versus traffic monsoon case that we may move to consolidate the issues are the same we just need to file that appeal due to the way i had to do travel months to consent to you representing them to the receiver you are not representing tropic monsoon so i don't even know if you can correct it now but but apart from that does this order say that traffic monsoon here by signs and agreement that you can represent them on a them i'll address briefly but the main issue i intend to address is the morrison issue so the three issues are that the court found that this product an ad pack that was sold by traffic monsoon was a security and as we raised in the district court and in our brief here we believe that it was in error because the district court ignored fundamental aspects of the product specifically the advertising second the district court the second  traffic and you could get more money for mobile trucking tracks with no additional weeks required and also for those additional investments it was no effort at all report certainly the returns it allowed you to take to perform and if that's an immunization then no matter what they do they can't ever be a ponzi scheme and it seems to me that what we have to look at here is not just the promises made but the practice that was followed which is going to speak louder than promises which might have indicated to people that those promises weren't genuine or worse and fear and that in fact payments were being made steadily constantly and that that is what was the defact promises rather than the the words of the document i think the distinction here though your honor is that the the promise being made about receiving money what people were told you will get a share of revenues but if that was dependent on s the second circuit specifically and found that the district court lacked subject matter jurisdiction over the case and the supreme court at the beginning of its opinion and morrison took time to make a very clear distinction between jurisdictional issues and subject matter and it said that in fact under the supreme court looked at that the jurisdiction statutes in the in the exchange act and said under the exchange act there was jurisdiction here down and the f c c here argues that that's no longer the law and the reason they argue that's no longer the law is due to section nine twenty nine of the dodd frank act and that's action by its very term intent very clear that the statute is supposed to have extraterritorial effect it did improperly by putting it in jurisdictional language which wasn't a problem in mor were sitting around just chatting and saying well you know what we think congress is really trying to do that that may be a question that i think would be worth addressing but here are what we have of the statute that in order to get to that question of nobody i think that's inaccurate but here before you get to that step of asking what's congressional what was the congressional intent in passing dodd frank you have to get past the fact that the language in southfield clearly and specifically said it said extraterritorial jurisdiction is permissible with the conduct in effect passed what it actually did the actual language of dodd frank removed from the jurisdiction of the district court  territory that it had before that is things taking place outside the united states without context and the fact that it appears from justice scalia that they had jurisdiction to hear that with your and god and that may help you to some extent but don't we read ten b in light well i'm repeating myself well and i know that is that if the court already had jurisdiction and the what was the purpose of the statute well the purpose of the statute as i mentioned the conduct or a fact in the united states and deprive the district courts of jurisdiction that they previously have which would be the exact opposite of what congress intended well that maybe you're right but we don't get there from or rather revenue that being paid out to the original investors is coming from we see that in this court case law in fact i believe that the center versus i'm a decision which is a case where no specific guaranteed except the money the new investors come in we invite you to be one of the early investors and if you think you're smart enough to figure out your early investor and not a late investor coming in and you're going to make a lot of money at a later investors later investors ca it would it would be i think it would be again i just wish that it would be a very difficult case to win it would depend on the specific facts and circumstances to determine if there were other misrepresentation drop parties or art is essential to upon that's correct but  money if we make it but then the actions could speak louder than the disclaimers in the document itself because you fact find out that you're getting many of the month that's correct your honor here but here here we have something even different here we have mr scobell representing to the public that that the revenue that was coming in ninety eight percent of the revenue that was coming in here was from the ad pacs or mr scobell was representing on his web page and we talk about this in our brief is that the high demand products where the advertising services these things that are separate and apart from the advert pact that was only two percent of their business i think it generated the sun total about three million dollars and some change where the discretion and so finding is that the revenues overwhelmingly were coming from the exponential stale of more and more of these investments and that was not disclosed to the public that you know that's that's from a firm of the enter aspect that's sure recklessness because the defendant defendant knew that the public thought that the revenues were coming from these other states the sale of other products the what you would think of as a legitimate aspect or the sham aspect of the internet advertising enterprise that irrigation rather than just turning more and more and more securities out so that's a massive distinction from what your honor  of the anti fraud provision in section in the exchange act there there was no language about cross border or extra territorial effect as a result the court found science and the court applied the presumption against extraterritor securities correct and that is flatly inconsistent with what congress expressly said when it added the affirmative indication of extraterritorial sco through the new language that one twenty nine t be inserted into can have the mastermind sitting right here in the united states planning doing all that all the planning all the conduct every single step or every single step up to the transaction he or she gets on a plane flies to a foreign country and they are the party sign the agreement that wouldn't that would potentially est the marketing transactional test because there would be a very very strong argument potentially that the transaction occurred overseas what congress wanted to get away from by providing the commission in the department of justice with more expansive jurisdiction this mark the broader conduct and effects test is not forcing the commission and the department of justice to look at every second fifty schemes involved massive numbers of transactions the scheme alone involved millions of transactions where those  what your honor congress thought it was and i think i think you guys i think you you sort of you indicated congress had an affirmative indication that they wanted the conduct in effect to apply to the commission and i think it is case that the second circuit dealt with that i believe the transactions occurred overseas it was at sea versus berger of the second circuit decision where we had a gentleman in new york who was in gauged in the fr right in new york he was planning every single step of it but he was executing the transactions through his bomber through his the caribbean hedge fund and he was executing it by believe with foreigners that would get that huge that that allows someone to sit right transactions and let me let me give you another example of where it's it's really important to the commission and why i think congress really wanted courts and the commission to to to apply the conduct and effects that we may be there made there are  states or we leave ill gotten gains in the hands of a defendant who is often in the united states who orchestrated the same exact probably just so happens that happen stance of how he or she structure that transaction that massive amounts of ill gotten had instead contracted with a server outside the us somebody in this effort with a separate the web site there and you know the transactions that have skate corporation daily engaging in the fraud so that it's substantial contacts in the united states on the conduct piece of it so moving to the marist and transactional test that's a bit more of an open question and this is one of the difficult questions and why we think this court should go the conduct and effects route but we talk about in our brief uniform electronic transfer act which is then applied by forty seven states and under that statute which is  generally widely held standard for determining where contracts and trans electronic transactions occur those transactions even if the server were in i think your pocket india i mean even if the server were in india because the place of business that was most closely associated with those transaction was in the united states under the principles articulated in that statute the when you're charging that the stronger here to rely was located and where he generated this plan and that's all in utah i puzzled why not go with the server are we do not go i just want to be clear we're not going with the server and we think that the district court had it exactly right the district court looked at the overseas investors if they were in india and they were selling to end this risk over were there in india with them and they were selling to oversee that the ninety percent of investors who are overseas the commission would have great difficulty going after th percent give you the rich or hundred percent or because ninety percent was not in the u s would you have no recourse on your honor to be perfectly frank we haven't explored that question because that's not the situation i think the commission would primarily to be honor to answer a question that i believe you asked your honor in our brief in our opening brief we make the representation which is supported in the record that mr scobell actually resided in the united kingdom during this entire time he had a home body own there his wife was there in the f t c is proof they represent and this is also reflected in the record that he was in utah at least once a month he had a son in utah and an ex wife in utah and he would come to would recommend to the to the court absolute act of this case and the reason i would recommend that is i think it will clear up some of what may what i perceive to be confusion about the difference between the conduct in effect test and the morrison test and the reason it clears that up is that nine twenty nine only deals with cases brought by the commissioner of the department of justice even on its own terms absolute activist with the case between private litigants in the second were in california they were california they were domestic corporations and the question that the second circuit looked at was what what is it when we talk about where a transaction took place so in other words if we're asking that question  title is passed within the united states that would certainly be true as well and i don't believe the commission provided any evidence during the preliminary injunction hearing of where title passed i think all the arguments were on where you that from a labeling point of view they both are looking at the same thing if i step back from the labels used for those two things as i think i just want you to tell me on correctly understanding this that is more correct to look at morrison the legal test of where does this legal enterprise as a matter of law get consummated whereas under frank we're looking at a effect test not not this not a lawyer exam of where the parties legally made a contract but rather where do the effects of the a contract where they felt would that be kind of the difference between those two tests or not is this not right please tell me what is right i think that it is largely right and if i may borrow the analogy that mr shirey that i think  borrowed from me in the transcript before the district court he'll tell me afterward if that's true i'm sure we'll all agree analogy the analogy is that's under the conduct in effect test if i came to you and said invest in ponzi ink it's the greatest thing ever factor in the united states and therefore under the conduct of the facts past that transaction would be covered but under morrison the question is where did the sale take place sort of the transaction take place and under morrison the transaction took place when we then then that transaction took place in mexico so that goes back to i mean that kind of i think affirms what i'm saying the remorse and you say this is a law exam a law school exam where did the parties enter into a legal people in or not i think that's about right the conduct in effect says there are so many courts out there that it gets convoluted but i think you're on to the distinction i think that's a fair summation of the distinction you're making and thank you very much thank you thank you all for your