In response to the Supreme Court’s decision in Morrison v. National Australia Bank where the Supreme Court said that there was no private right of action for lawsuits that involved transnational fraud, the SEC has taken a position that has angered some. 

As many know, the Dodd-Frank Act confirmed the SEC’s jurisdiction as it relates to potential foreign involvement.  However, the SEC was not so quick to support such a stance for private litigants.  In particular, the SEC believes that Congress could either clarify the Morrison test or take no action.

This no action position has engendered much criticism from SEC Commissioner Aguilar.  Commissioner Aguilar believes that Congress should revert to the pre Morrison test of conduct and effect, and ignore the Supreme Court’s s decision.

Accordingly, it will be interesting to see if Congress responds to this recommendation from the SEC, since it required the SEC , through the Dodd-Frank Act, to conduct this study and make this report to Congress.