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Before: Newman, Calabresi, B.D. Parker, C.JJ. http://nycourts.law.com/CourtDocumentViewer.asp?view=Document&docID=104731 NATIONAL AUSTRALIA Bank (NAB) bought U.S. mortgage service provider Home Side Lending Inc. in 1998. By 2001 it was forced to admit that calculations on HomeSide’s fees from servicing mortgages were wrong. $2.2 billion in write downs were announced. NAB’s shares not traded on U.S. exchanges, and its American Depository Receipts traded on the New York Stock Exchange, lost value. The appellate court declined to adopt a bright-line rule barring “foreign-cubed” securities transaction plaintiffs from suing, in U.S. courts, foreign securities issuers for breaches of U.S. securities law based on transactions in foreign countries. It determined that Psimenos v. E.F. Hutton & Co.‘s “conduct test” and “effects test” as to extraterritorial reach of §10(b) of the Securities Act of 1934 can be applied collectively. The panel affirmed dismissal of foreign plaintiffs’ claims under §10(b) for lack of subject matter jurisdiction. It determined that the “heart of the fraud” occurred in Australia and lay outside the United States.

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