not extend to
mere preparatory activities or the failure to prevent fraudulent acts where the bulk
of the activity was performed in foreign countries.” Id. at 1018.
• Cornfeld – whether injury was “directly” caused by United States activity
depends on how much (or how little) was done overseas. As relevant to our
discussion here, IIT v. Cornfeld, involved debentures that were offered and sold
almost entirely overseas. 619 F.2d 909 (2d Cir. 1980) (Friendly, J.). Defendants
urged that jurisdiction was therefore wanting under Bersch because the conduct in
the United States did not directly cause plaintiffs’ alleged injuries. This Court
rejected that argument as taking the holding of Bersch out of context.
Specifically, in contrast to the offering in Bersch, the overseas offering in
Cornfeld was in essence an offering of securities of an American issuer that was
closely coordinated with a United States offering of securities in the same issuer.
As a result, the important efforts in making the offering – including the location of
the underwriters, the drafting of the prospectuses, and all of the accounting work –
occurred in the United States, and little of importance happened overseas. In other
words, “[d]etermination whether American activities ‘directly’ caused losses to
19
foreigners depends not only on how much was done in the United States but also
on how much (here how little) was done abroad.” Id. at 920-21.
• Psimenos – losses are “directly” caused by United States conduct when
defendant engages in substantial conduct that is material to the completion of the
fraud here. Psimenos v. E.F. Hutton & Co., was a private action brought under
the Commodity Exchange Act, but the court applied cases construing subject
matter jurisdiction under the antifraud provisions of the securities laws. 722 F.2d
1041, 1044 (2d Cir. 1983). Plaintiff was a Greek national who opened an account
at defendant’s Athens office, and most of the fraudulent representations that gave
rise to the cause of action were made there. However, plaintiff’s commodity
transactions were executed on American markets. After reviewing its prior
decisions, this Court concluded that defendant’s activities in the United States in
furtherance of the fraudulent scheme were “material” and “substantial enough to
establish subject matter jurisdiction.” 722 F.2d at 1046. And the court
characterized Bersch as being concerned that the United States entertain suits by
aliens “only where conduct material to the completion of the fraud occurred in the
United States.” Id.
• Berger – losses are directly caused by United States conduct when a
fraudulent scheme is masterminded and implemented here. The defendant in SEC
Additional Second Circuit cases involving the extraterritorial reach 10 of the
antifraud provisions include: Europe and Overseas Commodity Traders v. Banque
Paribas London, 147 F.3d 118 (2d Cir. 1998); Itoba Ltd. v. LEP Group PLC, 54
F.3d 118 (2d Cir. 1995); AVC Nederland B.V. v. Atrium Inv. Partnership, 740
(continued...)
20
v. Berger was a resident of New York who operated an investment company
organized under the laws of the British Virgin Islands that was held almost
entirely by foreigners. 322 F.2d 187 (2d Cir. 2003). As part of a scheme to hide
fund losses, the defendant sent false account data to the fund administrator in
Bermuda, who used that data to generate inaccurate account statements that were
mailed to investors. Relying on Bersch, defendant claimed that his conduct in the
United States was merely preparatory because the final steps of preparing the
statements and delivering them to investors took place overseas. The court
disagreed finding that material and substantial conduct occurred in the United
States for jurisdiction to lie, because defendant “masterminded and implemented”
the fraudulent scheme from the United States – “the fraudulent conduct was
carried out entirely” by defendant in New York. The foreign conduct in the case
– preparation and mailing of statements from Bermuda – “was not itself
fraudulent” because the fund administrator was merely following defendant’s
instructions, which provided a means for defendant “to distribute false information
that he had already fraudulently concocted in the United States.” 10
(...continue10 d)
F.2d 148, 154 (2d Cir. 1984); Leasco Data Processing Equipment Corp. v.
Maxwell, 468 F.2d 1326 (2d Cir. 1972) (Friendly, J.); Schoenbaum v. Firstbrook,
405 F.2d 200, rev’d on the merits, 405 F.2d 215 (2d Cir. 1968) (Friendly, J.). See
also North South Finance Corp. v. Al-Turk, 100 F.3d 1046 (2d Cir. 1996).
21
B. The Second Circuit’s Decisions Do Not Provide a Clear Answer to
the Correct Resolution of the Jurisdictional Issue in this Case.
This Court’s previous cases identify a number of potentially relevant
questions, but they do not afford clear answers. For example, under these
circumstances, should the domestic conduct be considered “merely preparatory,”
given that more conduct that was integral to the fraud occurred in the United
States than occurred in Bersch, and the conduct reached a greater degree of
completion, but the scheme could not be completed until the information was
incorporated into the issuer’s statements in Australia and distributed to investors
there? Or should the conduct be considered sufficiently “substantial” and
“material to the completion of the fraud” that it “directly” caused the injury? Was
the overall scheme masterminded and implemented here or in Australia, given that
it required the concurrence of wrongdoers in both places, and how should this
issue be assessed under this Court’s existing case law?
In addition to not pointing clearly to the answers to these questions, the
existing Second Circuit case law may not provide an optimal decisional
22
framework for addressing future cases because the existing decisions have been
decided on a case-by-case basis, without prioritizing the factors or arranging them
in a unified test. In other words, while this may be a close case under the Second
Circuit case law, it perhaps appears a harder case than it has to be as a result of the
way this Circuit’s law has developed. Therefore, the Commission believes that
this Court should set forth an explicit test that both addresses the concerns
reflected in the Circuit’s decisions and offers more uniformity of analysis and
predictability of results.
II. Adoption of the Commission’s Proposed Articulation of the Conduct
Test Would Bring Needed Clarity and Would Shift the Inquiry from a
Case-By-Case Analysis that Turns on “Very Fine Distinctions.”
The Commission recommends adoption of the following formulation of the
conduct test:
The antifraud provisions of the securities laws apply to
transnational frauds that result exclusively or principally
in overseas losses if the conduct in the United States is
material to the fraud’s success and forms a substantial
component of the fraudulent scheme.
The test we propose describes when an injury is considered to be sufficiently
“directly” caused by United States conduct to support jurisdiction, reflecting the
fact that in Berger this Court upheld jurisdiction even though the last event in
The use of the term “materiality” for the jurisdictional inquiry 11 under the
conduct test should not be confused with the different concept of “materiality” as
(continued...)
23
effectuating the fraudulent scheme did not occur in this country.
Furthermore, the formulation we recommend builds on the existing
approach of this Circuit, but brings it together in a unified standard that will
provide greater guidance to lower courts in resolving future cases. In Psimenos,
the Court stated that domestic conduct must be “material to the completion of the
fraud,” 722 F.2d at 1046, and must have been “substantial acts in furtherance of
the fraud,” id. at 1045. Likewise, in Berger, the Court stated that the domestic
conduct must “materially relate[] to the fraud” and must constitute “substantial
acts in furtherance of the fraud.” 322 F.3d at 193. See also Kauthar SDN BHD v.
Sternberg, 149 F.3d 659, 667 (7th Cir. 1998) (expressly adopting the Second
Circuit’s conduct test; stating: “antifraud provisions of the securities laws [apply]
when the conduct occurring in the United States directly causes the plaintiff’s
alleged loss in that the conduct forms a substantial part of the alleged fraud and is
material to its success.” (emphasis added)).
The materiality inquiry would ensure that the domestic conduct was an
integral – not incidental or ancillary – link in the chain of events in the
transnational fraud leading to the overseas investors’ losses. 11 Cf. Psimenos, 722
(...continue11 d)
an element of a fraud violation. See Basic Inc. v. Levinson, 485 U.S. 224, 231-32
(1988).
24
F.2d at 1046 (“conduct material to the completion of the fraud” is more than “mere
preparatory activities, and conduct far removed from the consummation of the
fraud”). If the domestic conduct is deemed material, then the analysis would turn
to whether, under the totality of the circumstances, the domestic conduct was
substantial in relation to the entire fraud. The substantiality showing would
generally be satisfied by demonstrating that a sufficient quantum of conduct
occurred in the United States to reasonably warrant application of the antifraud
provisions in light of the competing policy concerns identified by this Circuit. Cf.
Bersch, 519 F.2d at 987 (domestic conduct “relatively small in comparison to
[conduct] abroad”). However, even limited conduct in the United States would
satisfy the substantiality showing where the particular domestic conduct was
highly significant to the fraud, such as, for example, where the conduct in question
involves communicating the misrepresentations to foreign investors in or from the
United States, cf., Gruenthal v. Hotz, 712 F.2d 421 (9th Cir. 1983), masterminding
the scheme here, or using the United States as a base to consummate schemes
concocted abroad, cf. Psimenos, 722 F.2d at 1047.
We believe this standard is consistent with the Court’s prior cases. Those
25
cases have indicated the result of the test’s application to certain fact patterns, so it
will not be necessary to apply the standard anew when those patterns recur. For
instance, it is clear that jurisdiction exists when misrepresentations are made in
this country. See Bersch, 519 F.2d at 986-87 (contrasting the facts of that case
with the paradigmatic example of a gun fired from one country into another).
Jurisdiction is appropriate when the mastermind of a fraudulent scheme is
operating from the United States. See Berger, 322 F.3d at 195. And jurisdiction
lies when the transaction that consummates the fraud occurs on United States
markets. See Psimenos, 722 F.2d at 1046.
In our view, the standard appropriately accommodates the policy concerns
that underlie this Circuit’s case law. This proposed standard would enable the
courts to address situations in which the United States is being used as a base for
fraudulent international securities schemes, while at the same time, it would allow
our courts to avoid “adjudicating disputes which have little in the way of a
significant connection to the United States.” Kauthar, 149 F.3d at 667.
Moreover, adoption of this standard would help address at least two key
uncertainties that appear to surround the district courts’ application of the Second
Circuit’s existing case law. First, the proposed standard makes clear that the
“direct cause” of the foreign investors’ loss includes more than simply last action
We have attempted in our proposed formulation to build on the language 12 of
the existing Circuit case law, but we note that continued use of the term “directly”
in articulating the conduct standard as it is presently applied in this Circuit may
introduce unnecessary confusion into the analysis by suggesting a last-action
requirement.
26
in the fraudulent chain (contrary to the defendants’ argument). 12 Thus, for
example, jurisdiction may lie in cases where the fraudulent statements are mailed
from outside the United States, assuming that the domestic conduct was otherwise
material to the fraud’s success and a substantial part (either in a qualitative or
quantitative sense) of the overall securities fraud.
Second, the Commission’s proposed articulation reduces the uncertainty
about determining whether conduct is “merely preparatory,” a standard which
seems to call for relatively fine distinctions about what constitutes preparatory
while offering little guidance as to how those distinctions should be made.
Instead, the proposed standard makes the inquiry more general by focusing on
whether a material and substantial portion of the fraud occurred in the United
States. In this way, it affords needed flexibility for courts to address the
“numerous combinations and permutations of, for example, the parties and the
types, places, timing and effects of relevant conduct that typically bear upon a
determination of whether an American court may properly exercise jurisdiction to
consider the merits of what are essentially foreign disputes.” In re Alstom SA Sec.
27
Litig., 406 F. Supp. 2d at 371.
To be sure, this standard will not provide absolute clarity, and indeed no
standard likely would short of the District of Columbia Circuit’s requirement that
the antifraud provisions only apply where all of the elements of the securities
fraud violation occurred in the United States. See supra pages 8-9. In our view,
however, the approach of the District of Columbia Circuit would simply allow too
much transnational fraudulent conduct to escape the reach of the antifraud
provisions, thereby possibly permitting the United States to serve as a base for the
exportation of securities fraud schemes. By making clear that the proper focus is
whether a material and substantial portion of the fraudulent conduct occurred here,
the Commission’s proposed standard would help move the focus away from
drawing the “very fine distinctions” that district courts are currently left to make
under existing Second Circuit case law and would provide a clearer test for
addressing the transnational issue.
The defendants and amici argue that the antifraud provisions should be
construed to have limited transnational application in order to preserve
international comity. In making their comity argument, defendants and amici rely
heavily on a recent Supreme Court decision delineating the transnational
application of the antitrust laws. F. Hoffmann-La Roche Ltd. v. Empagran S.A.,
Both this Circuit and the Restatement (Third) of Foreign Relations 13 Law
recognize that the antifraud provisions of the securities laws should be applied
broadly to transnational conduct. See Europe and Overseas Commodity Traders,
S.A. v. Banque Paribas London, 147 F.3d 118, 125 (2d Cir. 1998); RESTATEMENT
(THIRD) OF FOREIGN RELATIONS LAW § 416, cmt. A (1987).
28
542 U.S. 155, 164 (2004). The Commission believes that application of that case
in this context is not appropriate because the comity concerns raised by the
application of United States antitrust laws overseas are generally more serious
than those raised by application of the securities antifraud provisions. See
RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW § 416, Note 3 (1987) (“In
contrast to regulation under the antitrust laws, which not infrequently involved
prohibition of conduct which another state favored or required, ... United States
securities regulation ... has not resulted in state-to-state conflict.”). This is
particularly so in the context of prohibiting securities fraud where the potential for
conflict is less, as opposed to administrative or other regulatory requirements. 13
The Commission also believes that the proposed standard sufficiently
addresses the amici’s concern that an over-extension of the United States
securities laws to foreign corporations whose shares trade overseas may
discourage their investment in the United States. This concern must be balanced
against the principle that the United States should not be used as a base for
engaging in fraudulent conduct that may injure foreign investors. The
Some of the literature refers to these suits as “14 F-Cubed” class actions. See,
e.g., JOHN C. COFFEE, JR., Foreign Issuers Fear Global Class Actions, THE
NATIONAL LAW JOURNAL (June 14, 2007).
29
Commission believes that the standard proposed here strikes this balance
appropriately by affording jurisdiction only where the conduct in the United States
constitutes a substantial portion of the fraud that is material to the success of the
scheme.
Finally, the amici’s concerns are largely with the potential economic effects
of class actions, 14 not with Commission enforcement actions or named foreign
plaintiffs’ suits. As a result, to the extent that the Court is persuaded by the amici,
it would be more appropriate to address those issues by developing a heightened
jurisdictional standard for class actions, see supra note 1. To be sure, Commission
enforcement actions might be thought to pose a threat of similar magnitude to
foreign companies through possible disgorgement awards and civil penalties, but
any actual threat to comity that materializes could be accommodated by the
Commission as it decides whether to issue a formal order of private investigation,
see Securities Exchange Act § 21(a)(1), 15 U.S.C. § 78u(a)(1), initiate litigation,
or accept a settlement.
30
III. Under the Commission’s Proposed Articulation of the Conduct Test,
the Antifraud Provisions Would Apply Here.
The Commission believes that the defendants’ domestic conduct was both
material to the scheme’s success and a substantial part of the alleged fraud.
Based on the allegations in the complaint, the Commission believes that the
defendants’ conduct in the United States was material to the successful completion
of the fraud. The information that made the statements in Australia false was
generated in the United States with the expectation that it would be distributed to
foreign investors. Without this domestic misconduct, there would have been no
fraudulent release of information in Australia nor a resulting inflation of NAB’s
stock. Thus, the domestic conduct was an integral link in the chain of events
leading to the overseas investors’ losses.
Likewise, the HomeSide defendants are alleged to have conceived the
scheme in Florida. See, e.g., Vencap,519 F.2d at 1017-18 (allegations suggested
scheme conceived in New York); Berger, 322 F.3d at 194-94 (evidence
demonstrated scheme conceived in New York). The HomeSide defendants then
took numerous significant steps in the United States to perpetrate that scheme by
manipulating the assumptions in HomeSide’s MSR valuation modes, generating
the fraudulent valuations using those models, and then transmitting the fraudulent
As previously stated, see supra notes 4, 5 & 7, defendant NAB made filin15 gs
with the Commission containing the allegedly fraudulent information and the
company’s ADRs traded on an American exchange. This conduct in the United
States alone would have afforded the Commission jurisdiction to bring an
enforcement action. In this brief, however, we assume the only relevant conduct is
that alleged by the plaintiffs as a basis for jurisdiction over the foreign class
members’ claims.
31
valuations to NAB’s headquarters in Australia with the knowledge that this
information would be incorporated in the parent’s financials. In our view, this
domestic conduct was a substantial part of this transnational fraud. 15
32
CONCLUSION
In the Commission’s view, at least in the context of Commission
enforcement actions and suits by named foreign plaintiffs, the antifraud provisions
of the securities laws apply to transnational securities frauds that principally or
exclusively result in losses to overseas investors so long as the domestic conduct
was both material to the scheme’s success and a substantial part of the alleged
fraud. Furthermore, the Commission believes that the allegations in this case
satisfy this proposed standard.
Respectfully submitted,
ANDREW N. VOLLMER
Deputy General Counsel
JACOB H. STILLMAN
Solicitor
MARK PENNINGTON
Assistant General Counsel
____________________
WILLIAM K. SHIREY
Senior Counsel
Securities and Exchange Commission
100 F St., N.E.
Washington, D.C. 20549-8010
[phone] (Shirey)
September 17, 2008
CERTIFICATE OF COMPLIANCE
1. This brief complies with the type-volume limitation of Fed. R.
Approximately P. 32(a)(7)(B), because: this brief contains 7,000 words, excluding
the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).
2. This brief complies with the typeface requirements of Fed. R.
Approximately P. 32(a)(5) and the type-style requirements of Fed. R.
Approximately P. 32(a)(6) because: this brief has been prepared in proportionally
spaced typeface using WordPerfect 11 in 14 point Times New Roman type.
_________________
William K. Shirey
CERTIFICATE OF SERVICE
I hereby certify that on this 17 day of September, th 2008, I caused
ten copies of the BRIEF OF THE SECURITIES AND EXCHANGE
COMMISSION AS AMICUS CURIAE, IN RESPONSE TO THE COURT’S
REQUEST, to be served, via Federal Express overnight delivery, on the Clerk for
the United States Court of Appeals for the Second Circuit. Pursuant to agreement
with the various counsel, I caused an electronic pdf of the brief to be transmitted
to the following email addresses:
JAMES JOHNSON: [e-mail]
LABATON SUCHAROW & & RUDOFF LLP
(representing Plaintiffs)
GEORGE CONWAY: [e-mail]
WACHTELL, LIPTON, ROSEN & KATZ
(representing Defendants National Australia Bank and Frank Cicutto)
ALI M. STOEPPELWERTH: [e-mail]
WILMER CUTLER PICERKING HALE AND DORR LLP
(representing amicus curiae Washington Legal Foundation)
GIOVANNI PREZIOSO: [e-mail]
CLEARY GOTTLIEB STEEN & HAMILTON LLP
(representing amici curiae The Securities Industry and Financial Markets
Association, The Chamber of Commerce of the United States, The United
States Council for International Business, and The Association Française
Des Enterprises Privées)
RICHARD A. OLDERMAN: [e-mail]
WILLIAMS & CONNOLLY LLP
(representing amicus curiae The Association of Corporate Counsel)
_____________________
William K. Shirey

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