MULTINATIONAL ENFORCEMENT OF U.S. SECURITIES LAWS: THE NEED FOR THE CLEAR AND RESTRAINED SCOPE OF EXTRATERRITORIAL SUBJECT-MATTER JURISDICTION

Despite the usual presumption for the territorial application of securities laws, US courts have applied domestic antifraud provisions extraterritorially to transactions in other countries, justifying its actions as necessary to protect US investors and the integrity of US markets. The current approaches of US courts, however, have some problematic features. Because courts are not well suited to analyze the various delicate issues related to the application of antifraud rules, this article affirms the proposition that Congress should grapple with the issue of extraterritoriality and provide the judiciary with clear guidance as to the proper reach of the anti-fraud provisions. Moreover, believing that the current effects and conduct tests of the courts give practical approaches to decide the reasonable scope of extraterritoriality, this article makes some recommendations for the scope of extraterritorial subject-matter jurisdiction by suggesting modified and narrowed effects and conduct tests.