Applying Morrison v. National Australia Bank, Ltd. (2010) 561 U.S. 247, this decision holds that the district court erred in dismissing a complaint by US citizens under section 10(b) and 20(a) of the Securities Exchange Act arising from alleged fraud by a foreign issuer of securities in connection with the US citizens’ purchase in the US of American Depository Shares or Receipts entitling them to the shares of the foreign issuer.  Plaintiffs could amend to state that they incurred the liability to take and pay for securities, and Toshiba incurred the liability to deliver securities in the US on the over-the-counter market and that the fraud was in connection with plaintiff’s purchases.  That sufficed to make transaction “domestic” and subject to the Securities Exchange Act.

Ninth Circuit Court of Appeals (Wardlaw, J.); July 17, 2018; 2018 U.S. App. LEXIS 19640