At one point, it looked like the UBS securities class action would be a test case on the application of the Morrison decision (in which the U.S. Supreme Court rejected the extraterritorial application of Section 10(b) in private litigation). As it turned out, a number of district court decisions on the issue have been issued while the UBS court considered its ruling. This week, however, the court finally weighed in with a sweeping victory for the defendants. See In re UBS Sec. Litig., 1:07-cv-11225-RJS (S.D.N.Y. Sept. 13, 2011).
The court dismissed two sets of claims that Morrison arguably precluded. First, the court held that claims asserted by foreign plaintiffs who purchased UBS stock on a foreign exchange (“foreign-cubed claims”) were barred even though UBS common stock is cross-listed on the New York Stock Exchange. The court found that Morrison “makes clear that its concern was with respect to the location of the securities transaction and not the location of an exchange where the security may be dually listed.” Second, the court held that claims asserted by U.S. investors who purchased UBS stock on a foreign exchange (“foreign-squared claims”) were barred even though the orders were placed from the United States. The court found that neither the location of the buy order nor the place of injury converted the purchase into a “domestic” securities transaction.
Holding: Foreign-cubed and foreign-squared claims dismissed.