1 (Slip Opin i o n) OCTOBER T ERM, 20 09
Sy llabu s

N O TE : Wh er e it i s feas ibl e , a s y llab u s (h ead n ot e) wil lbe rel e as ed , as is bein g d o n e incon n ecti onwithth is cas e , a tth e ti meth e op in i o n is is s u ed

. Th e s y ll abu s con s titu tes n o p a r t of th e op in i o nof th eC o u r t bu t h a s be en pre p are dbyt h e Re po rte ro f De ci sio n s fo r t h e co nveni e nce of t h e reade r
. Se e United Statesv. Detroit Timbe r& Lumb er Co., 200U. S

. 3 21, 337

. 

# SUPREME CO URT O F THE UNI TED STATES

Sy llabu s


### MORRI SON ET AL



### . v
. NATIONAL AU STRALIA BA N K LTD. ET AL



### . CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECON D CIRCUIT
No. 08–1 19 1. Ar g u ed M a rc h29, 2010— Dec i ded Ju n e 24, 201 0 In1998, r e spo n den tNation a lAu str a li a Ba n k(Nation a l), a for e ig nban k

whose “ordinary shares” are not traded on any exchange in this coun

tr y , pu rc h a sed r e spon den tH o meSide Len d in g , a c o mpan yh e adqu ar
ter e d in Flor ida thatwas i nthe bu sin e s s of serv ic in g mor t g a g e s— seein gto c o llec t ionof th e mon t h l ypay m en ts, etc

. In2001, N a tion a l had to wr ite down the v a lue of HomeSide’ s as sets, c a usi n gNational’ s share prices to fall. Peti tioner s, Au str a lian s w h o p u r c h a sed Na

tional’s shares before the write- dow n s, su ed r e spon den t s—Nation a l , Hom e S i de, a n d officers of b o t hcom p a n ies—in Federa l Dis t rictCourt forv i olationof §§10(b) an d 20(a) of th e S e c u r i ties an d Ex c h an g eAc t of 1934 an d S EC Ru le 10b

– 5

. Th ey c l aimed th at Ho meSide an d it s offic e r s had manipulate d financ ial mode ls to m a ke the c o mpany ’ s mor t g a g e -servic i ngr i gh ts appearmor ev a luable than theyr e ally
wer e ; an d th at Na tion al an d its c h ie f executive officer were aware of this deception

. Respondents move d to di smis s forlac kof su bjec t

matter jurisdi c tion under F e deral Rule o f Civil Procedure 12(b)(1)
an d forfailu re to state a c l aim u n d erRu le 12(b)(6). Th e Distr i c t Cour t g r antedthe for m er motion, fi nding no j u ris d iction b e ca us e the domest icac ts wer e , at most, a link in a sec u r i ties fr a u d that c o n
cluded ab r oa d. The S e co nd Circuita ffirm ed. Held: 1

. The S e condCircuiterredin cons iderin g §1 0 (b ) ’s ext r a t errit o ria l

r e ac hto r a ise a qu es tionof s u bjec t- mat t er jurisdiction, t hus allowing dismi s s a l u n d erRu le 12(b)( 1 ). Wh at c o n d u c t §10(b) r e ac h e s is a mer
its question, while subjec t-mat t erjur i sdi c tion “r efer s to a tr ibunal’ s powerto h e ara c a se.” Union Pacific R. Co. v. Brotherhood of Loco

m o tive Engine ers an d Train m en Gen

. Com m
. of Adjustm e nt, Cent ral2 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Sy llabu s Region , 558 U

. S. ___, ___ (internal quota t ion marks o m itted). The Distr i c tCou r t h a d ju r i sdic tionu n d er15 U. S. C. §78aato adju dic a t e th e §10(b) qu estion . Howev e r , it is u nnece s s a ry t orem a nd in view of th at er r o rbec a u s e th e sa m ean aly s is jus t ifies d i sm is sa l under Rule 12(b)( 6 ). Pp. 4–5.

2. Section 10(b) does not provide a cause of action to fo reign plain

tiffs suing foreign and American de fenda n t s for m i s c onductin con
nect ion wit hs e curit i es t r a d ed on forei g n e x cha n ges

. Pp. 5

– 2 4

. (a) It is a “lon gstanding princi ple of American law ‘tha t legisla

t i on of Congre s s , unles s acont ra ry intent appear s, is me ant to app l y onlywithin the ter r i tor i al jur i sd iction of the United States.’ ” EEO C

v. Arab ian A m ericanOil Co. , 499 U. S. 2 44, 248 (Aramco). When a statute gives no clear indication of anextr ater r i tor i al applic a t ion , it ha s none. Nonetheles s , th e S e cond Circuit b e lieved the Excha n ge Ac t’ s si len c e abou t§1 0(b)’ s e x tr ater r i tor i alapplic a t ionp e r m itted th e courtt o“ d is cern” whet her C o ngre s s wouldhave wa nted the s t atute to apply. Thisdisregard of th e pr esu m ptionag ain s t ex trater r i tor i al

it y ha s occurr ed over m a ny deca des in ma ny court s of a ppea l s a n d ha s produced acollection of tes t s for divining con g res s iona l inten t th at ar e c o mplexinfor m ulationan d u n p r e dic t able inapplic at ion

. The results demonstrate the wisdomof th e presumption against ex

tr ater r i tor i ali t y
. Ratherth an g u es s a n ew in ea ch ca se, t h is Court applie s the presumption in all case s, pr eserv i n ga stabl e bac kg r o u n d ag ain s t wh ic hCon g r e ss c a nlegi sla t e withpr edic table ef fec t s. Pp. 5– 12. (b) Bec a u s e R u le 10 b–5 wa s pr omu l g a tedu n d er§10(b), it“doe s not extend b e yond cond uc t encompa s s e d b y§1 0 (b ) ’s prohib ition.” United Stat es v. O’ Haga n , 521 U. S. 64 2, 651. Th u s , if §10(b) i s n o t
ex tr ater r i tor i al, n e ith e ris R u le 10b –5. O nits f a c e , §10 (b) c o n t ain s nothingto sug g e st tha ti t ap plies abr oad. Contr a r yto th e ar g u ment of pet i tioners a n d t h e S o licitor Genera l, agenera l refere nce t oforeign commerce in th e definition of “interstate commerce,” see 15 U. S. C. §78c (a)(1 7), does n o t defea tt h e pr esu m ptio nag ain s t ex tr ater r i tor i al

ity, Aramco, supra, at 251. Nordoes a fleetin gr e fer e n c e, in§78b(2)’ s des cript ion of t h e Excha n ge Act ’ s pur p oses, to the dissemination and quotation abro a d of prices of domestic ally traded securities. Nor does Ex c h an g eAc t §30(b), wh ic hsay s th a tthe Ac t does not a pply“to any per s onin sofaras h etr an sac t s a bu sin e s s i nsec u r i ties w i th ou t th e ju

risdiction of the United State s ,” unle ss he d oes so in violation of re gu
lations pr omul g a ted bythe SEC “to pr ev ent .

. . ev asion of [the Ac t].” This would be an odd wayof indic a tingthat the Ac t alway s has ex

tr ater r i tor i al applic a t ion; the Co mmi ssion’ s enabling regulations pre

venting “evasion” seem directed at ac t i on s abr oad th at m i gh t c o n c eal a dome sticv i o l ation

. Th e a r g u men tof petitioners and the Solicitor3 Cite as: 56 1 U

. S. ____ (2010)
Sy llabu s General also f a ils to account for §30( a), which explicitly p r ovides for a specific extrat erritorial appl icatio n. Tha tprovis ion would b eq u ite
su per f lu ou s if th e r e st of th e Ex c h ang eAc talr e adyappli e d to tr an s
actions on fore ign exchanges

— and its li mit a tion of that a pplication t o sec u r i ties of d o mestic is su er s w o u l d be in operative. Th ere being no affir m at iv e in dic a tionin th e Ex c h an g e Ac t th at§10(b) applie s ex tr a
ter r i tor i ally , it does n o t. Pp. 12– 16. (c ) The domesticac tiv i tyinthis c a se—Fl o r i da is wher e HomeSide and its e x ecutives engaged inthe all e ged deceptivecond uct and where some misle a ding p u blic stateme n ts were made—does no t mean petitioners only s eek domest ic appl ication of the Act. It is a
ra re ca s eof prohib it ed ext r at errit o ria la p plica t ion t h atla cks all con
tac twith Unit ed State s ter r i tor y
. In Ar amc o , fo r example, whe r e the pla i ntiff ha d been hired in H o us ton a n d wa s a nAmerica ncitizen, s ee 499 U. S., at 247, th is Cou r t c o n c l u ded th at th e “foc u s ” of c o n gr e s
sional concern in Title VII of the Civ il Righ ts Act of 196 4 was neither that ter r i tor i a lev ent north at r e lations h ip, but dom e sticemploy

men t

. Apply i n gth at an aly s is h e r e : Th e Ex c h an g eAc t’s foc u s is n o t on the place where thedeception originated, but on p u rchases and sale s of securities in the Un ited S t ate s
. S e c t ion10(b) a pplies on lyto tr ansac t ions i nsec u r i ties l i s ted ondomes t icex c h ang e s and dome stic t r a n s a ct ions in ot her s e cu r i t i es
. The primacy of the domestic ex

c h an g eis su g g ested by th e E x c h ang eAc t’ s pr olog u e , see 48 S t a t . 88 1, and bythe fac tthatthe Ac t’ s r e gi st ration requirements apply only to
sec u r i ties liste d on nationalsecurities exchanges, §78 l (a). This focus is al so s t r o n glyc o n f ir med b y§30(a) an d (b ). M o r eov er , th e Cou r t r e
jec t s the notio nthat the Ex c h ang eAct re a c hes condu c t in this coun
t r y a ffect ing e x cha n ges or t r a n s a ct ions ab roa dfor t h e s a m erea s on that Aram co rejected overseas applicatio nof Title VII: The probabil

ity of incompatibi lity with other coun tries’ laws is so ob vious that i f Congres s intended s u ch for e ign a pplica t ion “it would have a ddres s e d th e su bjec t of c o n f lic ts withfor e ig nlaws an d pr oc edur es.” 499 U. S., at 256. Neith e rth e Gov e r n men tn o rpetit i on er s pr ov ide an ytex t u a l support for their proposed alternat ive tes t , whi c h wouldfind a viola

ti o nw h e r e th e f r au di nv o l v es si g n i f ic ant and mater i al c o nduc t in the Un ited St ates. Pp. 17–24. 547 F. 3d 16 7, affir m ed.

S CALI A , J., delivered the opinion of the Cour t, in whic h R OBERTS , C. J., and K ENNEDY , T HOMAS , and ALITO , JJ., joined. B REYER , J., filed
a nopinion co ncu rrin gin p a rta n d concu rringin t h e j u dgm e nt

. S TEVENS , J., filed an opinion concurringin the judgment, in which G IN S

BURG , J., joined. S OTOMAYO R , J., took no part in the consideration or decision of the case._________________

_________________ 1 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt

NOTIC E : Th is op i n ionis subjec t to f o rma lrevi si onbef o r e publicat ioninth e p r eli m in ary p rin t of th e U n it edS t at es R e p o rts

. R e ad ers ar e r e qu es ted to n o tif yth e R e p o r t e rof D e c i s i on s , Su p r em e C o u r t of th e U n ited St at es , Wa s h

ington, D. C. 2054 3, of any typ o gra p hical or other f o rmal err o rs , in or der th atc o rr ect i on sm a y b e mad eb e f o r e th ep r e lim in aryp rin t go es t o p r es s
. 

# SUPREME CO URT O F THE UNI TED STATES

No. 08–1 19 1



### ROB ERT M O RRI SON, ET AL 

### ., PET I TIONERS v. NATIONAL AU STRALIA BA N K LTD. ET AL



### . ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE SECO ND CIRCUIT [Ju n e24, 2010 ] 

### J USTICE 

### S CALIA 

### delivered the opini o n of the Co urt. We decide whether §10(b) of the Securities Exchan g e Act of 1934 provides a cause of action to foreign plaintiffs suing foreign and American defendants for m i sconduct in connection with securities traded on foreign exchanges. I Respondent National Australia Bank Limited (National) was, duringthe relevant time , the largest bank in Australia. Its Ordinary Sh ares—what in America would b e called “common stock”—a re tr aded on t h e Austral i an Stoc k E x ch ange Limited and on other foreign securities exchanges, but not on any exchan ge in the United State s
. There are listed on the New York Stock Exchange, however, National’s Amer ican Depositary Receipts (ADRs) , which rep r esent the righ t to receiv e a specified number of National’s Ordinary Shares. 547 F. 3d 167, 168, and n. 1 (CA2 2008). The complaint alleges the following facts, which we accept as true. In F e bruary 19 98, National bought respondent HomeSide Lending, Inc., a mortga g e servicing2 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### company h e adquartered in Florida. HomeSide’s business was to recei v e fees for servicing mo rtga g es (essentially the administrat i ve tasks associated with collecting mortgag e payments, see J. Rosenberg, Dictionary of Banking and Financial Services 600 (2d ed. 19 85)). The rights to receive those fees, so-called mortga g e-servicingrights, ca n provide a valuable inc o me strea m
. See 2 The New Palgrave Dicti onary of M o ney and Finance 817 (P. Newma n , M. Milgate, & J. Eatwe ll eds. 1992 ). How val uable each of the rights is depends, in part, on the likelihood that the mortgage to which it applies will be fully repaid before it i s due, terminating the need for s e rvicing. HomeSide calculated the present value of its mortgage-servici n g rights by using valuation models design ed to take this likelihood into account. It record ed the value of its assets, and the numbers appeared in National’s fin ancial statements. From 1998 until 2001, National’s annual re ports an d other public documents touted the success of HomeSide’s business, and respondents Frank Cicutto (Nationa l’s managing director and chief executive officer), Kevin Race (H omeSide’s chief ope r ating officer), and Hugh H a rris (H omeSide’s chief executive officer) did the same in public statements. But on July 5, 2001, National ann ounced that it was writing down the value of HomeSide’s assets by $450 million; and then again on September 3, by another $1.75 billi on. The prices of bot hOrdinary Shares and ADRs slum ped. After downplayi n g the July write-down, National explained the September write-down as th e result of a failure to a n ticipate the lowering of prevailin g interest rates (lower interestrates lead to mo re refinancings, i.e. , more early repaymen ts of mort gages), oth e r mistaken a ssumptions in the financial models, and the loss of goodwill. According to the complai n t, however, HomeSide, Race, Harris, and an other Hom e Side senior executive who is also a respondent here had manipulated HomeSide’s financial models to make the rates of early3 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### repayment unrealistically low in order to cause the mort

gage-servici ng righ ts to appear m o re valuable than the y really were. The complaint al so alleges that National and Cicutto were aware of t h is deception by July 2000, but did nothing about it. As relevant here, petitioners Russell Leslie Owen an d Brian and Geraldine Silverlock, all Australians, purchased National’s Ordinary Shares in 20 00 and 2001, before th e write-down s. 1 

### They s u ed National, HomeSide, Cicutto, and the three H o meSide executives in the United State s District Court for the SouthernDistrict of N e w York fo r alleged violations of §§10(b) and 20(a) of the Securities and Exchan ge Act of 1934 , 48 Stat. 891, 15 U. S. C. §§78j(b) and 78t(a), and SEC Rule 10b –5, 17 CFR §240.10b–5 (2009), promulgated pursuant to §10(b). 2 

### They sought torepresent a class of foreign purchasers of National’s Ordinary Share s during a specified period up to the September write-down. 547 F. 3d, at 169.

——————

1 Rober tM o r r i son , anAmer ic anin v e storinNation al’ s ADRs, al so br ough t suit, but his c l ai ms wer edis m isse d byth e Distr i c tCo ur t because he fa iled to allege damages. In re National A u stralia Bank Secu ritie s Liti gation , No. 03 Civ

. 6 5 3 7 ( B SJ), 200 6 W L38 44 465, * 9 (SDNY , Oc t. 25, 200 6). Petition er s did n o t appeal th at dec i sion , 54 7 F. 3d 167, 17 0, n

. 3 (CA2 2008) (c ase be l o w), an d it is n o t befor eu s
. Inex plic ably , M o r r i son c o nt inued to be listed a s a pe titionerin the Court of Appeals and here.

2 Th e r e lev a n ttex tof §10(b) a n d SEC Ru le 1 0b– 5 ar e set fo r t hlaterin th is opin ion

. Sec t ion20(a), 48 St at. 89 9, pr ov ides:

“ E very pers onwho, direct lyor indirect ly, cont rols a n y pers on liable under a n y pro v is ion of [the Excha n ge Act] or of any rule or regulation thereunder shall a l so be li ab le jo int l yand sev e r a llywith and to the
s a m eext e nt a s s u ch cont r o lled pers on to any person to whom such controlled person is l i ab le, unless the controlling person acted in good fa it h a n d did notdirect ly or indirect ly induce t h e a c tor a c t s cons tit u t

ing the violati o n or cause of action.” Liabi lityu n d er§20(a) is ob v i ou slyder iv a tiv eof liabil i t yun dersome other provision of the Exchange Act; §10(b) is the only basi s peti tioners
asser t ed.4 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### Respondents moved to dismiss for lack of subject-matte r jurisdiction under Fed e ral Ruleof Civil Procedure 12(b)(1) and for failure to state a claim un der Rule 12(b)(6). The District Co urt gran ted the moti onon the f o rmer ground, finding no jurisdiction because the acts in this countr y were, “at most, a link in the ch ain of an alleged overall securities fraud sche me that cu lminated abroad.” In re National A u str a lia Ba nk Securi tie sLiti gation , No. 03 Civ. 6537 (BSJ), 2006 WL 3 844465, *8 (SDNY, Oct. 25, 2006). The Court of Appeals for the Second Circuitaffirmed on similar grounds. The acts performed in the United States did not “co mpris[e] th e heart of the alleged fraud.” 5 47 F. 3d, at 175–176. We granted certiorari, 558 U. S. ___ (2009). II Before addressing the question presented, we must correct a th reshold error in th e S e cond Circuit’s analysis. It considered the extrat e rritorial reach of §10(b) to raise a question of subject-matter jurisd iction, wherefore it affirmed the DistrictCo urt’s dismissal under R u le 12(b)(1). See 547 F. 3d, at 177

. Inthis regard it was following Circuit pre c edent, see Schoenbaum v. Firstbrook , 405 F. 2d 200, 208, modified on other grounds en banc, 405 F. 2d 215 (1968). The Second Ci rcuit is hardly alone in taking this position, see, e.g., In re CP Ships Ltd. Secu ri

ties Lit i ga ti on , 578 F. 3d 1306, 1 313 (CA11 2009); Conti

nental Grain (Australia) PTY. Ltd

. v. Pacific Oilseeds, In c. , 592 F. 2d 409, 421 (CA8 1979). But to ask what condu ct §10(b) reaches is to ask wha t conduct §10(b) prohibits, which is amer i ts question. Subject-ma tter ju risdic tion, by con trast, “ r efers to a tribu

nal’s ‘ “po w er to hear a case.” ’ ” Union Pacific R. Co. v. LocomotiveEnginee rs and Train m en Gen. Comm. of Ad

justment, Central Region , 558 U. S. ___, ___ (2009) (slip op., at 12) ( quoting Arbaughv. Y & H Corp. , 546 U. S. 500,5 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### 514 (2006), in turnqu oting Unit ed St at esv. Cotton , 535 U. S. 625, 6 30 (2002)). It presents an issue qu ite separate from the question whether the allegations the plaintiff makes entitle him to relief. See Bell v. H ood , 327 U. S. 678, 682 (1946). The District Court here had jurisdicti on under 15 U. S. C. §7 8aa 3

### to adj u dicate th e question whether §10(b) applies to National’s conduct. In view of this error, which the parties do not dispute, petitioners ask us to remand. We think that unnecessary. Since nothing in the analysis of the courts below turned on the mistake, a remand would only require a new Rule 12(b)(6) label for the same Rule 12(b)(1) conclusion. As we have done before in situations like this, see, e.g., Romero v. Interna t ional Termin alOpera ting Co. , 358 U. S. 354, 359,381–384 (1959), we proceed to address whether petitioners’ allegations state a claim. III A It is a “longstanding principle of American law ‘that legislation of Congress, unless acontrary intent appears, is meant to apply only within the t e rritorial jurisdiction of the United States.’ ” EE O C v. Ara b ian Ameri can Oil Co. , 499 U. S. 2 44, 248 (1991) (Aramco)(quoting Foley Bros., Inc. v. Filardo , 336 U. S. 281, 285 (1949)). This principle represents a canon of construction, or a presu m ption about a statute’s meaning, rather than a limit upon Congress’s power to legislate, see Blackmerv. UnitedStates , 28 4 U. S. 421, 437 (1932). It rests on the per c eption that Congress ordinarily legislates with respect t o domestic,

——————

3 Sec t ion78a a pr ov ides:

“ T he dis t rict court s of t h eUnit edStates .

. . shall have excl usive jurisdiction of violations of [the Ex chang e Ac t] orth erul e s a n d regu la

tions thereunder, and of all suits in equity and ac tion s at law br ou gh t to enfor c eanyliabili tyor dutyc r e ated by[the Ex c h a n g eAc t] orthe rules and regulations thereunder.”6 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### not foreign matters. Smithv. Unit e dSta t es , 507 U. S. 197, 204, n. 5 (1993). Thus, “unless there is the affirmative intention of the C o ngress clearly expres sed” to give a statute ext r aterritoria leffect, “we must pr esume it is primarily concerned with domestic conditions.” Aram co , supra , at 2 48 (internal quotation marks omitted). Th e canon or presumption applies regardless of whether th ere is a risk of conflict between the American s t atute and a foreign law, see Salev. Haitian Centers Council, Inc. , 509 U. S. 155, 173–174 (19 93). When a statute gives no clea r indication of an extrate rritorial application, it has none. Despite this principle of interpretation, long and often recited in our opinions, the Second Circuit b e lieved that, because the Exchange Act is silen tas to the extraterritorial application of §10(b), it was left to the court to “discern” whether Congress would have wanted the statute to apply. See 547 F. 3d, at 170 (in t ernal quotation marks omitted). This disregard of the presumption against e x traterrito riality did not origi nate with the Court of Appeals panel in this cas e
. It has b een repeated over man y decades byvarious co urts of app e als in determining t h e application of the Exch ange Act, a n d §10(b) in particula r, to fraudulent schemes that involve conduct and effects abroad. That has produced a collection of tes t s for divining what Congress would have wanted, complex in for m ulation and unpredictab l e in applic ation. As of 1967, district courts at leas t in the Southern Dis

trict of New York had consistently conclud e d that, by reason of the presu m ption ag ainst extra territoriality, §10(b) did not apply when the stock transacti ons underlying the violation occurred abroad. See Schoenbaum v. Firs tbrook , 268 F. Supp. 385, 392 (1967) (citi n g F err aoliv. Cantor , CCH Fed. Sec. L. Rep. ¶91615 (SDNY 1965) and Kookv. Cra n g, 182 F. Supp. 3 88, 390 (S DNY 1960)). Schoenbau m involved the sale inCanada of the treasury shares of aCanadian corporation whose publicly traded7 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### shares (but not, of course, its treasury shares) were listed on both the American Stock Exchange and the Toronto Stock Exch ange. Invoking the presumption against extraterritoriality, the court held that §10(b) was inapplicable (though it i n correctlyv i ewed the d e fect as jur i sdictional)

. 268 F. Supp., at 391 –392, 393–394. The decision in Schoenbau m was reve rsed, however, by aS e cond Circ uit opinion which held th at “neither the usual presumption against ext r aterritoria lapplic ation of legisla t ion nor the specific language of [§]30(b) show Congressional intent to preclude application of the Exchange Act to transaction s regarding s t ocks tra ded in the United State s which are effected outside the United States .

. . .” Schoenbaum , 405 F. 2d, at 20 6. It suffice d to apply § 10(b) that, although th e transaction s in treasury shares took place in Canada, they affected the value of the common shares publicly traded i n the United States. See id., at 208–209. Application of §10(b), the Second Circuit found, was “necess a ry to prote c t American investors,” id., at 206. The SecondCircuittoo kanotherstep with L e asco Da ta Proces sing Equip. Cor p
. v. Maxwell , 468 F. 2d 1326 (1972), which invo lved an American company tha thad been fraudulently induced to buy securities in England. There, unlike in Schoenbaum , some of the deceptive conduct ha d occurred in the United States but the corporation whose securities were trade d (abroad) was not listed on any domestic exchange. Leasco said that the presumpti o n against extraterritoria lity apples only to matters over which the United States would not have prescriptive jurisdiction, 468 F. 2d, at 1334. Congress had prescripti v e jurisdiction to regulate the deceptive conduct in this country, the language of the Act could be read to cover that conduct, and the court concluded that “if Congress had thought ab out the point,” it would have wan t ed §10(b) t o apply. Id., at 1334–1337. With Schoenbaum and Leasco on the book s, t h e Second8 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### Circuit hadexcised the presumption againstextraterrit o
riality from the jurisprudence of §10(b) and replaced it with the inquiry whe t her it wo uld be reasonable (a nd hence what Congress would have wanted) to apply th e statute to a given situation. As long as th ere was prescriptive ju risdiction to regu late, the Second Circuit explained, wh ether to apply § 10(b) even to “predominantly foreign” tra nsactions became a matter of whether a court thought Co ngress “wis hed the pre c ious resources of United States courts and law enforcemen tagencies to be devoted to them ra ther than l e ave the problem to foreign countries.” Bers ch v. DrexelFires tone, Inc. , 519 F. 2d 974, 98 5 (1975); see also IIT v. Vencap, Ltd. , 519 F. 2d 1001, 1017– 1018 (CA2 1975). The Second Circuit ha d thus established tha tapplication of §10(b) could be premised upon either some effect on American securities m a rk ets or investors (Schoenbaum)or significant conduct in the United States (Leasco). I tl a t e r formalized these two applications into (1) an “effects test,” “whether th e wrongful conduct ha d a substan t ial effect i n the United States or upon United States citizens,” and (2 ) a “conduc t test,” “ w het h er the wr ongful cond uct oc curre d in the Unit ed States.” SEC v. Ber ger , 322 F. 3d 187, 192 – 193 (CA2 2003). Thes e became t h e north st ar of the Second Circuit ’s §10(b) ju risprudence , pointing the wayto what Congress would have wish ed. Ind eed , the Secon d Circuit dec lined to keep its two tests distinct on th e ground tha t“an admi xture or comb ination of the two ofte n gives a bett er picture o f whether t h ere is sufficient Unite d States involvement to justify the exercise of jurisdiction by an American court.” Itoba Ltd. v. Lep Gro u p PLC, 54 F. 3d 118, 122 (1995). The Second Circuit never put forward a te xt ual or even extratex t u a l basis forthese tests. As early as Bers ch , it confessed that “if we were askedto point to language in th e statutes , or even in the legislativ e history, th at compelled these conclusions, we would be9 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### unable to respond,” 519 F. 2d, at 993. As they dev e loped, these tests were not easy to administer. The c o nduct testwas held to apply di fferently depending on whether the harmed investors were Americans or foreigners: When the alleged damages consisted of losses to A m erican investors abroad, it was enough th at acts “of material importance” performed in the United States “significantly contribut ed” to thatre sult; where a s those acts must have “directly c aused” the result wh en losses to for e igners abroad were at issue. SeeBers ch , 5 19 F. 2d, at 993. And “merely preparatory activities in t h e United S t at es” did not suffice “to t r igger a p plication of th e securities laws for inj u ry to foreigners located abroad.” Id., at 992. This required the court to distinguish between mere preparation and using the United State s as a “base” for fraudulent activities in other countries. Vencap , sup ra , at 1017–1018. But merely satisfyi ng the conduct test wa s sometimes insufficientwithout “ ‘some addit i onal facto r tipping the scales’ ” in favor of the application of American law. Inte rb rew v. Edpe rbras c an Co rp. , 23 F. Supp. 2d 42 5, 432 (SDNY 1998) (quoting Europe& Overs ea s Commodity Trad ers, S. A. v. Banque Paribas London , 14 7 F. 3d 118 , 129 (CA2 1998)). District courts have noted the difficulty of applying such vague formula t ions. See, e.g., In re Alstom SA , 406 F. Su pp. 2d 346, 366–385 (SDNY 200 5). There is no more damning indictment of the “conduct” an d “effects” tests than the Second Circuit’s owndeclaratio n that “the p r esence or absence of any single factor whi c h was considered significant in other cases .

. . is not necessarily dispositive in future cases.” IIT v. Co rnfeld , 6 19 F. 2d 909, 918 (1980) (internal quotation marks omitted). Other Circ uits embrac ed the Seco nd Circuit ’s approach, though not its precise application. Like th e Second Circuit, theyd e scribed th eir decisions regardin gthe ext r ate r
ritorial application of §10(b) as essentially resolving matters of polic y. See, e.g., SEC v. Ka sser , 548 F. 2d 109, 11610 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### (CA3 1977); Continental Grain , 592 F. 2d, at 421–422; Grunen t hal GmbH v. Ho tz , 712 F. 2d 421, 424–425 (CA9 1983); Kauthar SDN BHDv. Ste r n b erg , 149 F. 3d 659, 667 (CA7 1998). While applying the same fundamental methodology of balancing interests and arri ving at what seemed thebest policy, they pro d uced a proliferation of vaguely related va riat ions onthe “conduc t” and “effects ” tests. As described in a le ading Seventh Circuit opinion: “Although t h e circuits .

. . s eem t o agree that there are some trans national situations to which th e antifraud provisions o f the securities laws are applicable , agreement appears to end at tha t point.” 4 

### Id., at 665. See also id., at 665–667 (describing the approaches of the various Circuits and adopting yet anoth er variation). At least one Court of Appeals has criticized this line of cases and t h e interpretive assumption that underlies it. In Zoelschv. Arthur Andersen & Co. , 824F. 2d 27, 32 (1987) (Bork, J.), the District of Columbia Circuit observed that rather than courts’ “div ining what ‘Congress would have wished’ if it had addressed the problem[, a] more natural inquiry might be what jurisdiction Congress in

——————

4 The prin cipa l conc urre nce (s ee post, p. 1 (S TEVENS , J., c o ncu rrin gin j u dgment) (h ereina fter co n c ur rence)) dis p utes this ch a r a c teriza tion, launching into a Homeric simile whic h takes as it s poi n t of departure (and mis t ake s forpr aise r a therthan c o ndemnatio n) then-Justi c e Rehnq uis t ’s s t a t ement in Bl ue Chip Stam ps v. Mano r D r ug Stores , 421 U. S. 723, 737 (197 5) th a t“[ w]h e nwe deal withpr iv ate ac tion s u n d er Ru le 10 b– 5, we deal wi th a ju dic i a lo a kwh ic hh a s g r ownfr om litt l e mor eth ana l e gi slat iv e ac or n
. ” Post , at 3. The concurrence seemingly believ e s tha tthe Cour ts of Appeal s hav ec a r e fully tr immed an d sculpted thi s “ j udicial o a k” i n to a cohes ive ca nopy, unde rthe wa tchful eye of Judge Henry Friendl y , the “mas t erarbor i st,” ibi d

. See post, at 2–3. Ev enif on e th in ks t h at th e “c on d u c t” an d “effe c t s” te st s ar e numb e red a m ong J u dgeFri e ndly’s ma ny fine contrib u ti ons to the la w, h i s su c c e ssor s , th ou ghper h a p s u n d er the i m pression that they nurture the same mig h tyoak, ar e in r e alit y tending each its own botanically distinct tree. It is te lling that th e concurrence ne ver attempts i t s own sy n t h e sis of th e v a r i ou s bala n c i n gtests th e Cir c u its h av e adopted.11 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### fact though t about and conferre d

. ” Althoughtempted to apply the p r esumption against ex traterrito riality and b e done with it, see id., a t31–32, th at court deferred to th e Second Circ uit because of its “preeminence in the field of securities law,” id., at 32. See also Robinsonv. TCI/US Wes tCom m unication s Inc. , 117 F. 3d 900, 906–907 (CA5 1997) (expressing agreement with Zoelsch ’s criticism of the emphasis onpoli cy considerations in s o me of the cases). Commentators have criticized the unpredictable and inconsisten tapplicatio n of §10(b) to transna tional cases. See, e.g., Choi & Silberman, Tran snational L i tigation and Global Securities Class- Action Lawsuits, 2009 Wis. L. Rev. 465, 467–4 68; Chang, Multination a l Enforcement of U. S. Securities Laws: The Need for the Clear and Restrained Scope of Extrate rritor i al Subject-Matter Jur isdiction, 9 Fordham J. Corp. & Fi n. L. 89, 10 6–108, 115 –116 (2004); Langevoort, Schoenbau m Revisited: Limiting the Scope of Antifraud Protection in an Internationalized Securiti es Marketplace, 55 Law & Contemp. Probs. 241, 244–24 8 (1992). So me have ch allenged the premise underlying the Courts of Appeals’ approach, namely that Congress did not consider the extraterri torial ap plication of §1 0(b) (thereby leaving it open to the courts, supposedly, to determine what Congress would h a ve wanted). See, e.g., Sachs, The International Reach of Rule 10b– 5: The Myth of Congressional Silen c e, 28 Colu m. J. Transnat’l L. 677 (1990) (arguing tha t Congress co nsidered, but rejected, applying th e Exchan ge Act to tra nsactions abroad). Others, mo re fundamentally, have noted that using con gressional silence as a justification for judge-made rules violates th e traditional principle th at sile nce means no extrate rritor i al application. See, e.g., Note, Let There Be Fraud (Abroad): A Proposal for A Ne w U. S. Juris prudence with Regard to the Extrate rritorial Ap plication of the Anti-Fraud Provisions of the 1933 and 1934 Securities Acts, 28 Law & Pol’y12 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### Int’l Bus. 477, 492–493 (1997). The criticisms seem to us justified. The results of judicial-speculation-made-law—divini ng wha tCo ngress would have wante dif it ha d thought of the situation before the court—dem o nstrate t h e wisdom of the presumpt ion against extraterritoria lity. Ra th er than gu ess anew ineach case, we apply the presumption in all cases, preserving a stable backgroun d against which Congress can legislate with pr edictable effects. 5 

### B Rule 10b–5, the regulation under which petitioners have brought suit, 6

### was promulgated under §10(b), and “does

——————

5 The con c ur re nce ur ges us to ca s t aside our inhibitions and join in th e ju dic i al la wmakin g , becau s e “[t]h i s en tire area of law is replete with judge-made rules,” post , at 3. It is dou b tles s tr u eth at, bec a u s e th e implied pr iv at e c a u s e of ac tionu n d er§10(b) an d Ru le 10b– 5 is a th in g of our o w n cre a t ion, we hav e a l s o defined its contours

. S ee, e. g. , Blue Chip Stamps , supra
. But when it comes to “the scope of [the] conduct pr oh ibited by [Ru l e 10 b–5 a n d] §10(b) , th e text of the statute control s our decision.” Central Bank of Den v er, N. A. v. Firs t Int ersta t e Bankof Denv er, N. A. , 51 1 U. S. 1 6 4 , 173 (19 94). It is on lywithr e spec t to th e addit i on al “el e men t s of th e 10b– 5 pr iv at e liabil i tysc h e me” th at we “h av e h a d ‘ t o in ferh o w th e 1934 Con g r e ss wou l d h av eaddr essed th e issu e[s] h a d t h e 10b–5 ac tio nbeeninc l u d ed as anex press pr ov isionin th e 19 34 Ac t.’ ” Ib i d

. (q uoting Mu sick, Pe eler & Gar ret tv. Em ployers Ins. of Wausau , 508 U. S. 286, 294 (19 33)). 6 Ru le 10b –5 m a kes it u n l awfu l:

“f

or a n y pe rs on, dire ct ly o rindire ctly, by the use of any means or instrumentalit y of interstate commerce, or of the mai l s orof any facility of any national securities exchange, “(a) To employ any devi ce, s c heme, or artifi ce to defraud, “(b) To make any untrue st atement of a mater i a l fac tor to omit to
s t at e a m a t e ria lfa ctnecess a r y inorder to make the statements made, in the light of the c i r c umstanc e s underwhich theywer emade, not mislead i ng , or

“(c ) To en g a ge inan yac t, pr ac tic e , or c o u r se of bu sin e ss wh ic h operates or would operate as a fr aud or de ceit upon any p e rson, in connection with the p u rchase ors a l eo f a n ys e c u r i t y
. ” 1 7 C F R §240.1 0 b –5 (2 009).Cite as: 56 1 U

. S. ____ (2010) 13
Opinion of theCourt

### not extend beyond conduct encompassed by §10(b)’s prohibition.” United S t a t es v. O’ Haga n , 521 U. S. 642, 651 (1997). Therefore, if §10(b) is not extraterritorial, neith e r is Rule 10b –5. On its face, §10(b) cont ains nothin g to suggest it applies abroad: “It shall be unlawful for any pers on, directlyor indirectly, by the use of a n y means or instrumentality of interstate commerce or of the mail s, or of any facility of any natio nal securities exchange .

. . [t]o use or employ, in co nnection with the purchase or sal e of any security registered on a national securities exchange or any security not so registered, .

. . any manipulative or deceptive device or contriva nce in contravention of such rules and regulations as the [Secur ities and Exchan ge] Commission may prescribe .

. . .” 15 U. S. C. 78j(b). Petitioners and the S o licitor General contend, howeve r, that th ree t h ings indicate that§1 0(b) or the Exchan ge Act in general h a s at least s o me extraterritorial application. First, theypoint to the definition of “interstate commerce,” a term used in §10(b), which includes “trad e , commerce, transportat i on, or communication .

. . between any foreign country and any State.” 15 U. S. C. §78c(a)(17). But “we h a ve repe atedly held that even statutes that contain broa d language in their definitions of ‘commerce’ that exp r essly refer to ‘forei gnco mmerce’ do not apply a b road.” Ara m c o , 499 U. S., at 251; see id., at 251–252 (discussing cases). Th e general reference to foreign commerce in the definition of “interstate co mmerce” does not defeat the presumption against extrater r i

­

——————

The S e cond Circuitcons idered pet i tione r s’ appeal to raise only a
c l aim u n d er Ru le 10b– 5(b) , sin c e it found th eirc l aims u n d er su bsec

tion s (a) an d (c ) to be for f eit e d. 547 F. 3d, at 17 6, n

. 7. We do likewise.14 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### toriality. 7 

### Petitioners and the Solicitor General next point out that Congress, in describing the purposes of the Exchange Act, observed that the “pric e s established and offered in such transaction s are gen e rally diss eminated and quoted throughout the United States and foreign countries.” 15 U. S. C. §78b(2). The antecedent of “such transactions,” however, is found in the first sentence of the section, which decl ares that “ transaction s in securities as commonly conducted upon securities exchanges and over-thecounter ma rkets a r e affected with a national public interest.” §78b. Nothing suggests that this nationalpublic interest pertains to t r ansactions conducted upon foreig n exchanges and marke t s. The fleeting reference to th edissemination and quotation abroad of the prices of securities traded in domest ic exchanges and ma rkets cann ot overcome the presumption against extraterri t o riality. Finally, there is §30(b) of the Exchange Act, 15 U. S. C. §78dd(b), which does mention the Act’s ex traterrito rial application: “The provi s ions of [th e Exchange Act] or o f any rule or regulation thereunder shall not apply to an y person insofar as he transacts a business in securities without the jurisdiction of the United State s ,” unless he does so inviolation of regulations promul gated by the Securities and Excha n ge Commission “to prevent .

. . evasion of [t he Act].” (The parties have poin ted us to no regulation promulgated pursuant to §30(b).) The Solicito r General argues that “[this] exemption would have no

——————

7 This conclusion does not render me aningless the inclusion of “trade,
c o mmer c e , tr anspor tation, o rc o mmunic a tion .

. . between anyfor e ign
c o u n t ryan d an yState” int h e defin i tion of “interstate commerce.” 15 U. S. C. §78c (a)(17). Forex ampl e, an issuer ba sed abroad, whose executives approve the pu b lication in the United Sta t e s of misle a din g information af fecting the pri c e of the issuer’s securities traded on the New York Stock Exchang e , probably will make use of some instrumentali tyof “c ommunic a tion . . . between [a] for e ig n c o untr y and [a] State. ”15 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### function if the Act didnot apply in the first instance to securities transactions thatoccu r abroad.” B r ief fo r United States as Amicus Curiae14. We are not convinced. In the first place, it wo uld be odd for Congres s to indicate the extrat e rritorial application of the whole Exchan ge Act by means of a provision impos i n g a condition precedent to its applic ation abroa d. And if the whole Act applied abroad, why would the Commissio n ’s enabling regulations be limited tothose preventing “evasion” of the Act, rathe rthan all those preventing “violation”? Th e provision seems to us directe d at ac tions abroad that might conceal a domestic violation, or might cause what would oth e rwise be a domestic violation to escape on a technicality. At most, the Solicit or General’s proposed in ference is p o ssibl e; but possible interpretations of statutory language do not override the presumption against extr aterritoriality. See Aramco , supra , at 253. The Solicitor General also fails to account for §30(a), which reads in relevant part as follows: “It shall b e unlawful for any broker or dealer

. . . to mak e use o f the mails or of any m e ans or i n strumentality of interstate commerce for the purpose of effecting on an exchange no t within or subject to the jurisdiction of the United States, any transaction in any security the issuer of which is a resident of, or is organized un der the la ws of, or has its principa l place of business in, a place wi thin or subject to the j u risdiction of the United States, in contravention of such rules and regulations as the Commission may prescribe . . . .” 15 U. S. C. §78dd(a). Subsection 30(a) contains what §10(b) lacks: a clear statement of extraterritorial e ffect. Its expli c it provision for a specif ic extraterritorial appl ication would be quite superfluous if the rest of the Ex cha n ge Actalr e ady applied to transactions on foreign exchan ges—and its limitation of16 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### that application to securities of domestic iss u ers would be inoperative. Even if that were not true, when a statute provides for some ext r aterritoria lapplication, the presumption against extr aterritoriality operates to limit that provision to its terms. See Microsoft Cor p
. v. AT&T Corp. , 550 U. S. 4 37, 455–456 (2007). No one claims that §3 0(a) applies her e
. The concurrence claims we have impermissibly narrowed the inquiry in evaluating whether a statute applies abroad, citing for thatpoint the dissent in Aramco , see post , at 6. But we do not say, as the concurrence seems to think, tha t the presum ption against extra terr itoriality is a “clear state m ent rule,” ibid., if by that is meant a requirement that a statute say “this law applies abroad. ” Assuredly context can be consul ted as well. But whatever sources of statutory meaning one consults to give “the most faithful reading” of the text, post , at 7, there is n o clear indication of extraterrito riality here. The concurrence does not even try to refu te that conclusion, but merely put s forward t h e same (at best) unc ertain indications reliedupon by petitioners and the Solicitor General. As the opinion for theCourtin Aramco (which we prefer to the dissent) shows, those uncer tain indications do n o t suffice. 8 

### In short, there is no affirmative indication in the Ex

change Act that §10(b ) applies extraterrito rially, and we therefore conclude that it does not.

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8 The con c ur re nce notes tha t , pos t

-Aram co , Congress provided explicitly for extraterritorial appl ication of Titl e VII, the statute at i ssue i n Aram co
. Po st , at 6, n

. 6. All th is sh ows is th at Con g r e ss kn ows h o w to giv ea statu t e ex plic it ex tr ater r i tor i al e ffec t—an dh o w to limi tth at effect to particular applicat ions, which is what the cit e d amendment did. See Civ il Righ ts Ac t of 1991, §10 9 , 105 Stat. 1 077.17 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### IV A Petitioners argue that the conclusion that §10(b) does not apply extrater r itorially does not resolve this case. They contend that the yseek no more than domestic application anyway, since Florida is where H o meSide and its senior exec utives engaged in the deceptive conduct o f manipulating HomeSi de’s financial models; their complaint also alleged that Race and Hughes ma de misleading public statements there. This is less ana n swer to the presumption against extrate rritorial application than it is an assertion—a quite valid assertion—that that presum ption here (a s often) is n o t self-evidently dispositive, but its application requires further analysis. For it is a rare case of prohibited extraterritor ial application that lacks al l contact wit hthe territ o ry of the United Sta t es. But t h e presumption against extrate rritorial application would be a craven watch dog indeed if itretreated to its kennel whenever somedomestic activity is involved in the case. The concurrence seem s to imagin e just such a timid sen t inel, see pos t , at 7–8, but our cases are to the contrary. In Aramco , for example, the Title VII plaintiff had been hired in Houston, and was a nAmerican citizen. S ee 499U. S. , at 247. The Court concluded, however, that neither tha t territorial event nor th at relationship was th e “focus” of congressional concern, id. , at 25 5, but rath er domestic employmen t

. See also Foley Bros. , 336 U. S., at 283, 285– 286. Applying th e same mod e of analysis here, we think tha t the focus of the Exchange Act is not upon the place where the deception originated, but upon purchases and sales of securities i nthe Unit ed States. Section 10 (b) does n o t punish deceptive conduct, but only deceptiv e conduct “in connection with the pu rchase or sale of any security regi stered on a national sec u rities exchange or any security no t so registered.” 15 U. S. C. §78j(b). See SEC v. Zandford ,18 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### 535 U. S. 813, 820 (2002). Those purchase-and-sale transactions are the objects of the st atute’s soli citude. It is those transactions thatthe statute seeks to “r egulate,” see Superin t en dent of Ins. of N. Y. v. BankersLif e& Casual ty Co. , 404 U. S. 6, 12 (1971); it is parties or prospective parties to those transactions that the statute seeks to “protec[t], ” id. , at 1 0

. See a l so Ernst & Ern s tv. Hochfeld er , 425 U. S. 185, 195 (1976). And it is in our view only transaction s in securities listed on domestic exchanges, and domestic transacti ons in other securities, to which §10(b) applies

. 9 

### The primacy of the do mestic exchange is suggested by the very prologue of the Exchange Act, which sets forth a s its object “ [ t]o provid e for the regulation of securities exchanges

. . . operating in interstate and foreign commerce and through th e mails, to prevent inequitable and unfair practices on suchexchanges .

. . .” 48 Stat. 881. W e k n ow of no one who thought that the Act was intended to “regulat[e]” foreignse curities exchanges—or indeed who even beli eved that under establish e d principles of interna

tional law Congress had the po wer to do so. The Ac t’s registration requirements apply o n ly to securities listed on national sec u rities exchanges. 15 U. S. C. §78 l (a).

——————

9 The concurre nce seems to think this test has litt l e to do with our conclusion in Part III, supra , th at § 10(b) does n o t appl yex tr ater r i torially. See post , at 11 –12. Th at is n o t so. If §10(b) did a p plyabr oad, we would not need to deter m ine whic h tr an snational fraud s it app lied to; i t would apply to all of the m(barri ng s o me other limita t ion). Thus , although it is true, as we have said , tha to u rthr e shold conc lusion that §1 0 (b ) ha s no ext r a t errit o ria leffectdoes notres o lve t h is cas e , it is a neces s a ry firs ts t ep in t h e a n a l ys is

.

The con c ur ren c e a l s om a kes t h e curi ous cri t icism that ou r evaluation of whe r e a put a tive violationoccurs is based onth e tex tof §10(b) r a th er than the doc t r i ne in the Cour ts of Appeal s. Post , at 1– 2. Alth ou ghi t concedes that our test is textually plaus ibl e, post, a t1 , i td o e s n o t( a n d
c a nnot) make the same c l aim forthe Cour t-of-Appeals doc t r i ne it endorses. Tha tis enough to make ourtest the betterone.19 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### With regard to securities not re gistered on domestic exchanges, the exclusive focus on domesticpurchases and sales 10

### is strongly confirmed by §30 ( a) and (b), discussed earlier. Th e former extends the normal scope of the Exchange Act’s prohibitions to acts e ffecting, in violation of rules prescribed by th e Commission, a “tran s action” in a United Sta t es security “on an exchange not within or subject to t h e jurisdict i on of th e United State s .” §78dd(a). And the lat t er specifies that the Ac t does not apply to “an y person insofar as he transacts a business in securities without the jurisdiction of the United State s ,” unless he does so inviolation of regulations promul gated by the Commission “to pre v ent evasion [of the Act] .” §78dd(b )

. Under both provisions it is the foreign location of the tran sac t ionthat establishes (or reflects the presumption of) the Act’s inapplicability, absent regulati ons by the Commission. The same focus on domestic transactions is evident in the Securities Act of 1933, 48 Stat. 74, en acted by the same Congress as the Exchange Act, andforming par t of the same c o mprehensive regulation of securities trading. See Central Bank of Denver, N. A. v. Firs t Int e rs t at e B a nk of Denver, N. A. , 511 U. S. 164, 170–171 (1994). Tha t legislation makes it u n lawful to sell a security, through a prospectus or otherwise, mak i ng use of “an ymeans or instruments of transp o rtation or communication in inter­

——————

10 That i s in ou r view the meanin g whichthe pres umption a g a i nst ext r a t errit o ria la pplicat ion req u ires for the words “purchase or sale, o f

. . . anys e curitynot s ore gis t ered” in §10(b)’s phras e“in c o nnection with the purchase or sale of a n y s e curit yre gis t ered onana t i ona ls e curit i es exchange or any sec urity no t so regi s te red” (emphasis added). Even without the p r esumption ag ainst extrat erritorial applic ation, the onl y alter n ativ e to th at r e adin gmakes n o n s ense of the phra se, causing it to
cover a ll purc ha s e s a n d s a les of regis t ered s e curit i es , a n d a l l purcha s es an d sa les of n o n r egister e d sec u r i ti es—a thought whi c h, if intended, would surely have been expressed by t h e s i m p ler phra se “ a ll purcha s es an d sales of se c u r i ties. ”20 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt


### state com m erce or of the mails,” unless a registrati on statement is in effect. 15 U. S. C. §77e(a)(1). The Commission has interpreted that re quirement “not to include

. . . sales that occur outside the United States.” 17 CFR §230.901 (2 009). Finally, we reject the notion th at the Exchange Act reaches conduct in this country affecting exchanges or transaction s abroad for the same reason that Aramco rejected overseas application of Title VII to all domestically concluded employment contracts or all employment contracts with Ame r ican employers: The probability of incompatibility with the applicable laws of oth e r countries is so obviou s that if Congress intended such foreign appli

cation “it would have addressed the subject of conflict s with foreign laws and procedures.” 499 U. S., at 256. Li ke the United States, foreign co untries regulate their domestic securities exchanges and secur i ties transa ctions occurring withintheir territorial jurisdiction. And the regulation of other countries often differs from ours as to what constitutes fraud, wha tdisclosures must be made, what damages are recoverable, what di scovery is available in litigation, what individual actions may be joined ina single suit, what attorn ey’s fees are recoverable, and man y other matters. See, e.g., Brief for United Kingdom of Great Brita i n and Northern Ireland as Amicu sCu riae16 – 21. The Commonwealth of Austral i a, the United Kingdom of Great Bri t ain and No rthern Irela n d, and the Republic of France have filed amicusb r i e f s i nt h i s c a s e
. S o h a v e (separately or jointly) such int e rnational and foreign organizations as the Internat ional Chamber of Commerce, the Swiss Bankers Association, the Federation of German Industries, the French Business Confederatio n, the Institute of International Bank ers, the European Bankin g Federation, the Austra lian Bankers’ Association, and the Association Française des Entreprises Privées. They a ll complain of the interference with f o reign securities regula­21 Cite as: 56 1 U

. S. ____ (2010)
Opinion of theCourt 

### tion that a pplication of §10(b) abroad would produce, an d urge the adoption of a clear test that will avoid that consequence. Th e transactio nal test we have adopted—whether the purchase or sale is made inthe United States, or involves a security listed ona domestic exchange—meets that requirement. B The Solicitor General suggests a different test, which petitioners also endorse: “[A] transnational securities fraud violates [§]10(b) when the fraud involves significant conduct in t h e United States that is material to the fraud’s success.” B r ief for Uni t ed S t ates a s Amicus Curiae16; see Brief for Petitioners 26. Neither the Solicitor General no r petitioners provide anytextual support for th is test. The Solicitor General sets forth a number of purposes such a test would serve: achieving a high standard of busines s ethics in the securities industry, ensuring honest securi

ties mark ets and thereby promoting investor confidence, and preventing the United St ate s from becoming a “Ba r
bary Coast” for malefac t ors pe rpetrating frauds in foreign mark ets. Brief for United States as Amicus Curiae16–17

. But it provides no textual support for the last of these purposes, or for the first two as applied to the foreign securities industry an d securities markets abroad. It is our function to give the statute the effect its language suggests, however modest that ma y be; not to extend it to admirable purposes it might be used to achieve. If, moreover, one is t o be attrac t ed bythe desirable consequenc es of the “significant and materi al conduct” test, one should also be repulse dby its adverse consequences. While there is no reason to believe that the United States has bec o me the B a rbary Coast for thos e perpetratin gfrauds on foreign s e curities markets, so me fear that it has become the Shangri-La of class-action litigation for lawye r s representing those allegedly cheated22 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### in foreign securities markets. See Brief for Infineon Technologies AG as Amicu sCuriae1–2, 22–25; Brief for European Aeronautic Defence & Spa c e Co. N. V. et al. as Amici Curiae2–4; Brief for Securities Industry an d Financial Markets As sociation et al. as Amici Curiae10 –16; Coffee, Securities Policeman to the World? The Co st of Global Class Actio n s, N. Y. L. J. 5 (2008); S. Grant & D. Zilka,The Current Role of Foreign Investors in Federal Securities Class Actions, PLI Corporate Law and Pr actice Han d

book Series, PLI Orde r No. 1107 2, pp. 15–1 6 (Sept.-Oct. 2007); Buxbaum, Mu ltinational Class Actions Under Federal Securities Law: Managing Jurisdictional Conflict, 46 Colum. J

. Transnat’lL. 14, 38–41 (2007). As case support for t h e “significant and material conduct” test, the Solic itor General relies primarily on Pasquan t in o v. Uni t edSta t es , 54 4 U. S. 349 (2005). 11 

### I n

——————

11 Discussed in Brief for Unit ed State s as Am i c u s C u r i a e 22– 23. Th e Solicitor General also cites, withou t desc r i ption, a numberof antitr ust
c a ses to suppor tthe pr opo s ition thatdo mesticc o nduc t with c o nsequ en c e s abr oad c a nbe c o v e r e d ev enby a statu t e th at does n o t appl y ext r a t errit o ria lly: Continen t a l Ore Co. v. Union Carb ide & Carb on Corp. , 370 U. S. 69 0 (1 96 2) ; United Stat esv. Sisal Sa les Corp. , 2 74 U. S. 268 (192 7); Thomsenv. Cayser , 243 U. S. 66 (1917 ); United Sta t es v. Pacific & Arcti cR. & Na v. Co. , 228 U. S. 87 (19 13). Th ese ar e n o longer of rele vance to the poin t (if they ever we re), since Continental Oreove r ruled the holding of America n Banana Co. v. United Fruit Co. , 213 U. S. 347, 357 ( 190 9), th at th e an ti tr u s t laws do n o t applyex tr ater

rit o ria lly. S ee W. S

. Kirkp a trick & Co. v. Envi ronm e n tal T ecto n ics Corp. Int’l, 493 U. S. 40 0 , 407 –4 08 ( 1 990). M o r eov er , th e pr eContinental Orecases all in volved conspiracies to res t ra in trade in the United State s , see Sisal Sal e s , su pr a , at 274– 27 6; Thom sen , sup r a , at 88; Pacific & Arcti c , sup r a , at 10 5– 106. An d alth ou gha fin a l c a se c i ted by the Solici t or General, S t eelev. Bulova Watch Co. , 344 U. S. 28 0 , 287 –2 88 ( 1 9 5 2 ) , migh t be r e ad to per m i ta pplic ationof an o n e x t r a ter r i

torial statute whene v er conduct in the U n ited States c o ntributes to a viola t ion ab roa d , we have since rea d it a s inter p r e tingthe st atute a t issue—the L a nham Ac t—to hav eex trater r i tor i al ef fec t , EEOC v. Arabian American Oil Co., 499 U. S. 2 44, 25 2 (1 99 1) (qu o tin g1 5 U. S. C. §1127 ).23 Cite as: 56 1 U

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Opinion of theCourt 

### that case we concluded that th e wire-fraud statute, 18 U. S. C. §1343 (2009 ed., Supp. II), was violated by defendants who ordered liquor over the phone fro m a store i n Maryland with the intent to smu ggle it into Canada an d deprive the Canadian Government of revenu e. 544 U. S., at 353, 371. Section 13 43 prohibits “any scheme or artifice to defraud, ” —fraud si mpliciter , without an y requirem e nt that it be “in connection with” any particulartransaction or event. T h e Pasquantino Court said that the petitioners’ “offense was complete the moment they executed the scheme insi de the United Stat es,” and that it was “[t]his domestic element of petitioners’ conduct [th a t] the Government is punishing.” 544 U. S., at 371. S e ction 10(b) , by contrast, punishes not all acts of decepti o n, but only such acts “i n connection withthe purchase orsale of any security re gistered on a nat ional securities exchange or any securit ynot so re gistered .” Not decepti o n alone, but deception with respect to ce rtai npurchases or sales is necessary for a violation of the statute. The Solicitor General points out that the “significant and material conduct” test is inaccord with prevailing notions of international comity

. If so, that proves that if the United States asserted prescri ptive jurisd iction pursuant to the “significant and mate ri al conduct” test it would not violate customary i n ternational law; but it in no way tends to prove that that is what Congress has done. Finally, the Solicitor General argues that the Commission has adopted an interpretati o nsimilar to the “significant and m a terial conduct” test, a n d that we should defer to that. I nthe two adjudicatio n s the Solicitor Gener a l cites, however, the C o mmissi on did not pu rport to be providing its own interpretationof the statute, but relie d on decisions of federal courts—m ainly Courtof Appeals decisions that in tur nrelied on the Sch o enbaum an d Leasco deci sions of the Second Circuit that we discussed earlier. S ee In re United Secu r i ties Cl eari ng Corp. , 5224 MORRISON v. NATIONAL AUSTRALIA BANK LTD.
Opinion of theCourt 

### S. E. C. 92, 95, n. 14, 96, n. 16(1994); In re Robert F. Lynch , Exchange Act Release No. 11737, 8 S. E. C. Docket 75, 77, n. 15 (1975). We need “accept only those agency interpretati ons that are reasonable in light of the princi

ples of construction cou rts normally employ.” Aramco , 4 99 U. S., at 26 0 (S CALI A 

### , J., concurrin gin part an d concurrin g in judgment). Since the Commission’s interpretati ons relied oncases we disa pprove , whi c h ignored or discarded the presumption against extra te rritoriality, we owe them no deference. * * * Section 10(b) reaches the use of a manipula tive or deceptive dev i ce or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sa le of any other security in the United States. Thi s case involves no securities listed on a domestic exchan ge, and all aspects of th e purchases complained of by those petition ers who still have live claims occurred outside the United States. Petitioners have therefore failed to state a cl aim on whi c h relief ca n be granted. We affir m the dismissal of pet i tioners’ complaint on this ground. It is so orde red.
J USTICE 

### S OTOMAYOR 

### took no part i nthe consideration or decision of t h is case._________________

_________________ 1 Cite as: 56 1 U

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Opinion of B RE Y E R , J. 

# SUPREME CO URT O F THE UNI TED STATES

No. 08–1 19 1



### ROB ERT M O RRI SON, ET AL 

### ., PET I TIONERS v. NATIONAL AU STRALIA BA N K LTD. ET AL



### . ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE SECO ND CIRCUIT [Ju n e24, 2010 ] 

### J USTICE 

### B RE YE R 

### , conc urring in p a rt and concurring i n the judgme nt. Section 10(b) of the Securities Exchange Act of 1934 applies to fraud “in connection with” t w o categories of transaction s: (1) “the purchase or sale of any security registered on a national securities exchange” or (2) “the purchase or sale of

. . . any security not so registered.” 15 U. S. C. §78j (b). In thi s case, the purchased s e curities are listed only on a few foreign excha n ges, none of which has registered with the Securiti es and Exchange Commission as a “national securities exchange.” See §78f. The first category th erefore does not ap ply. Further, the relevant purchases of these unregistered securities tookplace entirely in Australia and involved only Australian inves

tors. And in accordance with the presumption against extrater r itoriality, I do not re ad the second category to include such transacti ons. Thus, while state law or other federal fraud statutes, see, e.g., 18 U. S. C. §1341 (ma il fraud), §1343 (wire fraud), may apply to th e fraudulen t activity alle ged here to have occurr ed in the United State s , I believe that §10(b) does not. This case does not require us to consider other circumstances. To the ext e nt the Co urt’s opinion is consistent wi t h these views, I join it._________________

_________________ 1 Cite as: 56 1 U

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S TEVENS , J ., co ncu rrin gin j u dgm e nt 

# SUPREME CO URT O F THE UNI TED STATES

No. 08–1 19 1



### ROB ERT M O RRI SON, ET AL 

### ., PET I TIONERS v. NATIONAL AU STRALIA BA N K LTD. ET AL



### . ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEAL S FOR THE SECO ND CIRCUIT [Ju n e24, 2010 ] 

### J USTICE 

### S T EVEN S 

### , wit hwhom J USTICE 

### G IN SBURG

### joins, concurring i nthe judgm e nt. While I agree that petitioners have failed to state a claim on which relief can be granted, my reasoning differs from the Court’s. I would adhere to the general approac h that has been the law in the Second Circuit, and most of the rest of the country, for nearly four decades. I Today the Court announces a new “transactional test,” ante , at 21, for defining the reachof §10(b) of the Secu ri

ties Exchange Act of 1934 (Exchange Act), 15 U. S. C. §78j(b), and SEC Ru le 10b–5, 17 CFR § 240.10b–5(b) (2009): Henceforth, those provisions will extend only to “transactions in s e curities listed on domestic exchanges

. . . and domestic transactions in other securities,” ante , at 18. If oneconfines o n e’s gaze to the statutory text, the Court’s conclusion is a plausible one. But the federal courts have been construing §10(b) in a different manner for a long time, and the Court’s textual ana lysis is not nearly so compelling, i nmy view, as to warrant the aban

donment of their doctri ne. The text and history of §10(b) are famous ly opaque on the question of when, exactly, transnational securities2 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### frauds fall within the statute’s compass. As those types of frauds became more common in the latter half of the 20th century, th e federal courts were increasinglycalled upon to wrestle with tha tq u estion. The Court of Appeals for the Second Circuit, located in th e Nation’s financial center, led the effort. Begi nning in earnest with Schoenbau m v. Firs tbroo k , 405 F. 2d 200, rev’d on rehearing on other grounds, 40 5 F. 2d 215 (1968) (en banc), that court strove, over an extended series of cases, t o “discern” under wha t circumstan ces “Congre ss would have wished the precious resources of the United States cour ts and law enforcement agencies to be devoted to [trans national] transactions,” 547 F. 3d 167, 170 (20 08) (internal quotation marks omitted). Relying on opinions by Judge Henry Friendly, 1 

### the Second Circ uit eventually se ttled on a conduct-and-effects test. This test asks “(1) whether the wrongful conduc t occurred in the Unites States, and (2) whether the wrongful conduct had a substantial effect in the Unit ed States or upon United States citizens.” Id., at 171. Nu merous cases flesh out th e proper application of each prong. The Second Circuit ’s test became the “north star” of §10(b) jurisprudence, ante , a t8, not just regionally but nationally as well. With minorvariations, other courts converged on the same basic approach. 2 

### See Brief for United States as Amicus Cu riae 15 (“The courts hav e

——————

1 See, e. g., IIT, Int’l Inv

. Trustv. Cornfeld , 619 F. 2d 909 (CA2 1 9 8 0 ); IIT v. Ve ncap, Ltd. , 519 F. 2d 100 1 (C A2 197 5); Berschv. Drexel Fi re
s t on e, In c. , 519 F. 2d 9 74 ( CA2 19 75); Leasco Data Proces sin g

Eq uip. Corp. v. Maxw ell , 468 F. 2d 1326 (C A2 19 72 ).

2 I ac knowledg e that the Courts of Appeal s have differed i ntheir applications of t h e conduct-and-effect s tes t , with the c o nsequenc e that t h eir res p ect iv erulin gs a r e not perfectly “c ohesive.” An te , at 10, n. 4. It is nevertheles s s i gnifica n t that the other Courts of Appea l s , a l on g with the other branches of Govern ment, hav e “embr a c e d the Sec o nd Circuit ’s a pproa ch,” ante , a t9

. I f t h i s C o u r tw e r et od ol i k e w i s e , a s I would have u s do, t h e lowe r co urt s woul d of cou r s e co here e v en m o re tigh tlyar oundthe Sec o nd Ci r c u it’ s rule.3 Cite as: 56 1 U

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S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### uniformly agreed that Section 10(b) can apply to a tran s
national s e curities fraud either when fraudulent conduct has effects in the United States or when sufficient conduct relevant to the fraud occurs in the United States”); see also 1 Rest atement (Third) of Foreign Relations Law of the United Sta t es §416 ( 1986) (setting forth conduct-an deffects test). Neither Congress nor the Securities Ex

change Commission ( C ommission) acted to change the law. To the contrary, t h e Commission largely adopted th e Second Circuit’s position in its own adjudic a tions. See ante , at 23– 24. In light of this history, the Court’s critique of the deci

sion below for applyin g“ju d ge-m ade rules” is quite misplaced. Ante , at 11. This entire ar ea of law is replete with judge-made rules, which give concrete meaning to Congress’ general commands. 3

### “When we deal with priva t e actions under Rule 10 b–5,” then-Justice Rehnquist wrote many years ago, “we deal with a judicial oak which has grown from little m o re than a legislative a c orn.” Blue Chip S t am psv. Mano r Drug S t ores , 421 U. S. 723, 73 7 (1975). The “ ‘Mother Court’ ” of securities law tended t o that oak. Id., at 762 (Blackmun, J., dissenting) (describ i ng the Second Circuit). One of our gr eatest jurists—the jud g e who, “witho ut a doubt, did more to shape the law of securi

ties regulation than an y [other] in the country” 4

### —was its master arborist. The development of §10(b) law was hardly an i n stance of

——————

3 It is tr ue that“when it c o mes to ‘the scop e of [the] conduct prohibited by[Ru l e 1 0b– 5 an d] § 10(b), th e tex tof th e sta t u t e [h as] c o n t r o l[led] our decision[s].’ ” Ant e , at 12, n

. 5 (qu o tin g Cent ral Bankof Denve r, N

. A. v. Firs t In t ersta t e Bankof Den v er, N. A

. , 511 U. S. 16 4, 173 (1 99 4);
some brackets in origin al). The problem, whenit c o m e s to tr ansnation al sec u r i ties fr au ds, i s t h at th e text of the statute do es not provide a g r e a td e a lo f c o n t r o l

. A s w i t h any broadly phrased, longstanding
s t atute, courts have ha d to fi ll in the ga ps
.

4 Loss, InM e mor i am: Hen r y J. Fr ien d ly , 99 Harv . L. Rev

. 1722, 17 23 (198 6).4 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### judicial usurpation. Congress invited an e x pansive ro le for judicial elaboration when it crafted such an open-ended statute in 1934. And b o th Congre ss and the Commission subsequently affirmed that role when they left intact th e relevant statutory an d regula tory language, respectively, throughout all the years that followed. See Brief f o r Alecta pen s ionsförsäkring, ömsesidigt et al. as Amici Curiae31– 33; cf. Musick, Peele r & Gar rettv. Employers Ins. of Wausau , 508 U. S. 286, 294 (1993) (in f erring fro m recent legislation Congress’ de sire to “acknowledg[e]” t h e 10b–5 action without “entangling” itself inthe precis e formulationthereof). Unlik e ce rtain other domains of securities law, this is “a case in which Cong ress has enacted a regulatory statute and th en has acce pted, over a long period of time, broad judicial authority to defin e substantive standards of conduct and liabilit y,” and much else besides. Stoneri dge Inves t ment Pa rtners, L L C v. Scien t ific-A tlanta, Inc. , 552 U. S. 148, 163 (2008). This Court has not shied away fro m ackno w ledging tha t authority. We have co nsistently confirmed th at, in appl ying §10(b) and Rule 1 0b–5, courts may need“to flesh ou t the portions of the law with res p ect to whi c h neither the congressional enactment nor the administr a tive regul a
tions offer conclusive guidance.” Blue Chi p , 421 U. S., at 737. And we have unanimously“recogniz[e d] a judicia l authority to shape .

. . the 10b–5 cause of action,” for tha t i s at a s k“ C o n gr e s s h a s l e f tt ou s
. ” Musick, Peeler , 5 08 U. S., at 2 93, 294; see also id., at 292 (noting with approval that “federal courts have accepted and exercised the principal responsibility for the continuin gelaboration of the scop e of the 10 b–5 right and the definition of th e duties it imposes”). Indeed, we have unanimously endorsed the Second Circ uit’s bas ic interpretive approach t o §10(b)—ridiculed by the Court today—of striving to “di­5 Cite as: 56 1 U

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S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### vin[e] what Congress would have wanted,” ante , a t12

. 5 

### “Our task,” we have said, is “to attempt to i n fer how t h e 1934 Congress would h a ve addressed the issu e.” Musick, Peele r , 508 U. S., at 29 4. Thus, while the Court devotes a considerable amount o f attention to the development of the case law, ante , at 6– 10, it draws the wrong conclusions. The Second Circuit refined its test over several decades and dozens of cases, with the ta cit app r ova lof Congre ss and the Commission and with the general assent of its sister Cir c uits. That history is a reason we s h ould give additional weight to the Second Circuit’s “jud g e -made” doctrine, not a reason t o denigrate it. “The longstand ing ac ceptance bythe courts, coupled with Congress’ failure to reject [its] reasonable interpretati on of the wording of §10(b), .

. . argues significantly in favor of acceptance of the [Second Circuit] rul e by this Court.” Blu eCh ip , 421 U. S., at 733. II The Court’s other main critique of the Second Circuit ’s approach— a part from what the C o urt views as its excessive relian c e on fun ctional considerations and reconstructed congressional intent—i s that the Se cond Circui t

——————

5 Even a s t h e Courtrepea t edly declined t ogra n tce rt iora ri on ca s e s raising the issue, individual Justic es we nt furthe r and endorsed the S e cond Circuit ’s b a s i c a pproa ch t odet e rm ining t h e t r a n s n a t iona l rea c h of §10(b). Se e, e.g. , Scherkv. Alb erto-Cu lver Co. , 417 U. S. 506, 52 9 – 530 (1 97 4) (Dou gl as, J., join ed byBr ennan , Wh ite, and M a r s h a ll, JJ., dissen t in g) (“I th a s beenr e c o g n ized th at th e 19 34 Ac t , in c l u d in gthe protections of Rule 10b –5, applie s wh enfor e ig n defen d an ts h av e defrauded Am erican investor s , particularly when .

. . the yhave profited b yvirt ue of p r os crib e d con d uctwit h in o u r b o unda r ies

. This is t r u e even when the defendant is organi zed under the laws of a foreign
c o untry , is c o nduc tingmuch of its ac tiv i tyoutside the United Sta t e s , and is therefore gove rned larg ely by foreign law” (citing, inter alia , Leasco , 468 F

. 2d, at 133 4– 133 9, an d Schoenb a um v. Firstb rook , 405 F. 2d 200, r e v ’ d onr e h e ar in gonoth e rgr ou n d s, 405 F. 2d 215 (C A2 1968) (en banc))).6 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### has “disreg a rd[ed]” th e presumpt ion against extrater r it oriality. An te , at 6. It is the Cou rt, however, that misa pplies the presumption, in two main respects. First, the Court seeks to transf o rm the pr esumption from a flexib le rule of thumb into something more like a clear statement rule. We have been here before. In the case on which the Court primari l y relies, EE OC v. Ara

bian Ameri can Oil Co

. , 499 U. S. 244 (199 1) (Aramco ) , Chief Justice Rehnquist’s majori ty opinion included a sentence that appeared to mak e the same m o ve. See id., at 258 (“Co ngress’ awa r eness of th e need to make a clear statement that a statute applies ov erseas is a m ply demonstrated by the numerous occasio n s on which it has expressly legislated the extrate rritorial application of a statute”). Justice Marshall, indissent, vigorously objected. Se e id., at 261 (“[C]ontrary to wh at one would conclude from the majority’s analysis, this canon is not a ‘clear state m ent’ rule, the application of which relieves a court of the duty to give effect to a l l available indicia of th e legislative will”). Yet even Aram co—surely the mos textreme application of the presumption ag ainst extrat e rritoriality in my tim e on the Cou r t 6

### —contained numerous passages suggesting that the p r esumption may be overcome wit h out a clear directive. See id., at 248–255 (majority opinion) (repeatedly identifying congre ssional “intent” as the touchstone of the presumption). And our cases both befor e and after Aramco ma ke perfectlyclear that the Court c o ntinues to give effect to “ all available eviden ceabout the meaning” of a provision when cons idering its extraterritorial application, lest we defy Congress’ will. Salev. Haitian Cen t ers Council, Inc. , 509 U. S. 155, 177 (1 993) (emphasis added). 7

——————

6 And also one of the mo st short lived. See Civil Rights Act of 1991, §109, 10 5 St at . 1077 (r epu d iatin g Aram co ).

7 See also, e
. g. , Har tfordFireIns

. Co. v. California , 509 U. S. 7647 Cite as: 56 1 U

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S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### Contrar yto J USTICE 

### S CALIA

### ’s personal view of statutory interpretati on, that evidence legitimately encompasses more than the enacted text. Hence, while the Cou rt’s dictum that “[w]hen a statute gives no clear indication o f an extraterritorial application, it has none,” ante , at 6 , makes for anice cat c hp hrase, the p o int is overstated. The presumption against e x trate rritoriality can b e useful as a theory of congressiona lpurpose, a tool for managing international conflict, a backgro und norm, a ti ebreaker. It does not relieve courts of their d u ty to give statutes t h e most faithful reading possible. Second, an d more fu ndamentally, the Court er rs in suggesting that the presumption against extraterritoria l

ity is fatal to the Seco nd Circuit ’s test. For even if the presumption really we re a clear s t atement (or “clear ind i

cation,” ante , at 6, 16) rule, it would have only marginal relevance to this case. It is true, of course, that “this Cour t ordinarily construes

—————— (199 3) (dec lin in gto applypr esu m ption in assessing question of Sher man Ac t ex tr ater r i tor i ality) ; Smithv. United Stat es , 507 U. S. 1 97, 201 –2 04 (1 993 ) (opin i onforth e Cou r t byR e h n q u i st, C. J.) (c on sider i n g pr esumption “ [ l]ast l y , ” to r e solv e “anyling e r i ng doubt,” afterc o nsider

ing s t ruct ure , legis l at ive his t ory, a n d j u dici a lint e rpret a tions of Federa l Tor tClai ms Ac t); c f

. Sale , 509 U. S., at 1 88 (s tat i n gth at pr esu m pt io n “has speci a l f o rce when weare cons tr uingtr eatyand statutor ypr ov isions tha t ,” u n like §10(b), “ m ay invo lve foreign and military affa irs f o r which the Pre s ident has uni que respon sib i lity”); Dodge, Understanding th e Pr esu m pti o nAg ain s t Ex tr ater r i tor i ali t y , 16 Ber k eleyJ. In t’ l L. 85, 110 (1 99 8) (ex p lain in gth at lowerc o ur ts “h av e beenu n a n i mou s in
c o nc ludingthat the pr esumption ag ain s t ex tr ater r i to r i alityis not a clear stateme n t rule”). The Court also relies on Mi crosoftCorp. v. AT&T Corp. , 550 U. S. 4 37, 455 –4 56 (2 00 7). Ante , at 16. Yet Micro

soft ’s articulation of the pres umption is afa r cr y fromt h e Court ’ s rigid theory. “As a principle of general applica t ion,” Micro softinno cuous l y observ ed, “w e h av estated t h at c o u r ts sh ou ld ‘ a ssu me th at legi sl ator s take ac c o unt of the legi tim a t esov e r e ign interests of othernations when they write American laws.’ ” 55 0 U. S., a t 455 (qu o tin g F

. Hoffmann-La Roche L t dv. Em pagran S. A. , 542 U. S. 155 , 164 (200 4)).8 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### ambiguous statutes to avoid unreasonable interference with the sovereign authority of other nations,” F. Hoffman n-La Roche Ltd v. Em pagran S. A. , 542 U. S. 155, 164 (2004), and that, absent contrary e vidence, we presume “Congress is primarilyconcerned with domestic conditions,” Foley Bros., Inc. v. Filardo , 336 U. S. 281, 28 5 (1949). Accordingly, th e presumption against extraterritoriality “pro vides a sou n d basis forconcluding that Section 10(b) does not apply when a securities fraud with no effects in the United States is hatched and executed entirely outside this country.” Brief for U n ited State s as Amicus Curiae22. But that i s just about all it provides a soun d basis for concluding. And the co nclusion is not very illuminating, because no party to th e litigation disputes it. No one contends that §10(b) applies to wholly foreign frauds. Rather, the real question in this case is how much, an d what kinds of, domesti c contac ts are sufficient to t r igge r application of §10(b). 8 

### In developing its conduct-andeffects test, the Secon dCircu it endeavored to derive a solution from the E x ch ange Ac t’s text, st ruct ure, history , and purpos e. Judge Friendly and his colleagues were well aware that United States courts “cannot and should n o t expend [their] resources resolving cases that do not affect Americans or involve fraud em anating fro m America

. ” 547 F. 3d, at 175; see also id., at 171 (overriding concern is

“ ‘whether there is suff icientUnited States involvement’ ” (quoting Itoba Ltd. v. Lep Group PLC, 54 F. 3d 118, 122 (CA2 1995))). The question just sta t ed does not admit of aneasy an­

——————

8 Cf. Dodg e, 16 Ber k eleyJ. I n t’ l L., at 88, n
. 25 (r eg ar dless wh eth e r one frames question as “whe therthe pr esumption ag ains t ex tr ater r i toria lit y s h ould a pply [or] whe t her t h e re gul a t i on is ext r a t errit o ria l ,” “ o n e must ultim a te lygr apple with the bas ic issue of what co nnection to the United S t ate s is sufficient to just ifythe assump tion that Cong r e ss would want its laws to be applied”).9 Cite as: 56 1 U

. S. ____ (2010)

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### swer. The text of the Exchan ge Act indica t e s that §10(b) extends to at least some acti vities with aninternational component, but, a g ain, it is not pellucid as to which ones. 9 

### The Second Circuit draws the lin e as follows: §10(b) extends to tra n snational frauds “onl y when substantial acts in furthera n ce of the fraud were committedwithin th e United States,” SEC v. Be rge r , 322 F. 3d 187, 193 (CA2 2003) (internal quotation marks omitted), or when the fraud was “ ‘intended to produce’ ” and did produce “ ‘detrimental effects within’ ” the United States, Schoenbau m , 405 F. 2d, at 206. 10 

### This approach is consistent with the understandin g

——————

9 Byits ter m s, §10(b) r e g u l a tes “i nt erst at e com m e rce,” 1 5 U. S

. C. §7 8 j , which the Excha n ge Actdefines to include “ t r ade, com m e rce, tr anspor tat i on, orc o mmunic a tion .

. . betweenan yfor e ignc o u n t ryan d
an yState, or betweenan yState an d an y place or ship outside thereof.” §78c(a)(17). Other provisions of the Ex c h ang eAc t make c l eartha t Congres s contemplated s o me a m ount of tr a n s n a t iona l applica t ion. S e e, e.g

. , §78b(2) (s tatin g , inex plain i n gn e c e ssityforr e g u lation , th at “[t]h e prices establi s hed and offered in [sec urities] transact ions are generally dis s e mina ted a n d q u oted throu ghoutthe United States and foreign
c o u n t r i es an d c o n s titu te a bas is fo rdete r m iningand establi s hingthe prices at which securities are bought and sold”); §78 dd(b) (ex e mpting fromregula t i on foreign p a rt ies “ unles s” th eytr an sa c tbu sin e ss i n s e curit i es “ i n cont ravent ion of s u ch rules a n d regula t i ons a s t h e Com

m i s s ion m a y pres crib ea s neces s a ryor appropriate to prevent the evasion of this chapter” (emphasi s adde d)); see also Schoe n b a um , 405 F. 2d, at 2 0 6–20 8 (r ev iewin gstatu t or ytex tan d legi s l ativ e h i s t or y)

. The Cour t finds these tex t ual r e fer e ncesinsufficient to overcome the pres umption a g a i ns t extraterritoria lity, ante , at 13–1 5, bu t as ex

plained in the main tex t , that findin gr e st s u p onth e Co u r t’ s misap p lication of the p r esumption.

10 Th e Gov e r n m e n tsu bmi t s t h at a “tr an sn ation a l sec u r i ties fr au d

v i olates Sec t i o n10(b) if si g n ific an t c o ndu c t mater i alto th e fr au d’ s s u cces s occu rs in t h e Unit ed S t at es .” Brief for United St ates as Am icus Curiae 6. I under s tand the Gov e rnment ’s su bmi s s i onto be lar g elya repackaging o f the “conduct” prong of t h eS e cond Circu it ’s t e st

. The G o v e rn men tex pr esses n oviewon th at t e st’ s “effec t s” pr on g , as th e decision belo w considered only responde nts’ conduct. See id., at 1 5 , n
. 2; 547 F. 3d 167, 17 1 (CA2 2008).10 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### shared by most scholars that Congress, in passing the Exchan ge Act, “expec t e d U. S. securities laws to apply to certain inte rnational transactions or conduct. ” Bu xbaum, Multinational Class Actions Under Federal Securities Law: Man a ging Jurisdictional Conflict, 46 Colum. J. Transnat’l L. 14, 19 (2 007); see a l so Leasco Data Proces s
ing Equip. Corp. v. Maxw e l l , 468 F. 2d 1326, 1336 (CA2 1972) (Friendly, J.) (detailing evidence that Congres s“meant §10(b) to protect against fraud in the sale or purchase of securities wh ether or not these were traded on organized United States mark ets”). It is a l so consi s te nt with the traditional u n derstanding, regnant in the 193 0’s as it is now, that the presumption against extraterritoria l

ity does not apply “when the conduct [atissue] occurs within the United States,” and has lesser for c e when “the failure to extend the scope of the statute to a foreign setting will result in a dverse effects within the United States.” En vironmental Defen se Fund, Inc. v. Massey , 986 F. 2d 528, 5 31 (CADC 1 993); accord, Restatement (Second) of Foreign Relations Law of the United State s §38 (1964– 1965); cf. Small v. Uni t ed S t ates , 544 U. S. 385, 400 (2005) (T HOMAS 

### , J., joined by S CALI A 

### and K EN NEDY 

### , JJ., dissenting) (presu mption against extrat e rritoriality “lend[s] no support” to a “rule restricting a fe deral statut e from reaching conduct within U. S. borders ”) ; Continental Ore Co. v. Union Ca rb ide & Ca rb on Corp. , 3 70 U. S. 690, 705 (196 2) (presumpti on against extraterritoriality not controlling “[s]ince the activities of the defendants hadan impact within the United States and upon its foreign trade”). And it stri kes a reasonable balan ce between the goals of “preventingthe export of fraud from America,” protecting shareholders, enhancin g investor confidence, and deterring corporate misconduct, on th e one hand, and conserving United States re sources and limiting conflict with11 Cite as: 56 1 U

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### foreign law, on the othe r. 11 

### 547 F. 3d, at 175. Thus, while §10(b) may not gi ve any “clear indication” on its face as to how it should apply to transnational securities frauds, ante , at 6, 16, it does give strong clues that it shou ld cover at l e ast some of them, see n. 9, supra
. And in m y view, the S e cond Circu it has done the best jo b of discernin gwhat sorts of transn a tional frau ds Congress meant in 1 934—and still means today—to regulate. I d o not take issue with the Cou rt for beginnin gits inquiry with the statutory text, rather than the doctrine in the C o u r t s o f Ap p e a l s
. C f

. ante , at 18 , n. 9. I take issue with the Court for beginning and ending its inqu iry with the statutory text, when the text do es not spe a kwith geographic pre c ision, and for dismissing the long pedigree of , and the persuasive account of con gressional intent embodied in, the Second Circu it’s rule. Repudiating the Second Circui t ’s approachin its en

tirety, the Court establishes a novel rule that will foreclose private parties from bringing §10(b) actions whenever the relevant securities were purchased or sold abroad and are not listed on a domestic exchan ge. 12 

### The real motor of th e

——————

11 Given its focus on “domestic conditions,” Foley Bros., Inc. v. Filardo , 336 U. S. 2 81, 28 5 (1 94 9), I ex pec tth atv i r t u a llyal l “ ‘f oreign-cubed’ ”
ac tions—ac tio n s in whic h “(1) foreignplaintiffs [are] suing (2) a foreign issuer in an American courtfor viol ations of American securities law s based on secu rities transactions in (3) foreign c o un tr ies,” 547 F. 3d, a t 172—wou l d fa il th e Sec o n d Cir c u it’ s test. As th eyg e n e r a llysh ou ld. Under these circumstances, the odds of th e fr au d h av i nga su bs tan t i a l
conne ction to the United States are lo w. In reco gnit ion of t h e Excha n ge Ac t’ s foc u s onAmer ic anin v e stor s a n d t h e novelt y of foreign-c u b e d lawsuits, and in the interes tof prom oting cla r it y, itmighthave b e en appropriate to incorpo r ate one bright line into the Second Circuit’s test , b yca t e gorica lly ex cludings u ch la ws uit s fro m§1 0 (b ) ’s amb i t

.

12 The Court’s opinion does n o t, ho wever, foreclose the Commi ssion from bringing enforcement actions inadd i tional c i r c u mstanc es, as no issue c o nc erningthe Commi ssion’ s auth ority is presented by this case. The Commissi o n’s enfo rceme nt proceedin gs not only differ from p r ivate §10(b) ac t i on s inn u m er ou s poten t ial l y relevant respects, see Brief for12 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

S TEVENS , J ., co ncu rrin gin j u dgm e nt 

### Court’s opi n ion, it seems, is not the presumption against extrater r itoriality but rather the Court’s belief that transactions on domestic exchanges a r e “the focus of the Exchange Act” and “the objects of [its] solicitude.” Ante , a t 17, 18. In reality, however, it is the “public interest” an d “the interests of investors” thatare the objects of the statute’s solicitude. Eu rope & Ov e rsea s Com m odity Tra d

ers, S. A. v. Banque Paribas London , 147 F. 3d 118, 125 (CA2 1998) (citing H. R. Rep. No. 1838, 73 d Cong., 2d Sess., 32–3 3 (1934)); s ee als o Basic Inc. v. Levinson , 4 85 U. S. 224, 230 (1988) (“The 1934 Act was designed to protect investors against manipulation of stock price s ” (citing S. Rep. No. 792 , 73d Cong. , 2d Sess., 1–5 (1934)); Erns t & Ernstv. Hochfelder , 42 5 U. S. 185, 195 (1976) (“The 1934 Act was intended principally to protect investors .

. . ”); S. Rep. No. 1455, 73d C o ng., 2d Ses s ., 68 (1934) (“The Securities Exchange Act of 1934 aims t o protect th e interests of the public agains t the predatory operations of directors, o fficers, andprincipal stockholder s of corpor ations .

. . ”). And while the clarit y and simplicity of the Court’s test may have some salutary consequences, like all bright-line rules it also has drawb a cks. Imagine, for example, an American investor who buys shares in a company listed only o nan overse as exchange. That company has a major American subsidiary wi th executives based in New York City; and it was in Ne w York Ci ty t hat the exe c utiv es masterminded and implemented a massive dec e ption which artificially inflated the stock price—and which will, up on its disclosu re, cause the

—————— United S t ate s as Am icus Curiae12–13, bu t th eyal so pose ales s e r thr e at to inter n ational c o mi t y , id., at 26–27; cf. Empagran , 542 U. S., a t 171 (“ ‘[P]rivat e plaint iffs of t e n are unwilling to exercise the degree of
s e lf-res tra i nt a n d cons idera t ion of foreig n gove rnment a ls e ns ib ilitie s genera lly e x er cis e d b yt h e U. S

. Go vern m e nt ’ ” (q uoting Griffin, Ex tra

ter r i tor i alityi nU. S. and EU Antitr ust E n for c e ment, 6 7 Antitr ustL. J. 159, 19 4 (19 9 9 ) ; alter a tioninor igin al)).13 Cite as: 56 1 U

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### price to plummet. Or, imagin e that those sa me executives go knocking on doors in Manhattanand convin ce an unsophisticated retiree, on the basis of material misrepresentations, to invest her life savings in the company’s doomed securities. Both of these investors would, under the Court’s ne w test, be barred fr om seeking relief under §10(b). The oddity of that result should give paus e. For inwalling off such individuals from §10(b), the Court narrows the provision’s reach to a degree that would surprise and alarm generations of American investors—and, I am convinced, the Congre ss that pas s ed the Exchange Act. Indeed, the Court’s ru le turns §10(b) jurisprudence (and the presumption against extra territoriality) on its head, by with dra w ing the s t atute’s application from cases in which there is bothsubstantial wrongful conduct th at occurred inthe United States and a substantial injuriou s effect on United State s markets a n d citizens. III In my judgment, if petitioners’ all e gations of fraudulent misconduct that took place in Fl orida are true, then respondents may have violated §10(b), and could potentially be held accountable inan enforcement proce e ding brought by the Commission. But it does not follow that shareholders who have failed to allege that the bulk or the heart of the fraud o ccurred in the United States, or that the fraud had an adverse impact on American investors or mark ets, may maint a in a priva t e action to recover da mages they suffered abroad. Som e cases involving foreign securities transaction s have exte nsive links to, and ram i fications for, this countr y ; this case has Austr a lia written all over it. Accordin gly , for essentially the reasons stated in the Court of Appeals’ opinion, I would affirm its judgment. The Court instead elec ts to upend a significa n t area of securities law based o na plausible, but hardly decisive ,14 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

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### constructio nof the st atutory tex t

. In so doing, it pays short shrift to the United States’ interest in remedying frauds that transpire o nAmer ican soil or harm American citizens, as well as to the accumulated wisdom and experience of the lower court s
. I happen to agree with the result the Court reaches in this case. But “I resp ectfully dissent,” once again, “fro m the Court’s continui ng campai gn to render the private cause of action under §10(b) toothless.” Stoneridge , 552 U. S., at 175 (S TEVEN S 

### , J., dissenting).