In European Community v. RJR Nabisco, Inc., Case No. 11-CV-2475 (2d Cir. Apr. 23, 2014), the United States Court of Appeals for the Second Circuit held that the Racketeer Influenced and Corrupt Organizations (“RICO”) statute, 18 U.S.C. § 1961, et seq., could apply to conduct outside the territory of the United States. In doing so, the Second Circuit addressed the United States Supreme Court’s ruling in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010) [blog article here], which held that United States statutes are presumed not apply to extraterritorial conduct, unless Congress has clearly indicated its intent that the statute have extraterritorial application. Applying Morrison, the Second Circuit determined that RICO could apply to extraterritorial conduct, because a number of the statutes listed as predicate acts for RICO liability clearly apply extraterritorially. The Second Circuit ultimately concluded “that RICO applies extraterritorially if, and only if, liability or guilt could attach to extraterritorial conduct under the relevant RICO predicate.” Thus, even after the Supreme Court’s ruling in Morrison, RICO liability can still attach to foreign conduct where the underlying predicate statute applies to extraterritorial conduct.
Continue Reading Second Circuit Applies Morrison v. National Australia Bank to Allow Certain Extraterritorial Application of RICO
Second Circuit Applies Morrison to Criminal Prosecution Under Section 10(b) and Rule 10b-5
In United States v. Vilar, Case Nos. 10-521(L), 10-580(CON), 10-4639(CON), 2013 WL 4608948 (2d Cir. Aug. 30, 2013), the United States Court of Appeals for the Second Circuit held that Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities & Exchange Commission (“SEC”) Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder, do not apply to extraterritorial conduct in both the civil and criminal context. In so holding, the Second Circuit made clear that the United States Supreme Court’s ruling in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010) [blog article here], that civil liability under Section 10(b) does not apply extraterritorially, extends to criminal conduct as well. In light of that ruling, a criminal conviction for securities fraud can only be found if the defendant “engaged in fraud in connection with (1) a security listed on a U.S. exchange, or (2) a security purchased or sold in the United States.” While this holding did not disturb the defendants’ convictions in this case, the ruling provides guidance for future prosecutions under Section 10(b), which now require proof of a domestic sale or listing as a necessary element for conviction.
Continue Reading Second Circuit Applies Morrison to Criminal Prosecution Under Section 10(b) and Rule 10b-5