Tenth Circuit Affirms SEC's Extraterritorial Reach
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- Last week, in a much-anticipated decision, the U.S. Court of Appeals for the Tenth Circuit in SEC v. Scoville et al. held that Congress “clearly intended” Section 929P(b) of the Dodd-Frank Act to grant the U.S. Securities and Exchange Commission authority to enforce the anti-fraud provisions of the federal securities laws abroad where there is sufficient conduct or effect in the United States.
- The Tenth Circuit undertook a thorough analysis of the legislative history of Section 929P(b) and concluded that Congress “affirmatively and unmistakably” intended to grant extraterritorial authority to the SEC where either “significant steps” are taken in the U.S. to further a violation of the anti-fraud provisions or conduct outside the U.S. has a “foreseeable substantial effect” within the U.S.
- In sum, foreign securities-related transactions in connection with which there is significant U.S. conduct or a foreseeable substantial effect within the U.S. may be subject to civil and criminal securities enforcement proceedings by U.S. authorities.