To what extent should a foreign issuer be liable in US courts in connection with securities transactions effected outside the United States? Porsche famously ditched plans for an American listing when Sarbanes-Oxley was adopted. Porsche made clear that it didn't want to be sucked into the morass of trial lawyers and regulators that comprises our securities law regime. Yet, a bunch of hedge funds are now trying to drag Porsche into a US court for alleged securities violations even though the securities transactions in question took place abroad.
Steven Davidoff explains that their prospects look grim:
The automaker is subject to a lawsuit by 39 hedge funds in Federal District Court in Manhattan related to its ill-fated attempt to surreptitiously take over Volkswagen in 2008. Porsche recently filed its motion to dismiss this case, and it looks like Porsche has a good chance at success. The main reason: a Supreme Court decision in Morrison v. National Australia Bank Ltd. that severely limited the ability of security holders to sue foreign corporations in an American court for securities purchased abroad.
The case not only has the potential to force these hedge funds to go to Germany to pursue their claims, but also illustrates the strong effect that the Morrison decision is already having on foreign securities litigation in the United States. ...
Davidoff goes on to explore the complex jurisdictional questions posed by the case. It's a very good read.
