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BFA Lawyers Author Analysis of Cross-Listed Securities for the National Law Journal

May 30, 2016
BFA founding partner Joseph A. Fonti and partner Cynthia Hanawalt authored an article analyzing the implications of Morrison v. National Australia Bank Ltd. (2010) (“Morrison”) in the National Law Journal.  The article addresses the complexities that may arise from interpretations of the Supreme Court’s decision in Morrison that are at odds with the functionality of the global securities markets.  Some courts have read Morrison to require that the anti-fraud provisions in Section 10(b) of the Securities Exchange Act turn on the physical location a transaction clears.  But for securities registered and cross-listed on both the New York Stock Exchange and another exchange, like Canada’s Toronto Stock Exchange, the transaction clearance location is often determined by best-execution rules applied to integrated global markets.  Investors are often unable to determine, much less control, where their trades are executed.  Without further clarification from the courts, this means that, simply due to the happenstance of where a transaction clears, investors who sought to purchase securities registered with the U.S. Securities Exchange Commission, and listed on the NYSE, may be left without a remedy for fraud under U.S. laws.