Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 1 of 10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK. No. 07 Civ.

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1 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 1 of 10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK No. 07 Civ (RJS) IN RE UB S SECURITIES LITIGATION MEMORANDUM AND ORDER September 13, 2011 RICHARD J. SULLIVAN, District Judge: I. BACKGROUND Plaintiffs bring this putative class action A. Facts 1 against UBS AG ( UBS ) and certain of its employees, officers, and directors on behalf UBS is a Swiss bank and global of American and foreign investors who financial institution that, along with its purchased UBS stock on domestic and subsidiaries, provides wealth management foreign stock exchanges between August and banking services to clients worldwide and February Plaintiffs allege (Compl. 115.) From August 13, 2003 to violations of the federal securities laws February 23, 2009 (the Class Period ), arising out of allegedly false and misleading UBS s ordinary shares were listed for statements concerning UBS s investment in trading on the Swiss Exchange, the Tokyo mortgage-backed securities and other Stock Exchange, and the New York Stock purportedly high-risk assets. Exchange ( NYSE ). (Declaration of Robert J. Giuffra, Jr., dated August 31, Before the Court is Defendants motion 2010, Doc. No. 153 ( Giuffra Decl. ), Ex. 4 to dismiss the claims brought by those at 10.) Plaintiffs who purchased shares of UBS stock on foreign exchanges. For the reasons Plaintiffs are a group of foreign and set forth below, Defendants motion is domestic institutional investors who bring granted. this putative class action on behalf of all purchasers of UBS shares on foreign and domestic exchanges during the Class 1 The following facts, which are not in dispute, are taken from the Amended Consolidated Class Action Complaint ( Complaint or Compl. ) and from documents attached thereto. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

2 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 2 of 10 Period.2 (Compl. at 1.) Three of the four B. Procedural History lead Plaintiffs Union, IFM, and ATP are foreign institutional investors which This action was commenced on purchased shares of UBS stock on December 13, 2007, when William Wesner exchanges outside of the United States. ( Id.) filed a putative class action complaint OPEB, a United States entity, also against UBS AG and several individual purchased some of its UBS ordinary shares defendants. On March 6, 2008, Wesner s pursuant to purchase orders that were action was consolidated with Garber v. UBS executed on a foreign exchange. (Id. 113.) AG, et al., No. 08 Civ. 969 (RJS) into the above-captioned action, and on July 11, In the Complaint, Plaintiffs allege, 2008, Plaintiffs filed a Consolidated Class among other things, that Defendants violated Action Complaint. On May 8, 2009, 10(b) and 20(a) of the Securities Plaintiffs filed their Amended Consolidated Exchange Act of 1934 (the Exchange Class Action Complaint, which included Act ), 15 U.S.C. 78j(b) and 78t(a), and new allegations and new claims under 11, Rule 10b-5 promulgated thereunder, 17 12(a)(2), and 15 of the Securities Act of C.F.R b-5, by issuing fraudulent 1933 (the Securities Act ) relating to statements with respect to: (i) UBS s alleged misstatements in UBS s registration positions and losses in United States statements and prospectuses concerning mortgage-related securities; (ii) UBS s UBS s compliance with United States tax positions and losses in auction-rate and securities laws in its cross-border securities; and (iii) compliance with United business. Defendants subsequently moved States tax and securities laws by UBS s to dismiss the Foreign Plaintiffs claims, Swiss-based private wealth management arguing that, pursuant to the Second business for United States clients. (Compl. Circuit s conduct and effects tests, the ) Court lacked subject-matter jurisdiction over these claims. (Doc. No. 116.) Defendants also moved to dismiss the entire Complaint for failure to state a claim. (Doc. Nos. 119, 127.) Defendants motions were fully 2 Lead Plaintiffs are: (1) City of Pontiac Policemen s submitted as of January 29, and Firemen s Retirement System ( Pontiac ), a Michigan pension plan; (2) Arbejdsmarkedets On June 24, 2010, the Supreme Court Tillægspension ( ATP ), a Danish pension fund; (3) issued its decision in Morrison v. National Union Asset Management Holding AG ( Union ), a German investment company; and (4) International Australia Bank, --- U.S. ---, 130 S. Ct Fund Management, S.A. ( IFM ), a Luxembourg (2010), which rejected the Second Circuit s financial institution. The Representative Plaintiffs conduct and effects tests in favor of a include Teamsters Union Local 500 Severance Fund transactional test. Id. at Unlike ( Teamsters ), Oregon Public Employees Board courts applying the conduct and effects ( OPEB ), and Alaska Laborers-Employers Retirement Fund ( Alaska Laborers ), each of which tests, the Supreme Court found that the issue is an American pension fund, as well as Council of of 10(b) s extraterritorial reach does not the Borough of South Tyneside ( Tyneside ), an raise a question of subject-matter English pension fund. For purposes of this opinion, jurisdiction, but rather presents a merits Lead Plaintiffs and the Representative Plaintiffs are question. Id. at In light of the referred to collectively as Plaintiffs. ATP, Union, and IFM are referred to as Foreign Lead Plaintiffs, Morrison decision, the Court ordered the or along with Tyneside, Foreign Plaintiffs. parties to first brief Defendants motions to 2

3 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 3 of 10 dismiss on the basis of the Morrison III. DISCUSSION decision only. (July 14, 2010 Order at 1.) The Court noted that, following its As noted above, in light of the Supreme resolution of this motion, it will address... Court s decision in Morrison, Defendants (1) whether there is any need to appoint have moved to dismiss all claims arising out additional or new Lead Plaintiffs and (2) the of Plaintiffs purchases of UBS stock on schedule for Defendants motions to dismiss foreign exchanges. These claims fall into based upon grounds other than the Morrison two distinct categories: (i) claims asserted decision. (Id.) On August 31, 2010, by Foreign Plaintiffs who purchased UBS Defendants filed the instant motion, stock on a foreign exchange ( foreignpursuant to Rule 12(b)(6) of the Federal cubed claims), and (ii) claims asserted by Rules of Civil Procedure, seeking to dismiss OPEB, a domestic institutional investor, to all claims based on purchases of UBS the extent that such claims arise out of shares outside the United States. (Doc. No. OPEB s purchase of UBS stock on a foreign 151.) exchange ( foreign-squared claims). 3 II. STANDARD OF REVIEW A. The Morrison Decision On a motion to dismiss under Rule In Morrison, the Supreme Court 12(b)(6) of the Federal Rules of Civil addressed the extraterritorial reach of the Procedure, the Court must accept all well- Exchange Act and articulated a pleaded allegations contained in the transactional test for determining complaint as true and draw all reasonable whether 10(b)... provides a cause of inferences in the plaintiff s favor. See ATSI action to foreign plaintiffs suing foreign and Commc ns, Inc. v. Shaar Fund, Ltd., 493 American defendants for misconduct in F.3d 87, 98 (2d Cir. 2007); Grandon v. connection with securities traded on foreign Merrill Lynch & Co., 147 F.3d 184, 188 (2d exchanges. Morrison, 130 S. Ct. at Cir. 1998). To state a legally sufficient The plaintiffs in Morrison were foreign claim, a complaint must allege enough investors who purchased ordinary shares of facts to state a claim to relief that is the National Australia Bank ( NAB ) on the plausible on its face. Bell Atl. Corp. v. Australian Stock Exchange and then brought Twombly, 550 U.S. 544, 570 (2007). A claims in the Southern District of New York claim has facial plausibility where the under 10(b) alleging that the defendants plaintiff pleads factual content that allows made fraudulent misstatements concerning the court to draw the reasonable inference the financial performance of one of NAB s that the defendant is liable for the United States subsidiaries. In re Nat l Austl. misconduct alleged. Ashcroft v. Iqbal, --- Bank Sec. Litig., No. 03 Civ (BSJ), U.S. ---, 129 S. Ct. 1937, 1949 (2009). By 2006 WL , at *1-2 (S.D.N.Y. Oct. contrast, a pleading that only offers labels and conclusions or a formulaic recitation 3 Foreign-cubed actions involve claims in which of the elements of a cause of action will not (1) foreign plaintiffs [are] suing (2) a foreign issuer do. Id. (quoting Twombly, 550 U.S. at in an American court for violations of American 555). If the plaintiffs have not nudged their securities laws based on securities transactions in (3) claims across the line from conceivable to foreign countries. Morrison, 130 S. Ct. at 2894 n.1 1 (Stevens, J., concurring). Foreign-squared actions plausible, their complaint must be involve claims asserted by American investors who dismissed. Twombly, 550 U.S. at 570. have purchased securities of (1) foreign issuers on (2) foreign exchanges. (Defs. Mem. at 2.) 3

4 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 4 of 10 25, 2006). The district court dismissed the stressed that it know[s] of no one who claims of the foreign plaintiffs and the thought that the [Exchange] Act was Second Circuit affirmed, agreeing that the intended to regulat[e] foreign securities district court lacked subject-matter exchanges or indeed who even believed jurisdiction over the case under the Second that under established principles of Circuit s conduct and effects tests. See international law Congress had the power to Morrison v. Nat l Austl. Bank Ltd., 547 F.3d do so. Id. at 2884 (emphasis in original). 167 (2d Cir. 2008). In applying these tests, the district court and the Second Circuit In place of the conduct and effects considered (1) whether the wrongful tests, the Court adopted a transactional conduct occurred in the United States, and test, which the Court found properly reflects (2) whether the wrongful conduct had a that the focus of the Exchange Act is not substantial effect in the United States or upon the place where the deception upon United States citizens. Id. at 171. originated, but upon purchases and sales of Affirming the district court s finding that securities in the United States. Id. at neither of these tests had been met, the Under this test, 10(b) applies only to Second Circuit held that (1) the acts and securities listed on domestic exchanges[] omissions by the defendants undertaken in and domestic transactions in other Australia were significantly more central to securities. Id. at According to the the fraud and more directly responsible for Court, the transactional test incorporates the the harm to investors than the allegedly presumption against extraterritoriality and wrongful conduct that occurred in the thus avoids the probability of United States; and (2) the plaintiffs had incompatibility with the applicable laws of failed to assert that the alleged fraud had other countries. Id. at any meaningful effect on America s investors or its capital markets. Id. at 176. B. Foreign-Cubed Claims The Supreme Court, while affirming the Despite Morrison s seemingly clear dismissal of the plaintiffs foreign-cubed holding that 10(b) was not intended to claims, rejected the conduct and effects regulate foreign securities exchanges, tests. Morrison, 130 S. Ct. at Plaintiffs argue that their foreign-cubed Writing for the majority, Justice Scalia first claims are not foreclosed because here, noted that the extraterritorial application of unlike in Morrison, the securities that the 10(b) is not a question of subject-matter Foreign Plaintiffs purchased on foreign jurisdiction, but instead presents a merits exchanges were also cross-listed on the question regarding what conduct 10(b) NYSE. According to Plaintiffs, where U.S. prohibits. Id. at In analyzing this exchange-registered securities are at issue, question, the Court found that the conduct Morrison itself recognized that the locationand effects tests violated the of-the-transaction test... is entirely longstanding principle of American law irrelevant, even when those securities are that, unless a statute gives a clear indication purchased on foreign exchanges. (Pls. of an extraterritorial application, the statute Opp n at 13.) is meant to apply only within the territorial jurisdiction of the United States. Id. at In support of their so-called listing (internal quotation marks omitted). theory, Plaintiffs highlight certain language Applying this principle to 10(b), the Court from the Morrison opinion in which, they 4

5 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 5 of 10 argue, the Court made a clear distinction regardless of whether the purchase or sale between U.S. exchange-registered securities occurred in the United States or abroad; and (which were not at issue in Morrison) and (2) when the purchase or sale of the security unregistered securities that did not even is made in the United States, regardless of trade in the domestic over-the-counter whether the security trades on... a market (which were at issue in Morrison). domestic exchange. (Pls. Opp n at 4.) (Id. at 17.) Specifically, Plaintiffs point to The Court s bright line delineation the following language in Morrison between registered and unregistered regarding the proper scope of the securities, argue Plaintiffs, was undertaken transactional test: in order to emphasize that Morrison s holding is not applicable when U.S. [I]t is in our view only transactions exchange-registered securities are at issue. in securities listed on domestic (Id. at ) Thus, Plaintiffs contend, exchanges, and domestic transactions Justice Scalia s deliberate choice of the in other securities, to which 10(b) word listed... is more than enough to applies.... support the undeniable conclusion that 10(b) reaches transactions in securities that The transactional test we have are registered on a U.S. exchange (no matter adopted whether the purchase or where the trade is actually executed). (Id. sale is made in the United States, or at 14.) involves a security listed on a domestic exchange meets [the] Plaintiffs strained interpretation of requirement [that 10(b) avoid Morrison is unpersuasive. While certain regulation of foreign securities language from the Morrison opinion, when exchanges]. read in isolation, appears to be consistent with Plaintiffs position, Plaintiffs reading Morrison, 130 S. Ct. at 2884, 2886 of Morrison is in stark tension with the (emphasis added). Plaintiffs also put great language of the opinion as a whole. emphasis on the Court s conclusion that: Accordingly, the Court rejects Plaintiffs hyper-technical parsing of the opinion and Section 10(b) reaches the use of a finds, consistent with the overwhelming manipulative or deceptive device or majority of other courts to have addressed contrivance only in connection with the issue, that foreign-cubed claims asserted the purchase or sale of a security against issuers whose securities are crosslisted on an American stock listed on an American exchange are outside exchange, and the purchase or sale of of the scope of 10(b). any other security in the United States. First, in support of their argument, Plaintiffs quote selectively from the Id. at 2888 (emphasis added). Morrison opinion while ignoring the Court s broader holding. As noted above, Plaintiffs According to Plaintiffs reading of these listing theory relies on the Court s passages, Morrison identifies two separate statement, repeated several times throughout categories of transactions in securities... to the opinion, that 10(b) applies to securities which 10(b) applies: (1) when the security listed on a domestic exchange. Morrison, is registered with a U.S. exchange, 130 S. Ct. at Plaintiffs, however, 5

6 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 6 of 10 ignore the passages surrounding these Morrison Court s clear intention to limit the statements in which the Court makes clear extraterritorial reach of 10(b). In rejecting that its concern was with respect to the the conduct and effects tests, the Court location of the securities transaction and not made clear that the purpose of the Exchange the location of an exchange where the Act is limited to the protection of the United security may be dually listed: States national interest in domestic securities transactions, and [n]othing [W]e think that the focus of the suggests that this national public interest Exchange Act is not upon the place pertains to transactions conducted upon where the deception originated, but foreign exchanges and markets. Id. at 2882 upon purchases and sales of (emphasis in original). As noted above, the securities in the United States. transactional test was crafted in order to Section 10(b) does not punish avoid the probability of incompatibility deceptive conduct, but only with the applicable laws of other countries, deceptive conduct in connection which was so obvious that if Congress with the purchase or sale of any intended such foreign application it would security registered on a national have addressed the subject of conflicts with securities exchange or any security foreign laws and procedures. Id. at not so registered. 15 U.S.C. Under Plaintiffs reading of Morrison, 78j(b). Those purchase-and-sale however, the extraterritorial reach of the transactions are the objects of the Exchange Act would be even broader than it statute s solicitude. It is those had been under the conduct and effects transactions that the statute seeks to tests. According to Plaintiffs theory, a regulate ; it is parties or prospective 10(b) suit could be brought by any plaintiff parties to those transactions that the who purchased stock on any securities statute seeks to protec[t]. And it is exchange against any issuer, as long as the in our view only transactions in stock at issue was cross-listed on an securities listed on domestic American exchange. As other courts in this exchanges, and domestic transactions district have found, such an application of in other securities, to which 10(b) Morrison would be utterly inconsistent applies. with the notion of avoiding the regulation of foreign exchanges. In re Royal Bank of Id. at 2884 (internal citations omitted). In Scotland Grp. PLC Sec. Litig., 765 F. Supp. this passage, the Court makes clear that 2d 327, 336 (S.D.N.Y. 2011) (collecting 10(b) applies only to purchase-and-sale cases). transactions that are executed in the United States and not to all securities that Plaintiffs insist, nevertheless, that under happen to be cross-listed on an American their reading of Morrison, the Exchange Act exchange. Indeed, it is the primacy of the would not be impermissibly regulating domestic exchange to the Exchange Act as foreign stock exchanges because 10(b) a whole that provides the context for the merely provides an entirely optional Court s analysis. Id. remedy to those who purchased NYSEregistered securities outside the United Second, Plaintiffs reading of Morrison, States. (Pls. Opp n at 25.) According to to the extent that it supports the listing Plaintiffs, by cross-listing securities on theory, cannot be harmonized with the multiple exchanges, Defendants necessarily 6

7 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 7 of 10 consented to regulation in the multiple of a connection to the United States than the jurisdictions in which the ordinary shares are claimants in Morrison. Put simply, the registered ; therefore, the presumption Foreign Plaintiffs fail to allege any domestic against extraterritoriality is not implicated. conduct at all other than Defendants listing (Id. at ) But the issue here is not of UBS stock on an American exchange. whether Defendants, by listing shares of Given the Morrison Court s clear instruction stock on the NYSE, consented to regulation that the focus of the Exchange Act is... by the United States government (which upon purchases and sales of securities in the they clearly did), but whether Congress United States, the Foreign Plaintiffs claims intended a private right of action to apply plainly fail to allege a domestic connection extraterritorially such that it reaches sufficient to invoke 10(b). transactions that are executed on foreign exchanges. The Morrison Court Other courts in this district have also unambiguously found that Congress had no found the theory advanced by Plaintiffs to such intention. Morrison, 130 S. Ct. at 2885 be inconsistent with the clear directives of ( Like the United States, foreign countries Morrison. In In re Alstom SA Securities regulate their domestic securities exchanges Litigation, 741 F. Supp. 2d 469 (S.D.N.Y. and securities transactions occurring within 2010), Judge Marrero, while acknowledging their territorial jurisdiction. And the that isolated clauses of Morrison may be regulation of other countries often differs read as supporting the listing theory, found from ours as to what constitutes fraud, what that the listing theory presents a selective disclosures must be made, what damages are and overly-technical reading of Morrison recoverable, what discovery is available in that ignores the larger point of the decision. litigation, what individual actions may be Id. at 472. Similarly, in In re Vivendi joined in a single suit, what attorney s fees Universal S.A. Securities Litigation, 765 F. are recoverable, and many other matters. ). Supp. 2d 512 (S.D.N.Y. 2011), Judge Holwell found no indication that the Finally, Plaintiffs argue that an issuer s Morrison majority read Section 10(b) as mere listing of a stock on an American applying to securities that may be crossexchange is sufficient domestic conduct to listed on domestic and foreign exchanges.. avoid implication of the presumption against. where the purchase and sale does not arise extraterritoriality. (Pls. Opp n at 22.) This from the domestic listing. Id. at 531. argument, however, merely articulates the Judge Batts has also rejected the listing principles underlying the Second Circuit s theory, finding that [t]he idea that a foreign conduct test that the Morrison Court company is subject to U.S. securities laws squarely rejected. Indeed, in Morrison the everywhere it conducts foreign transactions Court rejected the argument that alleged merely because it has listed some misconduct by the issuer occurring in the securities in the United States is simply United States was sufficient domestic contrary to the spirit of Morrison. In re activity to fall within the scope of 10(b). Royal Bank of Scotland Grp. PLC Sec. As the Court stressed, the presumption Litig., 765 F. Supp. 2d 327, 336 (S.D.N.Y. against extraterritoriality would be a craven 2011). watchdog indeed if it retreated to its kennel whenever some domestic activity is involved The sole case from this district cited by in the case. Morrison, 130 S. Ct. at Plaintiffs in support of their position is Here, the Foreign Plaintiffs allege even less plainly inapposite. (See Pls. Opp n at 20-7

8 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 8 of (discussing S.E.C. v. Credit Bancorp, C. Foreign-Squared Claims Ltd., 738 F. Supp. 2d 376 (S.D.N.Y. 2010).) According to Plaintiffs, in Credit Bancorp Plaintiffs argue that, even if the Court Judge Sweet recognized that the holding in dismisses their foreign-cubed claims, the Morrison does not preclude application of claims asserted by investors who purchased Section 10(b) when U.S. exchange- their shares of UBS stock from within the registered securities are at issue, even if the United States survive Morrison, regardless securities purchases occur in foreign of whether the stock was purchased on a markets. (Id. at 20.) Plaintiffs, however, domestic or foreign exchange. According to broadly overstate and mischaracterize Credit Plaintiffs, an investor in the United States Bancorp s holding. In that case, the SEC who purchases common shares of a foreign brought an enforcement action against the company from a foreign exchange satisfies United States-based subsidiary of a Swiss Morrison s transactional test because this corporation and its principals after certain of constitutes a purchase... of any other the individual defendants were criminally security in the United States. (Pls. Opp n convicted of running a Ponzi scheme. One at 33 (quoting Morrison, 130 S. Ct. at of the defendants, proceeding pro se, relied 2888).) Under this view, a U.S. investor on Morrison to challenge the SEC s ability who places a buy order in the United States to bring 10(b) claims against him. Judge for a stock listed on a foreign exchange Sweet held that the SEC could bring its completes his or her purchase in the claims because the fraudulent transactions United States when the buy order is placed. occurred in the United States or, (Id. at 34.) alternatively, because the victims used stock registered on United States exchanges to Plaintiffs argument is unavailing. First, invest in the Ponzi scheme. Because this there is nothing in the text of Morrison to case involved an SEC enforcement action, suggest that the Court intended the location however, it is not relevant to private claims of an investor placing a buy order to be asserted under 10(b). See Morrison, 130 determinative of whether such a transaction S. Ct. at 2895 n.12 (Stevens, J., concurring) is domestic for purposes of 10(b). To (noting that Morrison does not... the contrary, the Morrison Court clearly foreclose the Commission from bringing sought to bar claims based on purchases and enforcement actions in additional sales on foreign exchanges, even though the circumstances, as no issue concerning the purchasers were American. In re Vivendi, Commission s authority is presented by this 765 F. Supp. 2d at 532 ( Though the case ). Supreme Court in Morrison did not explicitly define the phrase domestic Accordingly, because Morrison clearly transactions, there can be little doubt that intended to limit the extraterritorial reach of the phrase was intended to be a reference to 10(b), Defendants motion to dismiss is the location of the transaction, not to the granted with respect to all claims asserted by location of the purchaser. ). Indeed, as Foreign Plaintiffs arising out the purchase of discussed at length above, the Morrison UBS stock on a foreign exchange. Court s adoption of the transactional test reflects the primacy of the domestic exchange to the Exchange Act as a whole. Morrison, 130 S. Ct. at 2884; see Plumbers Union Local No. 12 Pension Fund v. Swiss 8

9 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 9 of 10 Reinsurance Co., 753 F. Supp. 2d 166, 177- Credit Suisse Grp., 729 F. Supp. 2d 620, 78 (S.D.N.Y. 2010) (noting that the 624 (S.D.N.Y. 2010) (same). "adoption of a clear test that will avoid interference with foreign securities Accordingly, Defendants' motion to regulation. could not be accomplished if dismiss is granted with respect to claims every security traded on a foreign exchange asserted by United States investors who were subject to section 10(b) whenever an purchased stock on a foreign exchange. investor located in the United States placed an electronic order" (internal quotation IV. CONCLUSION marks and citation omitted)). For the foregoing reasons, Defendants' Moreover, despite Plaintiffs' argument motion to dismiss Plaintiffs' claims based on to the contrary, an investor's mere allegation purchases of UBS shares outside of the that he suffered injury in the United States is United States is granted. The Clerk of Court insufficient to bring the investor's claim is respectfully directed to teuninate the within the scope of 10(b). Plaintiffs' motion located at docket number 151. position in essence a re-articulation of the Additionally, within 30 days of the date of 'effects" test was squarely rejected by the this Order, Plaintiffs shall submit a letter Morrison Court. Because, as the Court apprising the Court of the number of noted, "it is a rare case of prohibited remaining Plaintiffs as well as the status of extraterritorial application that lacks all Lead Plaintiffs, including whether it will be contact with the territory of the United necessary to appoint new Lead Plaintiffs. States," a test that attempts to measure After receiving Plaintiffs' letter, the Court domestic effects through factors such as will schedule a conference to discuss these location of the injury results in an overly issues as well as Defendants' contemplated vague standard incapable of consistent motion to dismiss the Complaint for failure application. Morrison, 130 S. Ct. at to state a claim. As other post-morrison courts have found, "the location of the harm to a plaintiff is SO ORDERED. independent of the location of the securities transaction that produced the harm." Swiss Dated: September 13, 2011 Reinsurance, 753 F. Supp. 2d at 178; accord New York, New York Elliot Assocs. v. Porsche Automobil Hldg. SE, 759 F. Supp. 2d 469, 474 (S.D.N.Y. 2010) (rejecting the plaintiffs' foreignsquared claims as "inconsistent with the 0 ICHA I I J. SULLIV Supreme Court's intention in [Morrison] to United States District Judge curtail the extraterritorial application of 10(b)); In re Royal Bank of Scotland Grp., 765 F. Supp. 2d at 337 ("Plaintiffs['] approach that it is enough to allege that Plaintiffs are represented by Gregory M. Plaintiffs are U.S. residents who were in the Castaldo, Andrew L. Zivitz, Sharan Nimiul, country when they decided to buy RBS Nauman A. Anijed, Jennifer L. Joost, and shares is exactly the type of analysis that Richard A. Russo, Jr. of Barroway Topaz Morrison seeks to prevent."); Cornwell v. Kessler Meltzer & Check, LLP, 280 King of Prussia Rd., Radnor, PA 19087; Jay W. 9

10 Case 1:07-cv RJS Document 164 Filed 09/13/11 Page 10 of 10 Eisenhofer, Geoffrey C. Jarvis, Charles T. Caliendo, Brenda F. SzydIo, and Natalia D. Williams of Grant & Eisenhofer P.A., 485 Lexington Avenue, 29 `h Floor, New York, NY 10017; Joseph F. Rice, William H. Narwold, Gregg S. Levin, James M. Hughes, and Badge Humphries of Motley Rice LLC, 28 Bridgeside Blvd., Mt. Pleasant, SC 29464; and Samuel H. Rudman and Robert M. Rothman of Robbins Geller Rudman & Dowd LLP, 58 South Service Road, Suite 200, Melville, NY Defendants are represented by Robert J. Giuffra, Jr., Maite Aquino, Suhana S. Han, and Matthew A. Schwartz of Sullivan & Cromwell LLP, 125 Broad Street, New York, NY SDNY i. NICALLY FILED DA 10