The proliferation of private securities class action lawsuits remains a threat to companies whose securities are listed or traded in the United States. Securities class actions impose an extremely high cost on companies: Over the last decade, there have been more than 1,850 securities class action filings, resulting in nearly $60 billion in total settlements. These notoriously lawyer-driven filings place a significant burden on the federal bench and threaten to impede the competitiveness of the U.S. capital markets and economy.
The threat of being subject to securities class actions is among the chief deterrents to listing on an American exchange, especially in the wake of the Supreme Court’s opinion in Morrison v. National Australia Bank, 130 S. Ct. 2869 (2010). Morrison restricted the extraterritorial application of the anti-fraud provisions of the Securities and Exchange Act of 1934 (Exchange Act) primarily to securities listed on a domestic exchange, thereby providing a significant inducement to list shares outside the United States.
