This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
Petitioners allege that fraudulent conduct involving financial information was intended to be incorporated into the Respondent’s Australian financial statements.
The case raises the question of whether Section 10(b) of the 1934 Exchange Act applies to conduct that occurs in the United States but affects a foreign issuer.
Background and question before the Court
According to Petitioners, petitioners identified two issues for the Court: (1) the scope of Section 10(b) when applied to alleged fraudulent conduct with financial information sent to Australia, and (2) the reasonableness of applying the statute under those circumstances.
What each side argues
Petitioners’ Position
Petitioners argue that Section 10(b) should be applied to the alleged fraud because the conduct occurred in the United States and materially affected the Australian financial statements.
Respondents’ Position
According to George T. Conway, III, the judgment of the Court of Appeals should be affirmed.
According to George T. Conway, III, section 10(b) contains a presumption against extraterritoriality and the Charming Betsy rule, so it should not apply to transactions of foreign issuers on foreign exchanges.
According to George T. Conway, III, the Section 10(b) private right of action is purely implied, not expressly provided.
According to George T. Conway, III, morrison’s claims should be dismissed because he suffered no damages and the fraud allegations lack the particularity required by the PSLRA.
What happened at oral argument
Chief Justice Roberts asked whether derivatives were at issue.
Justice Ginsburg asked which U.S. investor was harmed.
Justice Breyer asked if the petitioner wanted to finish.
Justice Scalia asked what the test is for whether the law is being applied internationally.
Justice Stevens asked whether a class of American shareholders of the Australian bank could be plaintiffs.
Justice Kennedy asked about limitations on discovery and the government’s test versus a foreign‑exchange test.
- [1] 7148027cefa3113a9ea4-r1-2bd9dfb091769f04.pdf, p. 20
- [2] 7148027cefa3113a9ea4-r1-2bd9dfb091769f04.pdf, p. 21
- [3] 7148027cefa3113a9ea4-r1-2bd9dfb091769f04.pdf, p. 22
- [4] 7148027cefa3113a9ea4-r1-2bd9dfb091769f04.pdf, p. 27
- [5] 7148027cefa3113a9ea4-r1-2bd9dfb091769f04.pdf, p. 28
- [6] 7148027cefa3113a9ea4-r1-2bd9dfb091769f04.pdf, p. 32
What the Court decided
Why it matters
The alleged fraud could result in a $1.75 billion writedown and affect a $187 billion mortgage portfolio.
According to Matthew D. Roberts (United States), the alleged fraud violated Section 10(b) because significant conduct occurred in the United States.
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- 7148027cefa3113a9ea4-r1-2bd9dfb091769f04.pdforal argument transcript
Guide generated September 23, 2026. Automated validation accepted this version.