The Extraterritorial Application of U.S. Financial Services Regulation

The U.S. Securities and Exchange Commission seeks to regulate non-U.S. domiciled financial firms when U.S. investors’ interests are affected. In 2010, in Morrison v. National Australia Bank, the U.S. Supreme Court narrowed the circumstances when extraterritorial regulation is appropriate. Although most articles about the Morrison decision focus attention on when the SEC can sue non-U.S. firms for fraud, this Article addresses an understudied area of financial regulation, namely when the SEC can regulate and require the registration of non-U.S. firms. The Article argues that by reaffirming the presumption against extraterritorial application of U.S. statutes, and by disapproving the conduct and effects test for extraterritorial jurisdiction, the Supreme Court has limited the SEC’s approaches to regulate extraterritorially. The Article reviews the Morrison case, explains why statutory amendments in the Dodd-Frank Act do not resolve the difficulties Morrison poses, discusses recent SEC…