(Slip Opinion) OCTOBER TERM, 2009 1 

Syllabus 

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader. 

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

MORRISON ET AL. v. NATIONAL AUSTRALIA BANK

LTD. ET AL. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 

THE SECOND CIRCUIT 

No. 08–1191. Argued March 29, 2010—Decided June 24, 2010 

In 1998, respondent National Australia Bank (National), a foreign bank 

whose “ordinary shares” are not traded on any exchange in this country, purchased respondent HomeSide Lending, a company headquartered in Florida that was in the business of servicing mortgages—

seeing to collection of the monthly payments, etc. In 2001, National 

had to write down the value of HomeSide’s assets, causing National’s

share prices to fall. Petitioners, Australians who purchased National’s shares before the write-downs, sued respondents—National,

HomeSide, and officers of both companies—in Federal District Court

for violation of §§10(b) and 20(a) of the Securities and Exchange Act 

of 1934 and SEC Rule 10b–5. They claimed that HomeSide and its

officers had manipulated financial models to make the company’s 

mortgage-servicing rights appear more valuable than they really

were; and that National and its chief executive officer were aware of 

this deception. Respondents moved to dismiss for lack of subjectmatter jurisdiction under Federal Rule of Civil Procedure 12(b)(1)

and for failure to state a claim under Rule 12(b)(6). The District 

Court granted the former motion, finding no jurisdiction because the 

domestic acts were, at most, a link in a securities fraud that concluded abroad. The Second Circuit affirmed. 

Held: 

1. The Second Circuit erred in considering §10(b)’s extraterritorial

reach to raise a question of subject-matter jurisdiction, thus allowing 

dismissal under Rule 12(b)(1). What conduct §10(b) reaches is a merits question, while subject-matter jurisdiction “refers to a tribunal’s

power to hear a case.” Union Pacific R. Co. v. Brotherhood of Locomotive Engineers and Trainmen Gen. Comm. of Adjustment, Central 
2 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Syllabus 

Region, 558 U. S. ___, ___ (internal quotation marks omitted). The 

District Court had jurisdiction under 15 U. S. C. §78aa to adjudicate

the §10(b) question. However, it is unnecessary to remand in view of

that error because the same analysis justifies dismissal under Rule

12(b)(6). Pp. 4–5. 

2. Section 10(b) does not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges. Pp. 5–24.

(a) It is a “longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply

only within the territorial jurisdiction of the United States.’ ” EEOC 

v. Arabian American Oil Co., 499 U. S. 244, 248 (Aramco). When a 

statute gives no clear indication of an extraterritorial application, it 

has none. Nonetheless, the Second Circuit believed the Exchange

Act’s silence about §10(b)’s extraterritorial application permitted the

court to “discern” whether Congress would have wanted the statute 

to apply. This disregard of the presumption against extraterritoriality has occurred over many decades in many courts of appeals and 

has produced a collection of tests for divining congressional intent

that are complex in formulation and unpredictable in application.

The results demonstrate the wisdom of the presumption against extraterritoriality. Rather than guess anew in each case, this Court

applies the presumption in all cases, preserving a stable background

against which Congress can legislate with predictable effects. Pp. 5– 

12. 

(b) Because Rule 10b–5 was promulgated under §10(b), it “does

not extend beyond conduct encompassed by §10(b)’s prohibition.” 

United States v. O’Hagan, 521 U. S. 642, 651. Thus, if §10(b) is not 

extraterritorial, neither is Rule 10b–5. On its face, §10(b) contains

nothing to suggest that it applies abroad. Contrary to the argument 

of petitioners and the Solicitor General, a general reference to foreign

commerce in the definition of “interstate commerce,” see 15 U. S. C. 

§78c(a)(17), does not defeat the presumption against extraterritoriality, Aramco, supra, at 251. Nor does a fleeting reference, in §78b(2)’s

description of the Exchange Act’s purposes, to the dissemination and

quotation abroad of prices of domestically traded securities. Nor does 

Exchange Act §30(b), which says that the Act does not apply “to any

person insofar as he transacts a business in securities without the jurisdiction of the United States,” unless he does so in violation of regulations promulgated by the SEC “to prevent . . . evasion of [the Act].” 

This would be an odd way of indicating that the Act always has extraterritorial application; the Commission’s enabling regulations preventing “evasion” seem directed at actions abroad that might conceal 

a domestic violation. The argument of petitioners and the Solicitor 
Cite as: 561 U. S. ____ (2010) 3 

Syllabus 

General also fails to account for §30(a), which explicitly provides for a

specific extraterritorial application. That provision would be quite 

superfluous if the rest of the Exchange Act already applied to transactions on foreign exchanges—and its limitation of that application to

securities of domestic issuers would be inoperative. There being no 

affirmative indication in the Exchange Act that §10(b) applies extraterritorially, it does not. Pp. 12–16. 

(c) The domestic activity in this case—Florida is where HomeSide and its executives engaged in the alleged deceptive conduct and 

where some misleading public statements were made—does not 

mean petitioners only seek domestic application of the Act. It is a 

rare case of prohibited extraterritorial application that lacks all contact with United States territory. In Aramco, for example, where the

plaintiff had been hired in Houston and was an American citizen, see 

499 U. S., at 247, this Court concluded that the “focus” of congressional concern in Title VII of the Civil Rights Act of 1964 was neither 

that territorial event nor that relationship, but domestic employment. Applying that analysis here: The Exchange Act’s focus is not

on the place where the deception originated, but on purchases and

sales of securities in the United States. Section 10(b) applies only to

transactions in securities listed on domestic exchanges and domestic

transactions in other securities. The primacy of the domestic exchange is suggested by the Exchange Act’s prologue, see 48 Stat. 881, 

and by the fact that the Act’s registration requirements apply only to

securities listed on national securities exchanges, §78l(a). This focus 

is also strongly confirmed by §30(a) and (b). Moreover, the Court rejects the notion that the Exchange Act reaches conduct in this country affecting exchanges or transactions abroad for the same reason

that Aramco rejected overseas application of Title VII: The probability of incompatibility with other countries’ laws is so obvious that if

Congress intended such foreign application “it would have addressed

the subject of conflicts with foreign laws and procedures.” 499 U. S., 

at 256. Neither the Government nor petitioners provide any textual

support for their proposed alternative test, which would find a violation where the fraud involves significant and material conduct in the

United States. Pp. 17–24. 

547 F. 3d 167, affirmed. 

SCALIA, J., delivered the opinion of the Court, in which ROBERTS, 

C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. BREYER, J., filed 

an opinion concurring in part and concurring in the judgment. STEVENS, J., filed an opinion concurring in the judgment, in which GINSBURG, J., joined. SOTOMAYOR, J., took no part in the consideration or 

decision of the case. 
_________________ 

_________________ 

Cite as: 561 U. S. ____ (2010) 1 

Opinion of the Court 

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press. 

SUPREME COURT OF THE UNITED STATES 

No. 08–1191 

ROBERT MORRISON, ET AL., PETITIONERS v.

NATIONAL AUSTRALIA BANK 

LTD. ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE SECOND CIRCUIT

[June 24, 2010] 

JUSTICE SCALIA delivered the opinion of the Court. 

We decide whether §10(b) of the Securities Exchange

Act of 1934 provides a cause of action to foreign plaintiffs 

suing foreign and American defendants for misconduct in

connection with securities traded on foreign exchanges. 

I 

Respondent National Australia Bank Limited (National) 

was, during the relevant time, the largest bank in Australia. Its Ordinary Shares—what in America would be

called “common stock”—are traded on the Australian 

Stock Exchange Limited and on other foreign securities

exchanges, but not on any exchange in the United States. 

There are listed on the New York Stock Exchange, however, National’s American Depositary Receipts (ADRs),

which represent the right to receive 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 February 1998, National bought respondent HomeSide Lending, Inc., a mortgage servicing 
2 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

company headquartered in Florida. HomeSide’s business 

was to receive fees for servicing mortgages (essentially the 

administrative tasks associated with collecting mortgage 

payments, see J. Rosenberg, Dictionary of Banking and 

Financial Services 600 (2d ed. 1985)). The rights to receive those fees, so-called mortgage-servicing rights, can 

provide a valuable income stream. See 2 The New Palgrave Dictionary of Money and Finance 817 (P. Newman, 

M. Milgate, & J. Eatwell eds. 1992). How valuable each of 

the rights is depends, in part, on the likelihood that the

mortgage to which it applies will be fully repaid before it is

due, terminating the need for servicing. HomeSide calculated the present value of its mortgage-servicing rights by

using valuation models designed to take this likelihood 

into account. It recorded the value of its assets, and the 

numbers appeared in National’s financial statements. 

From 1998 until 2001, National’s annual reports and 

other public documents touted the success of HomeSide’s

business, and respondents Frank Cicutto (National’s

managing director and chief executive officer), Kevin Race

(HomeSide’s chief operating officer), and Hugh Harris 

(HomeSide’s chief executive officer) did the same in public 

statements. But on July 5, 2001, National announced that 

it was writing down the value of HomeSide’s assets by

$450 million; and then again on September 3, by another

$1.75 billion. The prices of both Ordinary Shares and 

ADRs slumped. After downplaying the July write-down,

National explained the September write-down as the

result of a failure to anticipate the lowering of prevailing 

interest rates (lower interest rates lead to more refinancings, i.e., more early repayments of mortgages), other

mistaken assumptions in the financial models, and the 

loss of goodwill. According to the complaint, however, 

HomeSide, Race, Harris, and another HomeSide senior 

executive who is also a respondent here had manipulated 

HomeSide’s financial models to make the rates of early 
Cite as: 561 U. S. ____ (2010) 3 

Opinion of the Court 

repayment unrealistically low in order to cause the mortgage-servicing rights to appear more valuable than they

really were. The complaint also alleges that National and

Cicutto were aware of this deception by July 2000, but did 

nothing about it.

As relevant here, petitioners Russell Leslie Owen and 

Brian and Geraldine Silverlock, all Australians, purchased

National’s Ordinary Shares in 2000 and 2001, before the

write-downs.1 They sued National, HomeSide, Cicutto,

and the three HomeSide executives in the United States 

District Court for the Southern District of New York for 

alleged violations of §§10(b) and 20(a) of the Securities and

Exchange 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 to

represent a class of foreign purchasers of National’s Ordinary Shares during a specified period up to the September 

write-down. 547 F. 3d, at 169. 

—————— 

1Robert Morrison, an American investor in National’s ADRs, also 

brought suit, but his claims were dismissed by the District Court 

because he failed to allege damages. In re National Australia Bank 

Securities Litigation, No. 03 Civ. 6537 (BSJ), 2006 WL 3844465, *9 

(SDNY, Oct. 25, 2006). Petitioners did not appeal that decision, 547

F. 3d 167, 170, n. 3 (CA2 2008) (case below), and it is not before us. 

Inexplicably, Morrison continued to be listed as a petitioner in the 

Court of Appeals and here. 2 The relevant text of §10(b) and SEC Rule 10b–5 are set forth later in

this opinion. Section 20(a), 48 Stat. 899, provides: 

“Every person who, directly or indirectly, controls any person liable 

under any provision of [the Exchange Act] or of any rule or regulation

thereunder shall also be liable jointly and severally with and to the

same extent as such controlled person to any person to whom such 

controlled person is liable, unless the controlling person acted in good 

faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.” 

Liability under §20(a) is obviously derivative of liability under some 

other provision of the Exchange Act; §10(b) is the only basis petitioners 

asserted. 
4 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

Respondents moved to dismiss for lack of subject-matter 

jurisdiction under Federal Rule of Civil Procedure 12(b)(1) 

and for failure to state a claim under Rule 12(b)(6). The 

District Court granted the motion on the former ground, 

finding no jurisdiction because the acts in this country

were, “at most, a link in the chain of an alleged overall 

securities fraud scheme that culminated abroad.” In re 

National Australia Bank Securities Litigation, No. 03 Civ. 

6537 (BSJ), 2006 WL 3844465, *8 (SDNY, Oct. 25, 2006). 

The Court of Appeals for the Second Circuit affirmed on

similar grounds. The acts performed in the United States 

did not “compris[e] the heart of the alleged fraud.” 547 

F. 3d, at 175–176. We granted certiorari, 558 U. S. ___ 

(2009). 

II 

Before addressing the question presented, we must 

correct a threshold error in the Second Circuit’s analysis. 

It considered the extraterritorial reach of §10(b) to raise a 

question of subject-matter jurisdiction, wherefore it affirmed the District Court’s dismissal under Rule 12(b)(1). 

See 547 F. 3d, at 177. In this regard it was following 

Circuit precedent, see Schoenbaum v. Firstbrook, 405 

F. 2d 200, 208, modified on other grounds en banc, 405 

F. 2d 215 (1968). The Second Circuit is hardly alone in 

taking this position, see, e.g., In re CP Ships Ltd. Securities Litigation, 578 F. 3d 1306, 1313 (CA11 2009); Continental Grain (Australia) PTY. Ltd. v. Pacific Oilseeds, Inc., 

592 F. 2d 409, 421 (CA8 1979).

But to ask what conduct §10(b) reaches is to ask what

conduct §10(b) prohibits, which is a merits question. 

Subject-matter jurisdiction, by contrast, “refers to a tribunal’s ‘“power to hear a case.”’” Union Pacific R. Co. v. 

Locomotive Engineers and Trainmen Gen. Comm. of Adjustment, Central Region, 558 U. S. ___, ___ (2009) (slip 

op., at 12) (quoting Arbaugh v. Y & H Corp., 546 U. S. 500, 
Cite as: 561 U. S. ____ (2010) 5 

Opinion of the Court 

514 (2006), in turn quoting United States v. Cotton, 535 

U. S. 625, 630 (2002)). It presents an issue quite separate 

from the question whether the allegations the plaintiff 

makes entitle him to relief. See Bell v. Hood, 327 U. S. 

678, 682 (1946). The District Court here had jurisdiction 

under 15 U. S. C. §78aa3 to adjudicate the 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. 

International Terminal Operating 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 a contrary intent appears, 

is meant to apply only within the territorial jurisdiction of

the United States.’” EEOC v. Arabian American Oil Co., 

499 U. S. 244, 248 (1991) (Aramco) (quoting Foley Bros., 

Inc. v. Filardo, 336 U. S. 281, 285 (1949)). This principle

represents a canon of construction, or a presumption about 

a statute’s meaning, rather than a limit upon Congress’s 

power to legislate, see Blackmer v. United States, 284 

U. S. 421, 437 (1932). It rests on the perception that 

Congress ordinarily legislates with respect to domestic, 

—————— 

3 Section 78aa provides: 

“The district courts of the United States . . . shall have exclusive 

jurisdiction of violations of [the Exchange Act] or the rules and regulations thereunder, and of all suits in equity and actions at law brought

to enforce any liability or duty created by [the Exchange Act] or the 

rules and regulations thereunder.” 
6 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

not foreign matters. Smith v. United States, 507 U. S. 

197, 204, n. 5 (1993). Thus, “unless there is the affirmative intention of the Congress clearly expressed” to give a 

statute extraterritorial effect, “we must presume it is

primarily concerned with domestic conditions.” Aramco, 

supra, at 248 (internal quotation marks omitted). The 

canon or presumption applies regardless of whether there 

is a risk of conflict between the American statute and a 

foreign law, see Sale v. Haitian Centers Council, Inc., 509 

U. S. 155, 173–174 (1993). When a statute gives no clear 

indication of an extraterritorial application, it has none. 

Despite this principle of interpretation, long and often 

recited in our opinions, the Second Circuit believed that,

because the Exchange Act is silent as 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 (internal quotation marks 

omitted). This disregard of the presumption against extraterritoriality did not originate with the Court of Appeals panel in this case. It has been repeated over many

decades by various courts of appeals in determining the 

application of the Exchange Act, and §10(b) in particular, 

to fraudulent schemes that involve conduct and effects 

abroad. That has produced a collection of tests for divining what Congress would have wanted, complex in formulation and unpredictable in application. 

As of 1967, district courts at least in the Southern District of New York had consistently concluded that, by

reason of the presumption against extraterritoriality,

§10(b) did not apply when the stock transactions underlying the violation occurred abroad. See Schoenbaum v. 

Firstbrook, 268 F. Supp. 385, 392 (1967) (citing Ferraoli v. 

Cantor, CCH Fed. Sec. L. Rep. ¶91615 (SDNY 1965) and 

Kook v. Crang, 182 F. Supp. 388, 390 (SDNY 1960)). 

Schoenbaum involved the sale in Canada of the treasury 

shares of a Canadian corporation whose publicly traded 
Cite as: 561 U. S. ____ (2010) 7 

Opinion of the Court 

shares (but not, of course, its treasury shares) were listed

on both the American Stock Exchange and the Toronto

Stock Exchange. Invoking the presumption against extraterritoriality, the court held that §10(b) was inapplicable

(though it incorrectly viewed the defect as jurisdictional).

268 F. Supp., at 391–392, 393–394. The decision in 

Schoenbaum was reversed, however, by a Second Circuit

opinion which held that “neither the usual presumption 

against extraterritorial application of legislation nor the 

specific language of [§]30(b) show Congressional intent to 

preclude application of the Exchange Act to transactions

regarding stocks traded in the United States which are 

effected outside the United States . . . .” Schoenbaum, 405 

F. 2d, at 206. It sufficed to apply §10(b) that, although the 

transactions in treasury shares took place in Canada, they 

affected the value of the common shares publicly traded in

the United States. See id., at 208–209. Application of

§10(b), the Second Circuit found, was “necessary to protect 

American investors,” id., at 206. 

The Second Circuit took another step with Leasco Data 

Processing Equip. Corp. v. Maxwell, 468 F. 2d 1326 (1972),

which involved an American company that had been 

fraudulently induced to buy securities in England. There, 

unlike in Schoenbaum, some of the deceptive conduct had

occurred in the United States but the corporation whose

securities were traded (abroad) was not listed on any

domestic exchange. Leasco said that the presumption 

against extraterritoriality apples only to matters over 

which the United States would not have prescriptive

jurisdiction, 468 F. 2d, at 1334. Congress had prescriptive 

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 about the point,” it would have wanted §10(b) to

apply. Id., at 1334–1337. 

With Schoenbaum and Leasco on the books, the Second 
8 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

Circuit had excised the presumption against extraterritoriality from the jurisprudence of §10(b) and replaced it 

with the inquiry whether it would be reasonable (and 

hence what Congress would have wanted) to apply the 

statute to a given situation. As long as there was prescriptive jurisdiction to regulate, the Second Circuit explained, whether to apply §10(b) even to “predominantly 

foreign” transactions became a matter of whether a court

thought Congress “wished the precious resources of United 

States courts and law enforcement agencies to be devoted 

to them rather than leave the problem to foreign countries.” Bersch v. Drexel Firestone, Inc., 519 F. 2d 974, 985 

(1975); see also IIT v. Vencap, Ltd., 519 F. 2d 1001, 1017– 

1018 (CA2 1975).

The Second Circuit had thus established that application of §10(b) could be premised upon either some effect on 

American securities markets or investors (Schoenbaum) or 

significant conduct in the United States (Leasco). It later 

formalized these two applications into (1) an “effects test,”

“whether the wrongful conduct had a substantial effect in

the United States or upon United States citizens,” and (2) 

a “conduct test,” “whether the wrongful conduct occurred 

in the United States.” SEC v. Berger, 322 F. 3d 187, 192– 

193 (CA2 2003). These became the north star of the Second Circuit’s §10(b) jurisprudence, pointing the way to

what Congress would have wished. Indeed, the Second 

Circuit declined to keep its two tests distinct on the

ground that “an admixture or combination of the two often 

gives a better picture of whether there is sufficient United

States involvement to justify the exercise of jurisdiction by

an American court.” Itoba Ltd. v. Lep Group PLC, 54 

F. 3d 118, 122 (1995). The Second Circuit never put forward a textual or even extratextual basis for these tests. 

As early as Bersch, it confessed that “if we were asked to 

point to language in the statutes, or even in the legislative 

history, that compelled these conclusions, we would be 
Cite as: 561 U. S. ____ (2010) 9 

Opinion of the Court 

unable to respond,” 519 F. 2d, at 993.

As they developed, these tests were not easy to administer. The conduct test was held to apply differently depending on whether the harmed investors were Americans

or foreigners: When the alleged damages consisted of

losses to American investors abroad, it was enough that 

acts “of material importance” performed in the United

States “significantly contributed” to that result; whereas 

those acts must have “directly caused” the result when 

losses to foreigners abroad were at issue. See Bersch, 519 

F. 2d, at 993. And “merely preparatory activities in the 

United States” did not suffice “to trigger application of the

securities laws for injury to foreigners located abroad.” 

Id., at 992. This required the court to distinguish between

mere preparation and using the United States as a “base” 

for fraudulent activities in other countries. Vencap, supra, 

at 1017–1018. But merely satisfying the conduct test was

sometimes insufficient without “‘some additional factor 

tipping the scales’” in favor of the application of American 

law. Interbrew v. Edperbrascan Corp., 23 F. Supp. 2d 425, 

432 (SDNY 1998) (quoting Europe & Overseas Commodity 

Traders, S. A. v. Banque Paribas London, 147 F. 3d 118, 

129 (CA2 1998)). District courts have noted the difficulty 

of applying such vague formulations. See, e.g., In re 

Alstom SA, 406 F. Supp. 2d 346, 366–385 (SDNY 2005).

There is no more damning indictment of the “conduct” and

“effects” tests than the Second Circuit’s own declaration 

that “the presence or absence of any single factor which

was considered significant in other cases . . . is not necessarily dispositive in future cases.” IIT v. Cornfeld, 619 

F. 2d 909, 918 (1980) (internal quotation marks omitted).

Other Circuits embraced the Second Circuit’s approach,

though not its precise application. Like the Second Circuit, they described their decisions regarding the extraterritorial application of §10(b) as essentially resolving matters of policy. See, e.g., SEC v. Kasser, 548 F. 2d 109, 116 
10 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

(CA3 1977); Continental Grain, 592 F. 2d, at 421–422; 

Grunenthal GmbH v. Hotz, 712 F. 2d 421, 424–425 (CA9 

1983); Kauthar SDN BHD v. Sternberg, 149 F. 3d 659, 667 

(CA7 1998). While applying the same fundamental methodology of balancing interests and arriving at what 

seemed the best policy, they produced a proliferation of 

vaguely related variations on the “conduct” and “effects” 

tests. As described in a leading Seventh Circuit opinion: 

“Although the circuits . . . seem to agree that there are

some transnational situations to which the antifraud 

provisions of the securities laws are applicable, agreement 

appears to end at that point.”4 Id., at 665. See also id., at 

665–667 (describing the approaches of the various Circuits

and adopting yet another variation). 

At least one Court of Appeals has criticized this line of 

cases and the interpretive assumption that underlies it.

In Zoelsch v. Arthur Andersen & Co., 824 F. 2d 27, 32 

(1987) (Bork, J.), the District of Columbia Circuit observed 

that rather than courts’ “divining what ‘Congress would 

have wished’ if it had addressed the problem[, a] more

natural inquiry might be what jurisdiction Congress in 

—————— 

4The principal concurrence (see post, p. 1 (STEVENS, J., concurring in

judgment) (hereinafter concurrence)) disputes this characterization,

launching into a Homeric simile which takes as its point of departure

(and mistakes for praise rather than condemnation) then-Justice 

Rehnquist’s statement in Blue Chip Stamps v. Manor Drug Stores, 421 

U. S. 723, 737 (1975) that “[w]hen we deal with private actions under

Rule 10b–5, we deal with a judicial oak which has grown from little 

more than a legislative acorn.” Post, at 3. The concurrence seemingly

believes that the Courts of Appeals have carefully trimmed and

sculpted this “judicial oak” into a cohesive canopy, under the watchful 

eye of Judge Henry Friendly, the “master arborist,” ibid. See post, at 

2–3. Even if one thinks that the “conduct” and “effects” tests are 

numbered among Judge Friendly’s many fine contributions to the law, 

his successors, though perhaps under the impression that they nurture 

the same mighty oak, are in reality tending each its own botanically 

distinct tree. It is telling that the concurrence never attempts its own

synthesis of the various balancing tests the Circuits have adopted. 
Cite as: 561 U. S. ____ (2010) 11 

Opinion of the Court 

fact thought about and conferred.” Although tempted to 

apply the presumption against extraterritoriality and be

done with it, see id., at 31–32, that court deferred to the 

Second Circuit because of its “preeminence in the field of 

securities law,” id., at 32. See also Robinson v. TCI/US 

West Communications Inc., 117 F. 3d 900, 906–907 (CA5 

1997) (expressing agreement with Zoelsch’s criticism of 

the emphasis on policy considerations in some of the 

cases).

Commentators have criticized the unpredictable and

inconsistent application of §10(b) to transnational cases. 

See, e.g., Choi & Silberman, Transnational Litigation and 

Global Securities Class-Action Lawsuits, 2009 Wis. L. Rev. 

465, 467–468; Chang, Multinational Enforcement of U. S.

Securities Laws: The Need for the Clear and Restrained 

Scope of Extraterritorial Subject-Matter Jurisdiction, 9

Fordham J. Corp. & Fin. L. 89, 106–108, 115–116 (2004);

Langevoort, Schoenbaum Revisited: Limiting the Scope of

Antifraud Protection in an Internationalized Securities 

Marketplace, 55 Law & Contemp. Probs. 241, 244–248 

(1992). Some have challenged the premise underlying the 

Courts of Appeals’ approach, namely that Congress did not

consider the extraterritorial application of §10(b) (thereby 

leaving it open to the courts, supposedly, to determine

what Congress would have wanted). See, e.g., Sachs, The 

International Reach of Rule 10b–5: The Myth of Congressional Silence, 28 Colum. J. Transnat’l L. 677 (1990) (arguing that Congress considered, but rejected, applying the 

Exchange Act to transactions abroad). Others, more 

fundamentally, have noted that using congressional silence as a justification for judge-made rules violates the 

traditional principle that silence means no extraterritorial 

application. See, e.g., Note, Let There Be Fraud (Abroad):

A Proposal for A New U. S. Jurisprudence with Regard to 

the Extraterritorial Application of the Anti-Fraud Provisions of the 1933 and 1934 Securities Acts, 28 Law & Pol’y 
12 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

Int’l Bus. 477, 492–493 (1997). 

The criticisms seem to us justified. The results of judicial-speculation-made-law—divining what Congress would 

have wanted if it had thought of the situation before the

court—demonstrate the wisdom of the presumption 

against extraterritoriality. Rather than guess anew in 

each case, we apply the presumption in all cases, preserving a stable background against which Congress can legislate with predictable effects.5 

B 

Rule 10b–5, the regulation under which petitioners have

brought suit,6 was promulgated under §10(b), and “does 

—————— 

5The concurrence urges us to cast aside our inhibitions and join in 

the judicial lawmaking, because “[t]his entire area of law is replete with

judge-made rules,” post, at 3. It is doubtless true that, because the 

implied private cause of action under §10(b) and Rule 10b–5 is a thing

of our own creation, we have also defined its contours. See, e.g., Blue 

Chip Stamps, supra. But when it comes to “the scope of [the] conduct 

prohibited by [Rule 10b–5 and] §10(b), the text of the statute controls

our decision.” Central Bank of Denver, N. A. v. First Interstate Bank of 

Denver, N. A., 511 U. S. 164, 173 (1994). It is only with respect to the

additional “elements of the 10b–5 private liability scheme” that we 

“have had ‘to infer how the 1934 Congress would have addressed the

issue[s] had the 10b–5 action been included as an express provision in

the 1934 Act.’ ” Ibid. (quoting Musick, Peeler & Garrett v. Employers 

Ins. of Wausau, 508 U. S. 286, 294 (1933)). 6 Rule 10b–5 makes it unlawful: 

“for any person, directly or indirectly, by the use of any means or 

instrumentality of interstate commerce, or of the mails or of any facility

of any national securities exchange,

“(a) To employ any device, scheme, or artifice to defraud,

“(b) To make any untrue statement of a material fact or to omit to

state a material fact necessary in order to make the statements 

made, in the light of the circumstances under which they were made, 

not misleading, or

“(c) To engage in any act, practice, or course of business which

operates or would operate as a fraud or deceit upon any person, 

in connection with the purchase or sale of any security.” 17 CFR 

§240.10b–5 (2009). 
Cite as: 561 U. S. ____ (2010) 13 

Opinion of the Court 

not extend beyond conduct encompassed by §10(b)’s prohibition.” United States v. O’Hagan, 521 U. S. 642, 651 

(1997). Therefore, if §10(b) is not extraterritorial, neither 

is Rule 10b–5. 

On its face, §10(b) contains nothing to suggest it applies

abroad: 

“It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of 

interstate commerce or of the mails, or of any facility

of any national securities exchange . . . [t]o use or employ, in connection with the purchase or sale of any

security registered on a national securities exchange

or any security not so registered, . . . any manipulative or deceptive device or contrivance in contravention

of such rules and regulations as the [Securities and 

Exchange] Commission may prescribe . . . .” 15 

U. S. C. 78j(b). 

Petitioners and the Solicitor General contend, however, 

that three things indicate that §10(b) or the Exchange Act 

in general has at least some extraterritorial application. 

First, they point to the definition of “interstate commerce,” a term used in §10(b), which includes “trade, 

commerce, transportation, or communication . . . between 

any foreign country and any State.” 15 U. S. C. 

§78c(a)(17). But “we have repeatedly held that even statutes that contain broad language in their definitions of 

‘commerce’ that expressly refer to ‘foreign commerce’ do 

not apply abroad.” Aramco, 499 U. S., at 251; see id., at 

251–252 (discussing cases). The general reference to 

foreign commerce in the definition of “interstate commerce” does not defeat the presumption against extraterri­

—————— 

The Second Circuit considered petitioners’ appeal to raise only a 

claim under Rule 10b–5(b), since it found their claims under subsections (a) and (c) to be forfeited. 547 F. 3d, at 176, n. 7. We do likewise. 
14 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

toriality.7 

Petitioners and the Solicitor General next point out that

Congress, in describing the purposes of the Exchange Act,

observed that the “prices established and offered in such

transactions are generally disseminated 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 declares that “transactions in securities as commonly conducted upon securities exchanges and over-thecounter markets are affected with a national public interest.” §78b. Nothing suggests that this national public

interest pertains to transactions conducted upon foreign 

exchanges and markets. The fleeting reference to the 

dissemination and quotation abroad of the prices of securities traded in domestic exchanges and markets cannot 

overcome the presumption against extraterritoriality.

Finally, there is §30(b) of the Exchange Act, 15 U. S. C.

§78dd(b), which does mention the Act’s extraterritorial 

application: “The provisions of [the Exchange Act] or of

any rule or regulation thereunder shall not apply to any 

person insofar as he transacts a business in securities

without the jurisdiction of the United States,” unless he 

does so in violation of regulations promulgated by the

Securities and Exchange Commission “to prevent . . . 

evasion of [the Act].” (The parties have pointed us to no 

regulation promulgated pursuant to §30(b).) The Solicitor 

General argues that “[this] exemption would have no 

—————— 

7 This conclusion does not render meaningless the inclusion of “trade, 

commerce, transportation, or communication . . . between any foreign 

country and any State” in the definition of “interstate commerce.” 15 

U. S. C. §78c(a)(17). For example, an issuer based abroad, whose

executives approve the publication in the United States of misleading

information affecting the price of the issuer’s securities traded on the

New York Stock Exchange, probably will make use of some instrumentality of “communication . . . between [a] foreign country and [a] State.” 
Cite as: 561 U. S. ____ (2010) 15 

Opinion of the Court 

function if the Act did not apply in the first instance to

securities transactions that occur abroad.” Brief for 

United States as Amicus Curiae 14. 

We are not convinced. In the first place, it would be odd

for Congress to indicate the extraterritorial application of 

the whole Exchange Act by means of a provision imposing

a condition precedent to its application abroad. And if the 

whole Act applied abroad, why would the Commission’s 

enabling regulations be limited to those preventing “evasion” of the Act, rather than all those preventing “violation”? The provision seems to us directed at actions 

abroad that might conceal a domestic violation, or might

cause what would otherwise be a domestic violation to 

escape on a technicality. At most, the Solicitor General’s 

proposed inference is possible; but possible interpretations

of statutory language do not override the presumption 

against extraterritoriality. See Aramco, supra, at 253. 

The Solicitor General also fails to account for §30(a),

which reads in relevant part as follows: 

“It shall be unlawful for any broker or dealer . . . to 

make use of the mails or of any means or instrumentality of interstate commerce for the purpose of effecting on an exchange not 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 under the laws of, or has its principal place of 

business in, a place within or subject to the jurisdiction 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 effect. Its explicit provision 

for a specific extraterritorial application would be quite 

superfluous if the rest of the Exchange Act already applied

to transactions on foreign exchanges—and its limitation of 
16 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

that application to securities of domestic issuers would be

inoperative. Even if that were not true, when a statute 

provides for some extraterritorial application, the presumption against extraterritoriality operates to limit that

provision to its terms. See Microsoft Corp. v. AT&T Corp., 

550 U. S. 437, 455–456 (2007). No one claims that §30(a) 

applies here. 

The concurrence claims we have impermissibly narrowed the inquiry in evaluating whether a statute applies

abroad, citing for that point the dissent in Aramco, see 

post, at 6. But we do not say, as the concurrence seems to

think, that the presumption against extraterritoriality is a

“clear statement rule,” ibid., if by that is meant a requirement that a statute say “this law applies abroad.” 

Assuredly context can be consulted as well. But whatever 

sources of statutory meaning one consults to give “the 

most faithful reading” of the text, post, at 7, there is no 

clear indication of extraterritoriality here. The concurrence does not even try to refute that conclusion, but 

merely puts forward the same (at best) uncertain indications relied upon by petitioners and the Solicitor General. 

As the opinion for the Court in Aramco (which we prefer to 

the dissent) shows, those uncertain indications do not 

suffice.8 

In short, there is no affirmative indication in the Exchange Act that §10(b) applies extraterritorially, and we 

therefore conclude that it does not. 

—————— 

8The concurrence notes that, post-Aramco, Congress provided explicitly for extraterritorial application of Title VII, the statute at issue in 

Aramco. Post, at 6, n. 6. All this shows is that Congress knows how to 

give a statute explicit extraterritorial effect—and how to limit that

effect to particular applications, which is what the cited amendment 

did. See Civil Rights Act of 1991, §109, 105 Stat. 1077. 
Cite as: 561 U. S. ____ (2010) 17 

Opinion of the Court 

IV 

A 

Petitioners argue that the conclusion that §10(b) does

not apply extraterritorially does not resolve this case.

They contend that they seek no more than domestic application anyway, since Florida is where HomeSide and its 

senior executives engaged in the deceptive conduct of

manipulating HomeSide’s financial models; their complaint also alleged that Race and Hughes made misleading 

public statements there. This is less an answer to the 

presumption against extraterritorial application than it is 

an assertion—a quite valid assertion—that that presumption here (as often) is not self-evidently dispositive, but its

application requires further analysis. For it is a rare case 

of prohibited extraterritorial application that lacks all 

contact with the territory of the United States. But the 

presumption against extraterritorial application would be 

a craven watchdog indeed if it retreated to its kennel 

whenever some domestic activity is involved in the case.

The concurrence seems to imagine just such a timid sentinel, see post, 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 an American citizen. See 499 U. S., 

at 247. The Court concluded, however, that neither that 

territorial event nor that relationship was the “focus” of

congressional concern, id., at 255, but rather domestic 

employment. See also Foley Bros., 336 U. S., at 283, 285– 

286. 

Applying the same mode of analysis here, we think that

the focus of the Exchange Act is not upon the place where 

the deception originated, but upon purchases and sales of

securities in the United States. Section 10(b) does not 

punish deceptive conduct, but only deceptive conduct “in 

connection with the purchase or sale of any security registered on a national securities exchange or any security not 

so registered.” 15 U. S. C. §78j(b). See SEC v. Zandford, 
18 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

535 U. S. 813, 820 (2002). Those purchase-and-sale transactions are the objects of the statute’s solicitude. It is 

those transactions that the statute seeks to “regulate,” see 

Superintendent of Ins. of N. Y. v. Bankers Life & Casualty 

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 10. See also Ernst & Ernst v. 

Hochfelder, 425 U. S. 185, 195 (1976). And it is in our 

view only transactions in securities listed on domestic 

exchanges, and domestic transactions in other securities, 

to which §10(b) applies.9 

The primacy of the domestic exchange is suggested by 

the very prologue of the Exchange Act, which sets forth as

its object “[t]o provide for the regulation of securities 

exchanges . . . operating in interstate and foreign commerce and through the mails, to prevent inequitable and 

unfair practices on such exchanges . . . .” 48 Stat. 881. We 

know of no one who thought that the Act was intended to 

“regulat[e]” foreign securities exchanges—or indeed who 

even believed that under established principles of international law Congress had the power to do so. The Act’s 

registration requirements apply only to securities listed on

national securities exchanges. 15 U. S. C. §78l(a). 

—————— 

9The concurrence seems to think this test has little to do with our 

conclusion in Part III, supra, that §10(b) does not apply extraterritorially. See post, at 11–12. That is not so. If §10(b) did apply abroad, we 

would not need to determine which transnational frauds it applied to; it

would apply to all of them (barring some other limitation). Thus, 

although it is true, as we have said, that our threshold conclusion that

§10(b) has no extraterritorial effect does not resolve this case, it is a 

necessary first step in the analysis. 

The concurrence also makes the curious criticism that our evaluation 

of where a putative violation occurs is based on the text of §10(b) rather

than the doctrine in the Courts of Appeals. Post, at 1–2. Although it 

concedes that our test is textually plausible, post, at 1, it does not (and

cannot) make the same claim for the Court-of-Appeals doctrine it

endorses. That is enough to make our test the better one. 
Cite as: 561 U. S. ____ (2010) 19 

Opinion of the Court 

With regard to securities not registered on domestic 

exchanges, the exclusive focus on domestic purchases and

sales10 is strongly confirmed by §30(a) and (b), discussed 

earlier. The former extends the normal scope of the Exchange Act’s prohibitions to acts effecting, in violation of 

rules prescribed by the Commission, a “transaction” in a 

United States security “on an exchange not within or 

subject to the jurisdiction of the United States.” §78dd(a).

And the latter specifies that the Act does not apply to “any

person insofar as he transacts a business in securities

without the jurisdiction of the United States,” unless he 

does so in violation of regulations promulgated by the

Commission “to prevent evasion [of the Act].” §78dd(b).

Under both provisions it is the foreign location of the 

transaction that establishes (or reflects the presumption

of) the Act’s inapplicability, absent regulations by the 

Commission. 

The same focus on domestic transactions is evident in 

the Securities Act of 1933, 48 Stat. 74, enacted by the

same Congress as the Exchange Act, and forming part of

the same comprehensive regulation of securities trading.

See Central Bank of Denver, N. A. v. First Interstate Bank 

of Denver, N. A., 511 U. S. 164, 170–171 (1994). That 

legislation makes it unlawful to sell a security, through a

prospectus or otherwise, making use of “any means or 

instruments of transportation or communication in inter­

—————— 

10 That is in our view the meaning which the presumption against 

extraterritorial application requires for the words “purchase or sale, of

. . . any security not so registered” in §10(b)’s phrase “in connection with

the purchase or sale of any security registered on a national securities 

exchange or any security not so registered” (emphasis added). Even 

without the presumption against extraterritorial application, the only

alternative to that reading makes nonsense of the phrase, causing it to

cover all purchases and sales of registered securities, and all purchases

and sales of nonregistered securities—a thought which, if intended,

would surely have been expressed by the simpler phrase “all purchases 

and sales of securities.” 
20 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

state commerce or of the mails,” unless a registration 

statement is in effect. 15 U. S. C. §77e(a)(1). The Commission has interpreted that requirement “not to include 

. . . sales that occur outside the United States.” 17 CFR 

§230.901 (2009). 

Finally, we reject the notion that the Exchange Act 

reaches conduct in this country affecting exchanges or 

transactions abroad for the same reason that Aramco 

rejected overseas application of Title VII to all domestically concluded employment contracts or all employment

contracts with American employers: The probability of 

incompatibility with the applicable laws of other countries 

is so obvious that if Congress intended such foreign application “it would have addressed the subject of conflicts

with foreign laws and procedures.” 499 U. S., at 256. Like 

the United States, foreign countries regulate their domestic securities exchanges and securities transactions occurring within their territorial jurisdiction. And the regulation of other countries often differs from ours as to what 

constitutes fraud, what disclosures must be made, what 

damages are recoverable, what discovery is available in 

litigation, what individual actions may be joined in a 

single suit, what attorney’s fees are recoverable, and many

other matters. See, e.g., Brief for United Kingdom of 

Great Britain and Northern Ireland as Amicus Curiae 16– 

21. The Commonwealth of Australia, the United Kingdom

of Great Britain and Northern Ireland, and the Republic of 

France have filed amicus briefs in this case. So have 

(separately or jointly) such international and foreign

organizations as the International Chamber of Commerce, 

the Swiss Bankers Association, the Federation of German 

Industries, the French Business Confederation, the Institute of International Bankers, the European Banking 

Federation, the Australian Bankers’ Association, and the 

Association Française des Entreprises Privées. They all 

complain of the interference with foreign securities regula­
Cite as: 561 U. S. ____ (2010) 21 

Opinion of the Court 

tion that application of §10(b) abroad would produce, and 

urge the adoption of a clear test that will avoid that consequence. The transactional test we have adopted—whether 

the purchase or sale is made in the United States, or 

involves a security listed on a 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 the United States that is material to the fraud’s 

success.” Brief for United States as Amicus Curiae 16; see 

Brief for Petitioners 26. Neither the Solicitor General nor 

petitioners provide any textual support for this test. The 

Solicitor General sets forth a number of purposes such a

test would serve: achieving a high standard of business

ethics in the securities industry, ensuring honest securities markets and thereby promoting investor confidence,

and preventing the United States from becoming a “Barbary Coast” for malefactors perpetrating frauds in foreign 

markets. Brief for United States as Amicus Curiae 16–17. 

But it provides no textual support for the last of these

purposes, or for the first two as applied to the foreign

securities industry and securities markets abroad. It is 

our function to give the statute the effect its language

suggests, however modest that may be; not to extend it to 

admirable purposes it might be used to achieve.

If, moreover, one is to be attracted by the desirable 

consequences of the “significant and material conduct”

test, one should also be repulsed by its adverse consequences. While there is no reason to believe that the 

United States has become the Barbary Coast for those 

perpetrating frauds on foreign securities markets, some 

fear that it has become the Shangri-La of class-action

litigation for lawyers representing those allegedly cheated 
22 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

in foreign securities markets. See Brief for Infineon Technologies AG as Amicus Curiae 1–2, 22–25; Brief for European Aeronautic Defence & Space Co. N. V. et al. as Amici 

Curiae 2–4; Brief for Securities Industry and Financial

Markets Association et al. as Amici Curiae 10–16; Coffee, 

Securities Policeman to the World? The Cost of Global 

Class Actions, 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 Practice Handbook Series, PLI Order No. 11072, pp. 15–16 (Sept.-Oct.

2007); Buxbaum, Multinational Class Actions Under 

Federal Securities Law: Managing Jurisdictional Conflict,

46 Colum. J. Transnat’l L. 14, 38–41 (2007). 

As case support for the “significant and material conduct” test, the Solicitor General relies primarily on 

Pasquantino v. United States, 544 U. S. 349 (2005).11 In 

—————— 

11 Discussed in Brief for United States as Amicus Curiae 22–23. The 

Solicitor General also cites, without description, a number of antitrust 

cases to support the proposition that domestic conduct with consequences abroad can be covered even by a statute that does not apply

extraterritorially: Continental Ore Co. v. Union Carbide & Carbon 

Corp., 370 U. S. 690 (1962); United States v. Sisal Sales Corp., 274 

U. S. 268 (1927); Thomsen v. Cayser, 243 U. S. 66 (1917); United States 

v. Pacific & Arctic R. & Nav. Co., 228 U. S. 87 (1913). These are no 

longer of relevance to the point (if they ever were), since Continental 

Ore overruled the holding of American Banana Co. v. United Fruit Co., 

213 U. S. 347, 357 (1909), that the antitrust laws do not apply extraterritorially. See W. S. Kirkpatrick & Co. v. Environmental Tectonics 

Corp. Int’l, 493 U. S. 400, 407–408 (1990). Moreover, the preContinental Ore cases all involved conspiracies to restrain trade in the

United States, see Sisal Sales, supra, at 274–276; Thomsen, supra, at 

88; Pacific & Arctic, supra, at 105–106. And although a final case cited 

by the Solicitor General, Steele v. Bulova Watch Co., 344 U. S. 280, 

287–288 (1952), might be read to permit application of a nonextraterritorial statute whenever conduct in the United States contributes to a 

violation abroad, we have since read it as interpreting the statute at

issue—the Lanham Act—to have extraterritorial effect, EEOC v. 

Arabian American Oil Co., 499 U. S. 244, 252 (1991) (quoting 15 

U. S. C. §1127). 
Cite as: 561 U. S. ____ (2010) 23 

Opinion of the Court 

that case we concluded that the wire-fraud statute, 18 

U. S. C. §1343 (2009 ed., Supp. II), was violated by defendants who ordered liquor over the phone from a store in

Maryland with the intent to smuggle it into Canada and 

deprive the Canadian Government of revenue. 544 U. S., 

at 353, 371. Section 1343 prohibits “any scheme or artifice 

to defraud,”—fraud simpliciter, without any requirement

that it be “in connection with” any particular transaction 

or event. The Pasquantino Court said that the petitioners’

“offense was complete the moment they executed the 

scheme inside the United States,” and that it was “[t]his 

domestic element of petitioners’ conduct [that] the Government is punishing.” 544 U. S., at 371. Section 10(b),

by contrast, punishes not all acts of deception, but only 

such acts “in connection with the purchase or sale of any

security registered on a national securities exchange or 

any security not so registered.” Not deception alone, but

deception with respect to certain purchases or sales is

necessary for a violation of the statute.

The Solicitor General points out that the “significant

and material conduct” test is in accord with prevailing 

notions of international comity. If so, that proves that if 

the United States asserted prescriptive jurisdiction pursuant to the “significant and material conduct” test it would 

not violate customary international 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 interpretation similar to the “significant and material conduct” test, and that we should defer 

to that. In the two adjudications the Solicitor General 

cites, however, the Commission did not purport to be

providing its own interpretation of the statute, but relied 

on decisions of federal courts—mainly Court of Appeals

decisions that in turn relied on the Schoenbaum and 

Leasco decisions of the Second Circuit that we discussed 

earlier. See In re United Securities Clearing Corp., 52 
24 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

Opinion of the Court 

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 

interpretations that are reasonable in light of the principles of construction courts normally employ.” Aramco, 499 

U. S., at 260 (SCALIA, J., concurring in part and concurring 

in judgment). Since the Commission’s interpretations 

relied on cases we disapprove, which ignored or discarded 

the presumption against extraterritoriality, we owe them 

no deference. 

* * * 

Section 10(b) reaches the use of a manipulative or deceptive device or contrivance only in connection with the 

purchase or sale of a security listed on an American stock

exchange, and the purchase or sale of any other security in

the United States. This case involves no securities listed 

on a domestic exchange, and all aspects of the purchases 

complained of by those petitioners who still have live 

claims occurred outside the United States. Petitioners 

have therefore failed to state a claim on which relief can 

be granted. We affirm the dismissal of petitioners’ complaint on this ground. 

It is so ordered. 

JUSTICE SOTOMAYOR took no part in the consideration or 

decision of this case. 
_________________ 

_________________ 

Cite as: 561 U. S. ____ (2010) 1 

Opinion of BREYER, J. 

SUPREME COURT OF THE UNITED STATES 

No. 08–1191 

ROBERT MORRISON, ET AL., PETITIONERS v.

NATIONAL AUSTRALIA BANK 

LTD. ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE SECOND CIRCUIT

[June 24, 2010] 

JUSTICE BREYER, concurring in part and concurring in 

the judgment. 

Section 10(b) of the Securities Exchange Act of 1934

applies to fraud “in connection with” two categories of 

transactions: (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 this case, the purchased securities are 

listed only on a few foreign exchanges, none of which has 

registered with the Securities and Exchange Commission

as a “national securities exchange.” See §78f. The first 

category therefore does not apply. Further, the relevant 

purchases of these unregistered securities took place 

entirely in Australia and involved only Australian investors. And in accordance with the presumption against

extraterritoriality, I do not read the second category to

include such transactions. Thus, while state law or other 

federal fraud statutes, see, e.g., 18 U. S. C. §1341 (mail 

fraud), §1343 (wire fraud), may apply to the fraudulent 

activity alleged here to have occurred in the United States, 

I believe that §10(b) does not. This case does not require

us to consider other circumstances. 

To the extent the Court’s opinion is consistent with

these views, I join it. 
_________________ 

_________________ 

Cite as: 561 U. S. ____ (2010) 1 

STEVENS, J., concurring in judgment 

SUPREME COURT OF THE UNITED STATES 

No. 08–1191 

ROBERT MORRISON, ET AL., PETITIONERS v.

NATIONAL AUSTRALIA BANK 

LTD. ET AL. 

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE SECOND CIRCUIT

[June 24, 2010] 

JUSTICE STEVENS, with whom JUSTICE GINSBURG joins,

concurring in the judgment. 

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 approach

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 reach of §10(b) of the Securities Exchange Act of 1934 (Exchange Act), 15 U. S. C.

§78j(b), and SEC Rule 10b–5, 17 CFR §240.10b–5(b) 

(2009): Henceforth, those provisions will extend only to

“transactions in securities listed on domestic exchanges

. . . and domestic transactions in other securities,” ante, at 

18. If one confines one’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 analysis is not 

nearly so compelling, in my view, as to warrant the abandonment of their doctrine. 

The text and history of §10(b) are famously opaque on

the question of when, exactly, transnational securities 
2 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

STEVENS, J., concurring in judgment 

frauds fall within the statute’s compass. As those types of 

frauds became more common in the latter half of the 20th 

century, the federal courts were increasingly called upon

to wrestle with that question. The Court of Appeals for 

the Second Circuit, located in the Nation’s financial center, led the effort. Beginning in earnest with Schoenbaum 

v. Firstbrook, 405 F. 2d 200, rev’d on rehearing on other 

grounds, 405 F. 2d 215 (1968) (en banc), that court strove,

over an extended series of cases, to “discern” under what 

circumstances “Congress would have wished the precious 

resources of the United States courts and law enforcement 

agencies to be devoted to [transnational] transactions,” 

547 F. 3d 167, 170 (2008) (internal quotation marks omitted). Relying on opinions by Judge Henry Friendly,1 the 

Second Circuit eventually settled on a conduct-and-effects 

test. This test asks “(1) whether the wrongful conduct

occurred in the Unites States, and (2) whether the wrongful conduct had a substantial effect in the United States or 

upon United States citizens.” Id., at 171. Numerous cases 

flesh out the proper application of each prong. 

The Second Circuit’s test became the “north star” of 

§10(b) jurisprudence, ante, at 8, not just regionally but 

nationally as well. With minor variations, other courts 

converged on the same basic approach.2 See Brief for 

United States as Amicus Curiae 15 (“The courts have 

—————— 

1See, e.g., IIT, Int’l Inv. Trust v. Cornfeld, 619 F. 2d 909 (CA2 1980); 

IIT v. Vencap, Ltd., 519 F. 2d 1001 (CA2 1975); Bersch v. Drexel Firestone, Inc., 519 F. 2d 974 (CA2 1975); Leasco Data Processing Equip. 

Corp. v. Maxwell, 468 F. 2d 1326 (CA2 1972). 2 I acknowledge that the Courts of Appeals have differed in their applications of the conduct-and-effects test, with the consequence that

their respective rulings are not perfectly “cohesive.” Ante, at 10, n. 4. 

It is nevertheless significant that the other Courts of Appeals, along

with the other branches of Government, have “embraced the Second 

Circuit’s approach,” ante, at 9. If this Court were to do likewise, as I 

would have us do, the lower courts would of course cohere even more 

tightly around the Second Circuit’s rule. 
Cite as: 561 U. S. ____ (2010) 3 

STEVENS, J., concurring in judgment 

uniformly agreed that Section 10(b) can apply to a transnational securities 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 Restatement (Third) of Foreign Relations Law of the 

United States §416 (1986) (setting forth conduct-andeffects test). Neither Congress nor the Securities Exchange Commission (Commission) acted to change the

law. To the contrary, the Commission largely adopted the 

Second Circuit’s position in its own adjudications. See 

ante, at 23–24. 

In light of this history, the Court’s critique of the decision below for applying “judge-made rules” is quite misplaced. Ante, at 11. This entire area of law is replete with 

judge-made rules, which give concrete meaning to Congress’ general commands.3 “When we deal with private 

actions under Rule 10b–5,” then-Justice Rehnquist wrote 

many years ago, “we deal with a judicial oak which has 

grown from little more than a legislative acorn.” Blue 

Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 737 

(1975). The “‘Mother Court’” of securities law tended to 

that oak. Id., at 762 (Blackmun, J., dissenting) (describing 

the Second Circuit). One of our greatest jurists—the judge

who, “without a doubt, did more to shape the law of securities regulation than any [other] in the country”4—was its 

master arborist. 

The development of §10(b) law was hardly an instance of 

—————— 

3 It is true that “when it comes to ‘the scope of [the] conduct prohibited by [Rule 10b–5 and] §10(b), the text of the statute [has] control[led]

our decision[s].’ ” Ante, at 12, n. 5 (quoting Central Bank of Denver, N. 

A. v. First Interstate Bank of Denver, N. A., 511 U. S. 164, 173 (1994); 

some brackets in original). The problem, when it comes to transnational securities frauds, is that the text of the statute does not provide a 

great deal of control. As with any broadly phrased, longstanding 

statute, courts have had to fill in the gaps. 4Loss, In Memoriam: Henry J. Friendly, 99 Harv. L. Rev. 1722, 1723

(1986). 
4 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

STEVENS, J., concurring in judgment 

judicial usurpation. Congress invited an expansive role 

for judicial elaboration when it crafted such an open-ended 

statute in 1934. And both Congress and the Commission 

subsequently affirmed that role when they left intact the 

relevant statutory and regulatory language, respectively,

throughout all the years that followed. See Brief for 

Alecta pensionsförsäkring, ömsesidigt et al. as Amici 

Curiae 31–33; cf. Musick, Peeler & Garrett v. Employers 

Ins. of Wausau, 508 U. S. 286, 294 (1993) (inferring from

recent legislation Congress’ desire to “acknowledg[e]” the 

10b–5 action without “entangling” itself in the precise 

formulation thereof). Unlike certain other domains of 

securities law, this is “a case in which Congress has enacted a regulatory statute and then has accepted, over a

long period of time, broad judicial authority to define

substantive standards of conduct and liability,” and much 

else besides. Stoneridge Investment Partners, LLC v. 

Scientific-Atlanta, Inc., 552 U. S. 148, 163 (2008).

This Court has not shied away from acknowledging that

authority. We have consistently confirmed that, in applying §10(b) and Rule 10b–5, courts may need “to flesh out 

the portions of the law with respect to which neither the 

congressional enactment nor the administrative regulations offer conclusive guidance.” Blue Chip, 421 U. S., at 

737. And we have unanimously “recogniz[ed] a judicial

authority to shape . . . the 10b–5 cause of action,” for that

is a task “Congress has left to us.” Musick, Peeler, 508 

U. S., at 293, 294; see also id., at 292 (noting with approval that “federal courts have accepted and exercised

the principal responsibility for the continuing elaboration 

of the scope of the 10b–5 right and the definition of the 

duties it imposes”). Indeed, we have unanimously endorsed the Second Circuit’s basic interpretive approach to

§10(b)—ridiculed by the Court today—of striving to “di­
Cite as: 561 U. S. ____ (2010) 5 

STEVENS, J., concurring in judgment 

vin[e] what Congress would have wanted,” ante, at 12.5 

“Our task,” we have said, is “to attempt to infer how the

1934 Congress would have addressed the issue.” Musick, 

Peeler, 508 U. S., at 294. 

Thus, while the Court devotes a considerable amount of 

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 tacit approval of Congress and the Commission 

and with the general assent of its sister Circuits. That 

history is a reason we should give additional weight to the

Second Circuit’s “judge-made” doctrine, not a reason to

denigrate it. “The longstanding acceptance by the courts,

coupled with Congress’ failure to reject [its] reasonable 

interpretation of the wording of §10(b), . . . argues significantly in favor of acceptance of the [Second Circuit] rule

by this Court.” Blue Chip, 421 U. S., at 733. 

II 

The Court’s other main critique of the Second Circuit’s

approach—apart from what the Court views as its excessive reliance on functional considerations and reconstructed congressional intent—is that the Second Circuit 

—————— 

5Even as the Court repeatedly declined to grant certiorari on cases

raising the issue, individual Justices went further and endorsed the 

Second Circuit’s basic approach to determining the transnational reach

of §10(b). See, e.g., Scherk v. Alberto-Culver Co., 417 U. S. 506, 529– 

530 (1974) (Douglas, J., joined by Brennan, White, and Marshall, JJ.,

dissenting) (“It has been recognized that the 1934 Act, including the

protections of Rule 10b–5, applies when foreign defendants have

defrauded American investors, particularly when . . . they have profited 

by virtue of proscribed conduct within our boundaries. This is true 

even when the defendant is organized under the laws of a foreign 

country, is conducting much of its activity outside the United States, 

and is therefore governed largely by foreign law” (citing, inter alia, 

Leasco, 468 F. 2d, at 1334–1339, and Schoenbaum v. Firstbrook, 405 

F. 2d 200, rev’d on rehearing on other grounds, 405 F. 2d 215 (CA2

1968) (en banc))). 
6 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

STEVENS, J., concurring in judgment 

has “disregard[ed]” the presumption against extraterritoriality. Ante, at 6. It is the Court, however, that misapplies the presumption, in two main respects. 

First, the Court seeks to transform the presumption

from a flexible rule of thumb into something more like a 

clear statement rule. We have been here before. In the 

case on which the Court primarily relies, EEOC v. Arabian American Oil Co., 499 U. S. 244 (1991) (Aramco), 

Chief Justice Rehnquist’s majority opinion included a 

sentence that appeared to make the same move. See id., 

at 258 (“Congress’ awareness of the need to make a clear 

statement that a statute applies overseas is amply demonstrated by the numerous occasions on which it has expressly legislated the extraterritorial application of a 

statute”). Justice Marshall, in dissent, vigorously objected. See id., at 261 (“[C]ontrary to what one would 

conclude from the majority’s analysis, this canon is not a 

‘clear statement’ rule, the application of which relieves a 

court of the duty to give effect to all available indicia of the

legislative will”).

 Yet even Aramco—surely the most extreme application 

of the presumption against extraterritoriality in my time

on the Court6—contained numerous passages suggesting

that the presumption may be overcome without a clear 

directive. See id., at 248–255 (majority opinion) (repeatedly identifying congressional “intent” as the touchstone of 

the presumption). And our cases both before and after 

Aramco make perfectly clear that the Court continues to 

give effect to “all available evidence about the meaning” of 

a provision when considering its extraterritorial application, lest we defy Congress’ will. Sale v. Haitian Centers 

Council, Inc., 509 U. S. 155, 177 (1993) (emphasis added).7 

—————— 

6And also one of the most short lived. See Civil Rights Act of 1991, 

§109, 105 Stat. 1077 (repudiating Aramco). 7See also, e.g., Hartford Fire Ins. Co. v. California, 509 U. S. 764 
Cite as: 561 U. S. ____ (2010) 7 

STEVENS, J., concurring in judgment 

Contrary to JUSTICE SCALIA’s personal view of statutory

interpretation, that evidence legitimately encompasses

more than the enacted text. Hence, while the Court’s 

dictum that “[w]hen a statute gives no clear indication of

an extraterritorial application, it has none,” ante, at 6, 

makes for a nice catchphrase, the point is overstated. The 

presumption against extraterritoriality can be useful as a

theory of congressional purpose, a tool for managing international conflict, a background norm, a tiebreaker. It 

does not relieve courts of their duty to give statutes the 

most faithful reading possible.

Second, and more fundamentally, the Court errs in

suggesting that the presumption against extraterritoriality is fatal to the Second Circuit’s test. For even if the 

presumption really were a clear statement (or “clear indication,” ante, at 6, 16) rule, it would have only marginal

relevance to this case. 

It is true, of course, that “this Court ordinarily construes 

—————— 

(1993) (declining to apply presumption in assessing question of

Sherman Act extraterritoriality); Smith v. United States, 507 U. S. 197, 

201–204 (1993) (opinion for the Court by Rehnquist, C. J.) (considering

presumption “[l]astly,” to resolve “any lingering doubt,” after considering structure, legislative history, and judicial interpretations of Federal 

Tort Claims Act); cf. Sale, 509 U. S., at 188 (stating that presumption

“has special force when we are construing treaty and statutory provisions that,” unlike §10(b), “may involve foreign and military affairs for 

which the President has unique responsibility”); Dodge, Understanding 

the Presumption Against Extraterritoriality, 16 Berkeley J. Int’l L. 85, 

110 (1998) (explaining that lower courts “have been unanimous in 

concluding that the presumption against extraterritoriality is not a 

clear statement rule”). The Court also relies on Microsoft Corp. v. 

AT&T Corp., 550 U. S. 437, 455–456 (2007). Ante, at 16. Yet Microsoft’s articulation of the presumption is a far cry from the Court’s rigid 

theory. “As a principle of general application,” Microsoft innocuously

observed, “we have stated that courts should ‘assume that legislators 

take account of the legitimate sovereign interests of other nations when 

they write American laws.’ ” 550 U. S., at 455 (quoting F. Hoffmann-La 

Roche Ltd v. Empagran S. A., 542 U. S. 155, 164 (2004)). 
8 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

STEVENS, J., concurring in judgment 

ambiguous statutes to avoid unreasonable interference

with the sovereign authority of other nations,” 

F. Hoffmann-La Roche Ltd v. Empagran S. A., 542 U. S. 

155, 164 (2004), and that, absent contrary evidence, we

presume “Congress is primarily concerned with domestic 

conditions,” Foley Bros., Inc. v. Filardo, 336 U. S. 281, 285 

(1949). Accordingly, the presumption against extraterritoriality “provides a sound basis for concluding 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 United States as Amicus 

Curiae 22. But that is just about all it provides a sound 

basis for concluding. And the conclusion is not very illuminating, because no party to the litigation disputes it.

No one contends that §10(b) applies to wholly foreign

frauds. 

Rather, the real question in this case is how much, and

what kinds of, domestic contacts are sufficient to trigger 

application of §10(b).8 In developing its conduct-andeffects test, the Second Circuit endeavored to derive a 

solution from the Exchange Act’s text, structure, history,

and purpose. Judge Friendly and his colleagues were well 

aware that United States courts “cannot and should not 

expend [their] resources resolving cases that do not affect

Americans or involve fraud emanating from America.” 

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

“‘whether there is sufficient United States involvement’” 

(quoting Itoba Ltd. v. Lep Group PLC, 54 F. 3d 118, 122 

(CA2 1995))).

The question just stated does not admit of an easy an­

—————— 

8Cf. Dodge, 16 Berkeley J. Int’l L., at 88, n. 25 (regardless whether

one frames question as “whether the presumption against extraterritoriality should apply [or] whether the regulation is extraterritorial,” “one

must ultimately grapple with the basic issue of what connection to the

United States is sufficient to justify the assumption that Congress

would want its laws to be applied”). 
Cite as: 561 U. S. ____ (2010) 9 

STEVENS, J., concurring in judgment 

swer. The text of the Exchange Act indicates that §10(b) 

extends to at least some activities with an international 

component, but, again, it is not pellucid as to which ones.9 

The Second Circuit draws the line as follows: §10(b) extends to transnational frauds “only when substantial acts 

in furtherance of the fraud were committed within the 

United States,” SEC v. Berger, 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, Schoenbaum, 

405 F. 2d, at 206.10 

This approach is consistent with the understanding 

—————— 

9By its terms, §10(b) regulates “interstate commerce,” 15 U. S. C. 

§78j, which the Exchange Act defines to include “trade, commerce, 

transportation, or communication . . . between any foreign country and

any State, or between any State and any place or ship outside thereof.” 

§78c(a)(17). Other provisions of the Exchange Act make clear that

Congress contemplated some amount of transnational application. See, 

e.g., §78b(2) (stating, in explaining necessity for regulation, that “[t]he

prices established and offered in [securities] transactions are generally 

disseminated and quoted throughout the United States and foreign 

countries and constitute a basis for determining and establishing the 

prices at which securities are bought and sold”); §78dd(b) (exempting

from regulation foreign parties “unless” they transact business in 

securities “in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate to prevent the

evasion of this chapter” (emphasis added)); see also Schoenbaum, 405 

F. 2d, at 206–208 (reviewing statutory text and legislative history).

The Court finds these textual references insufficient to overcome the 

presumption against extraterritoriality, ante, at 13–15, but as explained in the main text, that finding rests upon the Court’s misapplication of the presumption. 10The Government submits that a “transnational securities fraud 

violates Section 10(b) if significant conduct material to the fraud’s 

success occurs in the United States.” Brief for United States as Amicus 

Curiae 6. I understand the Government’s submission to be largely a

repackaging of the “conduct” prong of the Second Circuit’s test. The 

Government expresses no view on that test’s “effects” prong, as the

decision below considered only respondents’ conduct. See id., at 15, 

n. 2; 547 F. 3d 167, 171 (CA2 2008). 
10 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

STEVENS, J., concurring in judgment 

shared by most scholars that Congress, in passing the 

Exchange Act, “expected U. S. securities laws to apply to 

certain international transactions or conduct.” Buxbaum, 

Multinational Class Actions Under Federal Securities 

Law: Managing Jurisdictional Conflict, 46 Colum. J. 

Transnat’l L. 14, 19 (2007); see also Leasco Data Processing Equip. Corp. v. Maxwell, 468 F. 2d 1326, 1336 (CA2 

1972) (Friendly, J.) (detailing evidence that Congress

“meant §10(b) to protect against fraud in the sale or purchase of securities whether or not these were traded on 

organized United States markets”). It is also consistent 

with the traditional understanding, regnant in the 1930’s

as it is now, that the presumption against extraterritoriality does not apply “when the conduct [at issue] occurs

within the United States,” and has lesser force when “the 

failure to extend the scope of the statute to a foreign setting will result in adverse effects within the United 

States.” Environmental Defense Fund, Inc. v. Massey, 986 

F. 2d 528, 531 (CADC 1993); accord, Restatement (Second) 

of Foreign Relations Law of the United States §38 (1964–

1965); cf. Small v. United States, 544 U. S. 385, 400 (2005) 

(THOMAS, J., joined by SCALIA and KENNEDY, JJ., dissenting) (presumption against extraterritoriality “lend[s] no

support” to a “rule restricting a federal statute from reaching conduct within U. S. borders”); Continental Ore Co. v. 

Union Carbide & Carbon Corp., 370 U. S. 690, 705 (1962) 

(presumption against extraterritoriality not controlling 

“[s]ince the activities of the defendants had an impact

within the United States and upon its foreign trade”).

And it strikes a reasonable balance between the goals of

“preventing the export of fraud from America,” protecting

shareholders, enhancing investor confidence, and deterring corporate misconduct, on the one hand, and conserving United States resources and limiting conflict with 
Cite as: 561 U. S. ____ (2010) 11 

STEVENS, J., concurring in judgment 

foreign law, on the other.11 547 F. 3d, at 175. 

Thus, while §10(b) may not give 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 should cover at least some of them, see n. 9, supra. 

And in my view, the Second Circuit has done the best job

of discerning what sorts of transnational frauds Congress

meant in 1934—and still means today—to regulate. I do 

not take issue with the Court for beginning its inquiry 

with the statutory text, rather than the doctrine in the

Courts of Appeals. Cf. ante, at 18, n. 9. I take issue with 

the Court for beginning and ending its inquiry with the 

statutory text, when the text does not speak with geographic precision, and for dismissing the long pedigree of, 

and the persuasive account of congressional intent embodied in, the Second Circuit’s rule. 

Repudiating the Second Circuit’s approach in its entirety, 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 exchange.12 The real motor of the 

—————— 

11Given its focus on “domestic conditions,” Foley Bros., Inc. v. Filardo, 

336 U. S. 281, 285 (1949), I expect that virtually all “ ‘foreign-cubed’ ” 

actions—actions in which “(1) foreign plaintiffs [are] suing (2) a foreign

issuer in an American court for violations of American securities laws 

based on securities transactions in (3) foreign countries,” 547 F. 3d, at 

172—would fail the Second Circuit’s test. As they generally should. 

Under these circumstances, the odds of the fraud having a substantial

connection to the United States are low. In recognition of the Exchange 

Act’s focus on American investors and the novelty of foreign-cubed 

lawsuits, and in the interest of promoting clarity, it might have been 

appropriate to incorporate one bright line into the Second Circuit’s test, 

by categorically excluding such lawsuits from §10(b)’s ambit. 12The Court’s opinion does not, however, foreclose the Commission 

from bringing enforcement actions in additional circumstances, as no

issue concerning the Commission’s authority is presented by this case. 

The Commission’s enforcement proceedings not only differ from private 

§10(b) actions in numerous potentially relevant respects, see Brief for 
12 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

STEVENS, J., concurring in judgment 

Court’s opinion, it seems, is not the presumption against 

extraterritoriality but rather the Court’s belief that transactions on domestic exchanges are “the focus of the Exchange Act” and “the objects of [its] solicitude.” Ante, at 

17, 18. In reality, however, it is the “public interest” and

“the interests of investors” that are the objects of the

statute’s solicitude. Europe & Overseas Commodity Traders, S. A. v. Banque Paribas London, 147 F. 3d 118, 125 

(CA2 1998) (citing H. R. Rep. No. 1838, 73d Cong., 2d 

Sess., 32–33 (1934)); see also Basic Inc. v. Levinson, 485 

U. S. 224, 230 (1988) (“The 1934 Act was designed to

protect investors against manipulation of stock prices” 

(citing S. Rep. No. 792, 73d Cong., 2d Sess., 1–5 (1934)); 

Ernst & Ernst v. Hochfelder, 425 U. S. 185, 195 (1976) 

(“The 1934 Act was intended principally to protect investors . . . ”); S. Rep. No. 1455, 73d Cong., 2d Sess., 68 (1934) 

(“The Securities Exchange Act of 1934 aims to protect the

interests of the public against the predatory operations of 

directors, officers, and principal stockholders of corporations . . . ”). And while the clarity and simplicity of the 

Court’s test may have some salutary consequences, like all

bright-line rules it also has drawbacks. 

Imagine, for example, an American investor who buys 

shares in a company listed only on an overseas exchange. 

That company has a major American subsidiary with 

executives based in New York City; and it was in New 

York City that the executives masterminded and implemented a massive deception which artificially inflated the

stock price—and which will, upon its disclosure, cause the 

—————— 

United States as Amicus Curiae 12–13, but they also pose a lesser 

threat to international comity, id., at 26–27; cf. Empagran, 542 U. S., at 

171 (“ ‘[P]rivate plaintiffs often are unwilling to exercise the degree of

self-restraint and consideration of foreign governmental sensibilities

generally exercised by the U. S. Government’ ” (quoting Griffin, Extraterritoriality in U. S. and EU Antitrust Enforcement, 67 Antitrust L. J.

159, 194 (1999); alteration in original)). 
Cite as: 561 U. S. ____ (2010) 13 

STEVENS, J., concurring in judgment 

price to plummet. Or, imagine that those same executives

go knocking on doors in Manhattan and convince 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 new test, be barred from seeking relief under 

§10(b).

The oddity of that result should give pause. For in 

walling 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 Congress that passed the Exchange Act.

Indeed, the Court’s rule turns §10(b) jurisprudence (and

the presumption against extraterritoriality) on its head,

by withdrawing the statute’s application from cases in

which there is both substantial wrongful conduct that 

occurred in the United States and a substantial injurious

effect on United States markets and citizens. 

III 

In my judgment, if petitioners’ allegations of fraudulent 

misconduct that took place in Florida are true, then respondents may have violated §10(b), and could potentially 

be held accountable in an enforcement proceeding 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 occurred in the United States, or that the fraud 

had an adverse impact on American investors or markets, 

may maintain a private action to recover damages they

suffered abroad. Some cases involving foreign securities 

transactions have extensive links to, and ramifications for, 

this country; this case has Australia written all over it.

Accordingly, for essentially the reasons stated in the Court 

of Appeals’ opinion, I would affirm its judgment.

The Court instead elects to upend a significant area of 

securities law based on a plausible, but hardly decisive, 
14 MORRISON v. NATIONAL AUSTRALIA BANK LTD. 

STEVENS, J., concurring in judgment 

construction of the statutory text. In so doing, it pays

short shrift to the United States’ interest in remedying

frauds that transpire on American soil or harm American 

citizens, as well as to the accumulated wisdom and experience of the lower courts. I happen to agree with the result

the Court reaches in this case. But “I respectfully dissent,” once again, “from the Court’s continuing campaign 

to render the private cause of action under §10(b)

toothless.” Stoneridge, 552 U. S., at 175 (STEVENS, J., 

dissenting).