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Second Circuit Rules on Legal Standard Required to Establish a "Domestic Transaction" in Securities under Morrison
Practices
On March 1, 2012, in Absolute Activist Value Master Fund Ltd. v. Ficeto, the Second Circuit addressed for the first time what constitutes a "domestic transaction" in securities not listed on a U.S. exchange, elucidating the extraterritorial application of Section 10(b) of the Securities Exchange Act, as decided in the Supreme Court's 2010 decision in Morrison v. National Australia Bank. The Second Circuit held that, to establish a domestic transaction in securities not listed on a U.S. exchange, plaintiffs must allege facts plausibly showing either that irrevocable liability was incurred or that title was transferred within the United States.