Morrison decision applied in review of UBS credit crisis class action
The 2nd Circuit U.S. Court of Appeals earlier this month upheld the U.S. Supreme Court’s decision in Morrison v. National Australia Bank in a case against UBS. As a result of Morrison, securities traded outside the U.S. are no longer considered within U.S. jurisdiction, effectively barring investors who purchase securities on a foreign exchange from participating in U.S. class actions. This is the first instance that the Morrison decision has been challenged in a U.S. appellate court.
According to Kevin LaCroix of the D&O Diary, “the Second Circuit’s rulings, while entirely consistent with rulings of the lower courts, are important because they are the first by an appellate court on these issues. The rulings make it clear that the plaintiffs will not be able to use these theories to try to circumvent Morrison in order to present the claims of shareholders who purchased their shares in the defendant company on a foreign exchange.”
It is clear the U.S. judicial system is standing pat on the Morrison decision, forcing investors to seek the recovery of damages outside of the U.S. The recent decision in the UBS case highlights the need for institutional investors to have a comprehensive solution in place for addressing international class actions.