Absolute Activist: The Second Circuit Clarifies the Territorial Limits of Section 10(B) in Private Lawsuits

2 March 2012
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Key takeaways 

  • The Second Circuit's Absolute Activist decision makes clear that transactions in securities not listed on a U.S. exchange are not subject to private section 10(b) liability, unless irrevocable liability is incurred or title passes in the U.S. 
  • The Second Circuit found other U.S. connections to transnational securities transactions, such as the U.S. location of the broker or the issuer of the securities, insufficient to satisfy its test. 
  • We expect further litigation in this area to continue to explore the territorial limits of section 10(b) under particular factual circumstances.