Morrison v. National Australia Bank Ltd.

(Slip Opinion) OCTOBER TERM, 2009 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

MORRISON ET AL. v. NATIONAL AUSTRALIA BANK

LTD. ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE SECOND CIRCUIT

No. 08–1191. Argued March 29, 2010—Decided June 24, 2010
In 1998, respondent National Australia Bank (National), a foreign bank
whose “ordinary shares” are not traded on any exchange in this coun
try, purchased respondent HomeSide Lending, a company headquar
tered in Florida that was in the business of servicing mortgages—
seeing to collection of the monthly payments, etc. In 2001, National
had to write down the value of HomeSide’s assets, causing National’s
share prices to fall. Petitioners, Australians who purchased Na
tional’s shares before the write-downs, sued respondents—National,
HomeSide, and officers of both companies—in Federal District Court
for violation of §§10(b) and 20(a) of the Securities and Exchange Act
of 1934 and SEC Rule 10b–5. They claimed that HomeSide and its
officers had manipulated financial models to make the company’s
mortgage-servicing rights appear more valuable than they really
were; and that National and its chief executive officer were aware of
this deception. Respondents moved to dismiss for lack of subject
matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1)
and for failure to state a claim under Rule 12(b)(6). The District
Court granted the former motion, finding no jurisdiction because the
domestic acts were, at most, a link in a securities fraud that con
cluded abroad. The Second Circuit affirmed.
Held:
1. The Second Circuit erred in considering §10(b)’s extraterritorial
reach to raise a question of subject-matter jurisdiction, thus allowing
dismissal under Rule 12(b)(1). What conduct §10(b) reaches is a mer
its question, while subject-matter jurisdiction “refers to a tribunal’s
power to hear a case.” Union Pacific R. Co. v. Brotherhood of Loco
motive Engineers and Trainmen Gen. Comm. of Adjustment, Central
2 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Syllabus

Region, 558 U. S. ___, ___ (internal quotation marks omitted). The
District Court had jurisdiction under 15 U. S. C. §78aa to adjudicate
the §10(b) question. However, it is unnecessary to remand in view of
that error because the same analysis justifies dismissal under Rule
12(b)(6). Pp. 4–5.
2. Section 10(b) does not provide a cause of action to foreign plain
tiffs suing foreign and American defendants for misconduct in con
nection with securities traded on foreign exchanges. Pp. 5–24.
(a) It is a “longstanding principle of American law ‘that legisla
tion of Congress, unless a contrary intent appears, is meant to apply
only within the territorial jurisdiction of the United States.’ ” EEOC
v. Arabian American Oil Co., 499 U. S. 244, 248 (Aramco). When a
statute gives no clear indication of an extraterritorial application, it
has none. Nonetheless, the Second Circuit believed the Exchange
Act’s silence about §10(b)’s extraterritorial application permitted the
court to “discern” whether Congress would have wanted the statute
to apply. This disregard of the presumption against extraterritorial
ity has occurred over many decades in many courts of appeals and
has produced a collection of tests for divining congressional intent
that are complex in formulation and unpredictable in application.
The results demonstrate the wisdom of the presumption against ex
traterritoriality. Rather than guess anew in each case, this Court
applies the presumption in all cases, preserving a stable background
against which Congress can legislate with predictable effects. Pp. 5–
12.
(b) Because Rule 10b–5 was promulgated under §10(b), it “does
not extend beyond conduct encompassed by §10(b)’s prohibition.”
United States v. O’Hagan, 521 U. S. 642, 651. Thus, if §10(b) is not
extraterritorial, neither is Rule 10b–5. On its face, §10(b) contains
nothing to suggest that it applies abroad. Contrary to the argument
of petitioners and the Solicitor General, a general reference to foreign
commerce in the definition of “interstate commerce,” see 15 U. S. C.
§78c(a)(17), does not defeat the presumption against extraterritorial
ity, Aramco, supra, at 251. Nor does a fleeting reference, in §78b(2)’s
description of the Exchange Act’s purposes, to the dissemination and
quotation abroad of prices of domestically traded securities. Nor does
Exchange Act §30(b), which says that the Act does not apply “to any
person insofar as he transacts a business in securities without the ju
risdiction of the United States,” unless he does so in violation of regu
lations promulgated by the SEC “to prevent . . . evasion of [the Act].”
This would be an odd way of indicating that the Act always has ex
traterritorial application; the Commission’s enabling regulations pre
venting “evasion” seem directed at actions abroad that might conceal
a domestic violation. The argument of petitioners and the Solicitor
 Cite as: 561 U. S. ____ (2010) 3

Syllabus

General also fails to account for §30(a), which explicitly provides for a
specific extraterritorial application. That provision would be quite
superfluous if the rest of the Exchange Act already applied to trans
actions on foreign exchanges—and its limitation of that application to
securities of domestic issuers would be inoperative. There being no
affirmative indication in the Exchange Act that §10(b) applies extra
territorially, it does not. Pp. 12–16.
(c) The domestic activity in this case—Florida is where Home-
Side and its executives engaged in the alleged deceptive conduct and
where some misleading public statements were made—does not
mean petitioners only seek domestic application of the Act. It is a
rare case of prohibited extraterritorial application that lacks all con
tact with United States territory. In Aramco, for example, where the
plaintiff had been hired in Houston and was an American citizen, see
499 U. S., at 247, this Court concluded that the “focus” of congres
sional concern in Title VII of the Civil Rights Act of 1964 was neither
that territorial event nor that relationship, but domestic employ
ment. Applying that analysis here: The Exchange Act’s focus is not
on the place where the deception originated, but on purchases and
sales of securities in the United States. Section 10(b) applies only to
transactions in securities listed on domestic exchanges and domestic
transactions in other securities. The primacy of the domestic ex
change is suggested by the Exchange Act’s prologue, see 48 Stat. 881,
and by the fact that the Act’s registration requirements apply only to
securities listed on national securities exchanges, §78l(a). This focus
is also strongly confirmed by §30(a) and (b). Moreover, the Court re
jects the notion that the Exchange Act reaches conduct in this coun
try affecting exchanges or transactions abroad for the same reason
that Aramco rejected overseas application of Title VII: The probabil
ity of incompatibility with other countries’ laws is so obvious that if
Congress intended such foreign application “it would have addressed
the subject of conflicts with foreign laws and procedures.” 499 U. S.,
at 256. Neither the Government nor petitioners provide any textual
support for their proposed alternative test, which would find a viola
tion where the fraud involves significant and material conduct in the
United States. Pp. 17–24.
547 F. 3d 167, affirmed.

SCALIA, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. BREYER, J., filed
an opinion concurring in part and concurring in the judgment. STE-
VENS, J., filed an opinion concurring in the judgment, in which GINS-
BURG, J., joined. SOTOMAYOR, J., took no part in the consideration or
decision of the case.
 Cite as: 561 U. S. ____ (2010) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES
_________________

No. 08–1191
_________________

ROBERT MORRISON, ET AL., PETITIONERS v.

NATIONAL AUSTRALIA BANK

LTD. ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

[June 24, 2010]

JUSTICE SCALIA delivered the opinion of the Court.
We decide whether §10(b) of the Securities Exchange
Act of 1934 provides a cause of action to foreign plaintiffs
suing foreign and American defendants for misconduct in
connection with securities traded on foreign exchanges.
I
Respondent National Australia Bank Limited (National)
was, during the relevant time, the largest bank in Austra­
lia. Its Ordinary Shares—what in America would be
called “common stock”—are traded on the Australian
Stock Exchange Limited and on other foreign securities
exchanges, but not on any exchange in the United States.
There are listed on the New York Stock Exchange, how­
ever, National’s American Depositary Receipts (ADRs),
which represent the right to receive a specified number of
National’s Ordinary Shares. 547 F. 3d 167, 168, and n. 1
(CA2 2008).
The complaint alleges the following facts, which we
accept as true. In February 1998, National bought re­
spondent HomeSide Lending, Inc., a mortgage servicing
2 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

company headquartered in Florida. HomeSide’s business
was to receive fees for servicing mortgages (essentially the
administrative tasks associated with collecting mortgage
payments, see J. Rosenberg, Dictionary of Banking and
Financial Services 600 (2d ed. 1985)). The rights to re­
ceive those fees, so-called mortgage-servicing rights, can
provide a valuable income stream. See 2 The New Pal­
grave Dictionary of Money and Finance 817 (P. Newman,
M. Milgate, & J. Eatwell eds. 1992). How valuable each of
the rights is depends, in part, on the likelihood that the
mortgage to which it applies will be fully repaid before it is
due, terminating the need for servicing. HomeSide calcu­
lated the present value of its mortgage-servicing rights by
using valuation models designed to take this likelihood
into account. It recorded the value of its assets, and the
numbers appeared in National’s financial statements.
From 1998 until 2001, National’s annual reports and
other public documents touted the success of HomeSide’s
business, and respondents Frank Cicutto (National’s
managing director and chief executive officer), Kevin Race
(HomeSide’s chief operating officer), and Hugh Harris
(HomeSide’s chief executive officer) did the same in public
statements. But on July 5, 2001, National announced that
it was writing down the value of HomeSide’s assets by
$450 million; and then again on September 3, by another
$1.75 billion. The prices of both Ordinary Shares and
ADRs slumped. After downplaying the July write-down,
National explained the September write-down as the
result of a failure to anticipate the lowering of prevailing
interest rates (lower interest rates lead to more refinanc­
ings, i.e., more early repayments of mortgages), other
mistaken assumptions in the financial models, and the
loss of goodwill. According to the complaint, however,
HomeSide, Race, Harris, and another HomeSide senior
executive who is also a respondent here had manipulated
HomeSide’s financial models to make the rates of early
 Cite as: 561 U. S. ____ (2010) 3

Opinion of the Court

repayment unrealistically low in order to cause the mort­
gage-servicing rights to appear more valuable than they
really were. The complaint also alleges that National and
Cicutto were aware of this deception by July 2000, but did
nothing about it.
As relevant here, petitioners Russell Leslie Owen and
Brian and Geraldine Silverlock, all Australians, purchased
National’s Ordinary Shares in 2000 and 2001, before the
write-downs.1 They sued National, HomeSide, Cicutto,
and the three HomeSide executives in the United States
District Court for the Southern District of New York for
alleged violations of §§10(b) and 20(a) of the Securities and
Exchange Act of 1934, 48 Stat. 891, 15 U. S. C. §§78j(b)
and 78t(a), and SEC Rule 10b–5, 17 CFR §240.10b–5
(2009), promulgated pursuant to §10(b).2 They sought to
represent a class of foreign purchasers of National’s Ordi­
nary Shares during a specified period up to the September
write-down. 547 F. 3d, at 169.
——————
1 Robert Morrison, an American investor in National’s ADRs, also

brought suit, but his claims were dismissed by the District Court
because he failed to allege damages. In re National Australia Bank
Securities Litigation, No. 03 Civ. 6537 (BSJ), 2006 WL 3844465, *9
(SDNY, Oct. 25, 2006). Petitioners did not appeal that decision, 547
F. 3d 167, 170, n. 3 (CA2 2008) (case below), and it is not before us.
Inexplicably, Morrison continued to be listed as a petitioner in the
Court of Appeals and here.
2 The relevant text of §10(b) and SEC Rule 10b–5 are set forth later in

this opinion. Section 20(a), 48 Stat. 899, provides:
“Every person who, directly or indirectly, controls any person liable
under any provision of [the Exchange Act] or of any rule or regulation
thereunder shall also be liable jointly and severally with and to the
same extent as such controlled person to any person to whom such
controlled person is liable, unless the controlling person acted in good
faith and did not directly or indirectly induce the act or acts constitut­
ing the violation or cause of action.”
Liability under §20(a) is obviously derivative of liability under some
other provision of the Exchange Act; §10(b) is the only basis petitioners
asserted.
4 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

Respondents moved to dismiss for lack of subject-matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1)
and for failure to state a claim under Rule 12(b)(6). The
District Court granted the motion on the former ground,
finding no jurisdiction because the acts in this country
were, “at most, a link in the chain of an alleged overall
securities fraud scheme that culminated abroad.” In re
National Australia Bank Securities Litigation, No. 03 Civ.
6537 (BSJ), 2006 WL 3844465, *8 (SDNY, Oct. 25, 2006).
The Court of Appeals for the Second Circuit affirmed on
similar grounds. The acts performed in the United States
did not “compris[e] the heart of the alleged fraud.” 547
F. 3d, at 175–176. We granted certiorari, 558 U. S. ___
(2009).
II
Before addressing the question presented, we must
correct a threshold error in the Second Circuit’s analysis.
It considered the extraterritorial reach of §10(b) to raise a
question of subject-matter jurisdiction, wherefore it af­
firmed the District Court’s dismissal under Rule 12(b)(1).
See 547 F. 3d, at 177. In this regard it was following
Circuit precedent, see Schoenbaum v. Firstbrook, 405
F. 2d 200, 208, modified on other grounds en banc, 405
F. 2d 215 (1968). The Second Circuit is hardly alone in
taking this position, see, e.g., In re CP Ships Ltd. Securi
ties Litigation, 578 F. 3d 1306, 1313 (CA11 2009); Conti
nental Grain (Australia) PTY. Ltd. v. Pacific Oilseeds, Inc.,
592 F. 2d 409, 421 (CA8 1979).
But to ask what conduct §10(b) reaches is to ask what
conduct §10(b) prohibits, which is a merits question.
Subject-matter jurisdiction, by contrast, “refers to a tribu­
nal’s ‘ “power to hear a case.” ’ ” Union Pacific R. Co. v.
Locomotive Engineers and Trainmen Gen. Comm. of Ad
justment, Central Region, 558 U. S. ___, ___ (2009) (slip
op., at 12) (quoting Arbaugh v. Y & H Corp., 546 U. S. 500,
 Cite as: 561 U. S. ____ (2010) 5

Opinion of the Court

514 (2006), in turn quoting United States v. Cotton, 535
U. S. 625, 630 (2002)). It presents an issue quite separate
from the question whether the allegations the plaintiff
makes entitle him to relief. See Bell v. Hood, 327 U. S.
678, 682 (1946). The District Court here had jurisdiction
under 15 U. S. C. §78aa3 to adjudicate the question
whether §10(b) applies to National’s conduct.
In view of this error, which the parties do not dispute,
petitioners ask us to remand. We think that unnecessary.
Since nothing in the analysis of the courts below turned on
the mistake, a remand would only require a new Rule
12(b)(6) label for the same Rule 12(b)(1) conclusion. As we
have done before in situations like this, see, e.g., Romero v.
International Terminal Operating Co., 358 U. S. 354, 359,
381–384 (1959), we proceed to address whether petition­
ers’ allegations state a claim.
III

A

It is a “longstanding principle of American law ‘that
legislation of Congress, unless a contrary intent appears,
is meant to apply only within the territorial jurisdiction of
the United States.’ ” EEOC v. Arabian American Oil Co.,
499 U. S. 244, 248 (1991) (Aramco) (quoting Foley Bros.,
Inc. v. Filardo, 336 U. S. 281, 285 (1949)). This principle
represents a canon of construction, or a presumption about
a statute’s meaning, rather than a limit upon Congress’s
power to legislate, see Blackmer v. United States, 284
U. S. 421, 437 (1932). It rests on the perception that
Congress ordinarily legislates with respect to domestic,
——————
3 Section 78aa provides:
“The district courts of the United States . . . shall have exclusive
jurisdiction of violations of [the Exchange Act] or the rules and regula­
tions thereunder, and of all suits in equity and actions at law brought
to enforce any liability or duty created by [the Exchange Act] or the
rules and regulations thereunder.”
6 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

not foreign matters. Smith v. United States, 507 U. S.
197, 204, n. 5 (1993). Thus, “unless there is the affirma­
tive intention of the Congress clearly expressed” to give a
statute extraterritorial effect, “we must presume it is
primarily concerned with domestic conditions.” Aramco,
supra, at 248 (internal quotation marks omitted). The
canon or presumption applies regardless of whether there
is a risk of conflict between the American statute and a
foreign law, see Sale v. Haitian Centers Council, Inc., 509
U. S. 155, 173–174 (1993). When a statute gives no clear
indication of an extraterritorial application, it has none.
Despite this principle of interpretation, long and often
recited in our opinions, the Second Circuit believed that,
because the Exchange Act is silent as to the extraterrito­
rial application of §10(b), it was left to the court to “dis­
cern” whether Congress would have wanted the statute to
apply. See 547 F. 3d, at 170 (internal quotation marks
omitted). This disregard of the presumption against ex­
traterritoriality did not originate with the Court of Ap­
peals panel in this case. It has been repeated over many
decades by various courts of appeals in determining the
application of the Exchange Act, and §10(b) in particular,
to fraudulent schemes that involve conduct and effects
abroad. That has produced a collection of tests for divin­
ing what Congress would have wanted, complex in formu­
lation and unpredictable in application.
As of 1967, district courts at least in the Southern Dis­
trict of New York had consistently concluded that, by
reason of the presumption against extraterritoriality,
§10(b) did not apply when the stock transactions underly­
ing the violation occurred abroad. See Schoenbaum v.
Firstbrook, 268 F. Supp. 385, 392 (1967) (citing Ferraoli v.
Cantor, CCH Fed. Sec. L. Rep. ¶91615 (SDNY 1965) and
Kook v. Crang, 182 F. Supp. 388, 390 (SDNY 1960)).
Schoenbaum involved the sale in Canada of the treasury
shares of a Canadian corporation whose publicly traded
 Cite as: 561 U. S. ____ (2010) 7

Opinion of the Court

shares (but not, of course, its treasury shares) were listed
on both the American Stock Exchange and the Toronto
Stock Exchange. Invoking the presumption against extra­
territoriality, the court held that §10(b) was inapplicable
(though it incorrectly viewed the defect as jurisdictional).
268 F. Supp., at 391–392, 393–394. The decision in
Schoenbaum was reversed, however, by a Second Circuit
opinion which held that “neither the usual presumption
against extraterritorial application of legislation nor the
specific language of [§]30(b) show Congressional intent to
preclude application of the Exchange Act to transactions
regarding stocks traded in the United States which are
effected outside the United States . . . .” Schoenbaum, 405
F. 2d, at 206. It sufficed to apply §10(b) that, although the
transactions in treasury shares took place in Canada, they
affected the value of the common shares publicly traded in
the United States. See id., at 208–209. Application of
§10(b), the Second Circuit found, was “necessary to protect
American investors,” id., at 206.
The Second Circuit took another step with Leasco Data
Processing Equip. Corp. v. Maxwell, 468 F. 2d 1326 (1972),
which involved an American company that had been
fraudulently induced to buy securities in England. There,
unlike in Schoenbaum, some of the deceptive conduct had
occurred in the United States but the corporation whose
securities were traded (abroad) was not listed on any
domestic exchange. Leasco said that the presumption
against extraterritoriality apples only to matters over
which the United States would not have prescriptive
jurisdiction, 468 F. 2d, at 1334. Congress had prescriptive
jurisdiction to regulate the deceptive conduct in this coun­
try, the language of the Act could be read to cover that
conduct, and the court concluded that “if Congress had
thought about the point,” it would have wanted §10(b) to
apply. Id., at 1334–1337.
With Schoenbaum and Leasco on the books, the Second
8 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

Circuit had excised the presumption against extraterrito­
riality from the jurisprudence of §10(b) and replaced it
with the inquiry whether it would be reasonable (and
hence what Congress would have wanted) to apply the
statute to a given situation. As long as there was pre­
scriptive jurisdiction to regulate, the Second Circuit ex­
plained, whether to apply §10(b) even to “predominantly
foreign” transactions became a matter of whether a court
thought Congress “wished the precious resources of United
States courts and law enforcement agencies to be devoted
to them rather than leave the problem to foreign coun­
tries.” Bersch v. Drexel Firestone, Inc., 519 F. 2d 974, 985
(1975); see also IIT v. Vencap, Ltd., 519 F. 2d 1001, 1017–
1018 (CA2 1975).
The Second Circuit had thus established that applica­
tion of §10(b) could be premised upon either some effect on
American securities markets or investors (Schoenbaum) or
significant conduct in the United States (Leasco). It later
formalized these two applications into (1) an “effects test,”
“whether the wrongful conduct had a substantial effect in
the United States or upon United States citizens,” and (2)
a “conduct test,” “whether the wrongful conduct occurred
in the United States.” SEC v. Berger, 322 F. 3d 187, 192–
193 (CA2 2003). These became the north star of the Sec­
ond Circuit’s §10(b) jurisprudence, pointing the way to
what Congress would have wished. Indeed, the Second
Circuit declined to keep its two tests distinct on the
ground that “an admixture or combination of the two often
gives a better picture of whether there is sufficient United
States involvement to justify the exercise of jurisdiction by
an American court.” Itoba Ltd. v. Lep Group PLC, 54
F. 3d 118, 122 (1995). The Second Circuit never put for­
ward a textual or even extratextual basis for these tests.
As early as Bersch, it confessed that “if we were asked to
point to language in the statutes, or even in the legislative
history, that compelled these conclusions, we would be
 Cite as: 561 U. S. ____ (2010) 9

Opinion of the Court

unable to respond,” 519 F. 2d, at 993.
As they developed, these tests were not easy to adminis­
ter. The conduct test was held to apply differently de­
pending on whether the harmed investors were Americans
or foreigners: When the alleged damages consisted of
losses to American investors abroad, it was enough that
acts “of material importance” performed in the United
States “significantly contributed” to that result; whereas
those acts must have “directly caused” the result when
losses to foreigners abroad were at issue. See Bersch, 519
F. 2d, at 993. And “merely preparatory activities in the
United States” did not suffice “to trigger application of the
securities laws for injury to foreigners located abroad.”
Id., at 992. This required the court to distinguish between
mere preparation and using the United States as a “base”
for fraudulent activities in other countries. Vencap, supra,
at 1017–1018. But merely satisfying the conduct test was
sometimes insufficient without “ ‘some additional factor
tipping the scales’ ” in favor of the application of American
law. Interbrew v. Edperbrascan Corp., 23 F. Supp. 2d 425,
432 (SDNY 1998) (quoting Europe & Overseas Commodity
Traders, S. A. v. Banque Paribas London, 147 F. 3d 118,
129 (CA2 1998)). District courts have noted the difficulty
of applying such vague formulations. See, e.g., In re
Alstom SA, 406 F. Supp. 2d 346, 366–385 (SDNY 2005).
There is no more damning indictment of the “conduct” and
“effects” tests than the Second Circuit’s own declaration
that “the presence or absence of any single factor which
was considered significant in other cases . . . is not neces­
sarily dispositive in future cases.” IIT v. Cornfeld, 619
F. 2d 909, 918 (1980) (internal quotation marks omitted).
Other Circuits embraced the Second Circuit’s approach,
though not its precise application. Like the Second Cir­
cuit, they described their decisions regarding the extrater­
ritorial application of §10(b) as essentially resolving mat­
ters of policy. See, e.g., SEC v. Kasser, 548 F. 2d 109, 116
10 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

(CA3 1977); Continental Grain, 592 F. 2d, at 421–422;
Grunenthal GmbH v. Hotz, 712 F. 2d 421, 424–425 (CA9
1983); Kauthar SDN BHD v. Sternberg, 149 F. 3d 659, 667
(CA7 1998). While applying the same fundamental meth­
odology of balancing interests and arriving at what
seemed the best policy, they produced a proliferation of
vaguely related variations on the “conduct” and “effects”
tests. As described in a leading Seventh Circuit opinion:
“Although the circuits . . . seem to agree that there are
some transnational situations to which the antifraud
provisions of the securities laws are applicable, agreement
appears to end at that point.”4 Id., at 665. See also id., at
665–667 (describing the approaches of the various Circuits
and adopting yet another variation).
At least one Court of Appeals has criticized this line of
cases and the interpretive assumption that underlies it.
In Zoelsch v. Arthur Andersen & Co., 824 F. 2d 27, 32
(1987) (Bork, J.), the District of Columbia Circuit observed
that rather than courts’ “divining what ‘Congress would
have wished’ if it had addressed the problem[, a] more
natural inquiry might be what jurisdiction Congress in
——————
4 The principal concurrence (see post, p. 1 (STEVENS, J., concurring in

judgment) (hereinafter concurrence)) disputes this characterization,
launching into a Homeric simile which takes as its point of departure
(and mistakes for praise rather than condemnation) then-Justice
Rehnquist’s statement in Blue Chip Stamps v. Manor Drug Stores, 421
U. S. 723, 737 (1975) that “[w]hen we deal with private actions under
Rule 10b–5, we deal with a judicial oak which has grown from little
more than a legislative acorn.” Post, at 3. The concurrence seemingly
believes that the Courts of Appeals have carefully trimmed and
sculpted this “judicial oak” into a cohesive canopy, under the watchful
eye of Judge Henry Friendly, the “master arborist,” ibid. See post, at
2–3. Even if one thinks that the “conduct” and “effects” tests are
numbered among Judge Friendly’s many fine contributions to the law,
his successors, though perhaps under the impression that they nurture
the same mighty oak, are in reality tending each its own botanically
distinct tree. It is telling that the concurrence never attempts its own
synthesis of the various balancing tests the Circuits have adopted.
 Cite as: 561 U. S. ____ (2010) 11

Opinion of the Court

fact thought about and conferred.” Although tempted to
apply the presumption against extraterritoriality and be
done with it, see id., at 31–32, that court deferred to the
Second Circuit because of its “preeminence in the field of
securities law,” id., at 32. See also Robinson v. TCI/US
West Communications Inc., 117 F. 3d 900, 906–907 (CA5
1997) (expressing agreement with Zoelsch’s criticism of
the emphasis on policy considerations in some of the
cases).
Commentators have criticized the unpredictable and
inconsistent application of §10(b) to transnational cases.
See, e.g., Choi & Silberman, Transnational Litigation and
Global Securities Class-Action Lawsuits, 2009 Wis. L. Rev.
465, 467–468; Chang, Multinational Enforcement of U. S.
Securities Laws: The Need for the Clear and Restrained
Scope of Extraterritorial Subject-Matter Jurisdiction, 9
Fordham J. Corp. & Fin. L. 89, 106–108, 115–116 (2004);
Langevoort, Schoenbaum Revisited: Limiting the Scope of
Antifraud Protection in an Internationalized Securities
Marketplace, 55 Law & Contemp. Probs. 241, 244–248
(1992). Some have challenged the premise underlying the
Courts of Appeals’ approach, namely that Congress did not
consider the extraterritorial application of §10(b) (thereby
leaving it open to the courts, supposedly, to determine
what Congress would have wanted). See, e.g., Sachs, The
International Reach of Rule 10b–5: The Myth of Congres­
sional Silence, 28 Colum. J. Transnat’l L. 677 (1990) (ar­
guing that Congress considered, but rejected, applying the
Exchange Act to transactions abroad). Others, more
fundamentally, have noted that using congressional si­
lence as a justification for judge-made rules violates the
traditional principle that silence means no extraterritorial
application. See, e.g., Note, Let There Be Fraud (Abroad):
A Proposal for A New U. S. Jurisprudence with Regard to
the Extraterritorial Application of the Anti-Fraud Provi­
sions of the 1933 and 1934 Securities Acts, 28 Law & Pol’y
12 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

Int’l Bus. 477, 492–493 (1997).
The criticisms seem to us justified. The results of judi­
cial-speculation-made-law—divining what Congress would
have wanted if it had thought of the situation before the
court—demonstrate the wisdom of the presumption
against extraterritoriality. Rather than guess anew in
each case, we apply the presumption in all cases, preserv­
ing a stable background against which Congress can legis­
late with predictable effects.5
B
Rule 10b–5, the regulation under which petitioners have
brought suit,6 was promulgated under §10(b), and “does
——————
5 The concurrence urges us to cast aside our inhibitions and join in

the judicial lawmaking, because “[t]his entire area of law is replete with
judge-made rules,” post, at 3. It is doubtless true that, because the
implied private cause of action under §10(b) and Rule 10b–5 is a thing
of our own creation, we have also defined its contours. See, e.g., Blue
Chip Stamps, supra. But when it comes to “the scope of [the] conduct
prohibited by [Rule 10b–5 and] §10(b), the text of the statute controls
our decision.” Central Bank of Denver, N. A. v. First Interstate Bank of
Denver, N. A., 511 U. S. 164, 173 (1994). It is only with respect to the
additional “elements of the 10b–5 private liability scheme” that we
“have had ‘to infer how the 1934 Congress would have addressed the
issue[s] had the 10b–5 action been included as an express provision in
the 1934 Act.’ ” Ibid. (quoting Musick, Peeler & Garrett v. Employers
Ins. of Wausau, 508 U. S. 286, 294 (1933)).
6 Rule 10b–5 makes it unlawful:

“for any person, directly or indirectly, by the use of any means or
instrumentality of interstate commerce, or of the mails or of any facility
of any national securities exchange,
“(a) To employ any device, scheme, or artifice to defraud,
“(b) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made,
not misleading, or
“(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security.” 17 CFR
§240.10b–5 (2009).
 Cite as: 561 U. S. ____ (2010) 13

Opinion of the Court

not extend beyond conduct encompassed by §10(b)’s prohi­
bition.” United States v. O’Hagan, 521 U. S. 642, 651
(1997). Therefore, if §10(b) is not extraterritorial, neither
is Rule 10b–5.
On its face, §10(b) contains nothing to suggest it applies
abroad:
“It shall be unlawful for any person, directly or indi­
rectly, by the use of any means or instrumentality of
interstate commerce or of the mails, or of any facility
of any national securities exchange . . . [t]o use or em­
ploy, in connection with the purchase or sale of any
security registered on a national securities exchange
or any security not so registered, . . . any manipulat­
ive or deceptive device or contrivance in contravention
of such rules and regulations as the [Securities and
Exchange] Commission may prescribe . . . .” 15
U. S. C. 78j(b).
Petitioners and the Solicitor General contend, however,
that three things indicate that §10(b) or the Exchange Act
in general has at least some extraterritorial application.
First, they point to the definition of “interstate com­
merce,” a term used in §10(b), which includes “trade,
commerce, transportation, or communication . . . between
any foreign country and any State.” 15 U. S. C.
§78c(a)(17). But “we have repeatedly held that even stat­
utes that contain broad language in their definitions of
‘commerce’ that expressly refer to ‘foreign commerce’ do
not apply abroad.” Aramco, 499 U. S., at 251; see id., at
251–252 (discussing cases). The general reference to
foreign commerce in the definition of “interstate com­
merce” does not defeat the presumption against extraterri­

——————
The Second Circuit considered petitioners’ appeal to raise only a
claim under Rule 10b–5(b), since it found their claims under subsec­
tions (a) and (c) to be forfeited. 547 F. 3d, at 176, n. 7. We do likewise.
14 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

toriality.7
Petitioners and the Solicitor General next point out that
Congress, in describing the purposes of the Exchange Act,
observed that the “prices established and offered in such
transactions are generally disseminated and quoted
throughout the United States and foreign countries.” 15
U. S. C. §78b(2). The antecedent of “such transactions,”
however, is found in the first sentence of the section,
which declares that “transactions in securities as com­
monly conducted upon securities exchanges and over-the­
counter markets are affected with a national public inter­
est.” §78b. Nothing suggests that this national public
interest pertains to transactions conducted upon foreign
exchanges and markets. The fleeting reference to the
dissemination and quotation abroad of the prices of securi­
ties traded in domestic exchanges and markets cannot
overcome the presumption against extraterritoriality.
Finally, there is §30(b) of the Exchange Act, 15 U. S. C.
§78dd(b), which does mention the Act’s extraterritorial
application: “The provisions of [the Exchange Act] or of
any rule or regulation thereunder shall not apply to any
person insofar as he transacts a business in securities
without the jurisdiction of the United States,” unless he
does so in violation of regulations promulgated by the
Securities and Exchange Commission “to prevent . . .
evasion of [the Act].” (The parties have pointed us to no
regulation promulgated pursuant to §30(b).) The Solicitor
General argues that “[this] exemption would have no
——————
7 This conclusion does not render meaningless the inclusion of “trade,
commerce, transportation, or communication . . . between any foreign
country and any State” in the definition of “interstate commerce.” 15
U. S. C. §78c(a)(17). For example, an issuer based abroad, whose
executives approve the publication in the United States of misleading
information affecting the price of the issuer’s securities traded on the
New York Stock Exchange, probably will make use of some instrumen­
tality of “communication . . . between [a] foreign country and [a] State.”
 Cite as: 561 U. S. ____ (2010) 15

Opinion of the Court

function if the Act did not apply in the first instance to
securities transactions that occur abroad.” Brief for
United States as Amicus Curiae 14.
We are not convinced. In the first place, it would be odd
for Congress to indicate the extraterritorial application of
the whole Exchange Act by means of a provision imposing
a condition precedent to its application abroad. And if the
whole Act applied abroad, why would the Commission’s
enabling regulations be limited to those preventing “eva­
sion” of the Act, rather than all those preventing “viola­
tion”? The provision seems to us directed at actions
abroad that might conceal a domestic violation, or might
cause what would otherwise be a domestic violation to
escape on a technicality. At most, the Solicitor General’s
proposed inference is possible; but possible interpretations
of statutory language do not override the presumption
against extraterritoriality. See Aramco, supra, at 253.
The Solicitor General also fails to account for §30(a),
which reads in relevant part as follows:
“It shall be unlawful for any broker or dealer . . . to
make use of the mails or of any means or instrumen­
tality of interstate commerce for the purpose of effect­
ing on an exchange not within or subject to the juris­
diction of the United States, any transaction in any
security the issuer of which is a resident of, or is or­
ganized under the laws of, or has its principal place of
business in, a place within or subject to the jurisdic­
tion of the United States, in contravention of such
rules and regulations as the Commission may pre­
scribe . . . .” 15 U. S. C. §78dd(a).
Subsection 30(a) contains what §10(b) lacks: a clear
statement of extraterritorial effect. Its explicit provision
for a specific extraterritorial application would be quite
superfluous if the rest of the Exchange Act already applied
to transactions on foreign exchanges—and its limitation of
16 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

that application to securities of domestic issuers would be
inoperative. Even if that were not true, when a statute
provides for some extraterritorial application, the pre­
sumption against extraterritoriality operates to limit that
provision to its terms. See Microsoft Corp. v. AT&T Corp.,
550 U. S. 437, 455–456 (2007). No one claims that §30(a)
applies here.
The concurrence claims we have impermissibly nar­
rowed the inquiry in evaluating whether a statute applies
abroad, citing for that point the dissent in Aramco, see
post, at 6. But we do not say, as the concurrence seems to
think, that the presumption against extraterritoriality is a
“clear statement rule,” ibid., if by that is meant a re­
quirement that a statute say “this law applies abroad.”
Assuredly context can be consulted as well. But whatever
sources of statutory meaning one consults to give “the
most faithful reading” of the text, post, at 7, there is no
clear indication of extraterritoriality here. The concur­
rence does not even try to refute that conclusion, but
merely puts forward the same (at best) uncertain indica­
tions relied upon by petitioners and the Solicitor General.
As the opinion for the Court in Aramco (which we prefer to
the dissent) shows, those uncertain indications do not
suffice.8
In short, there is no affirmative indication in the Ex­
change Act that §10(b) applies extraterritorially, and we
therefore conclude that it does not.

——————
8 The concurrence notes that, post-Aramco, Congress provided explic­

itly for extraterritorial application of Title VII, the statute at issue in
Aramco. Post, at 6, n. 6. All this shows is that Congress knows how to
give a statute explicit extraterritorial effect—and how to limit that
effect to particular applications, which is what the cited amendment
did. See Civil Rights Act of 1991, §109, 105 Stat. 1077.
 Cite as: 561 U. S. ____ (2010) 17

Opinion of the Court

IV

A

Petitioners argue that the conclusion that §10(b) does
not apply extraterritorially does not resolve this case.
They contend that they seek no more than domestic appli­
cation anyway, since Florida is where HomeSide and its
senior executives engaged in the deceptive conduct of
manipulating HomeSide’s financial models; their com­
plaint also alleged that Race and Hughes made misleading
public statements there. This is less an answer to the
presumption against extraterritorial application than it is
an assertion—a quite valid assertion—that that presump­
tion here (as often) is not self-evidently dispositive, but its
application requires further analysis. For it is a rare case
of prohibited extraterritorial application that lacks all
contact with the territory of the United States. But the
presumption against extraterritorial application would be
a craven watchdog indeed if it retreated to its kennel
whenever some domestic activity is involved in the case.
The concurrence seems to imagine just such a timid senti­
nel, see post, at 7–8, but our cases are to the contrary. In
Aramco, for example, the Title VII plaintiff had been hired
in Houston, and was an American citizen. See 499 U. S.,
at 247. The Court concluded, however, that neither that
territorial event nor that relationship was the “focus” of
congressional concern, id., at 255, but rather domestic
employment. See also Foley Bros., 336 U. S., at 283, 285–
286.
Applying the same mode of analysis here, we think that
the focus of the Exchange Act is not upon the place where
the deception originated, but upon purchases and sales of
securities in the United States. Section 10(b) does not
punish deceptive conduct, but only deceptive conduct “in
connection with the purchase or sale of any security regis­
tered on a national securities exchange or any security not
so registered.” 15 U. S. C. §78j(b). See SEC v. Zandford,
18 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

535 U. S. 813, 820 (2002). Those purchase-and-sale trans­
actions are the objects of the statute’s solicitude. It is
those transactions that the statute seeks to “regulate,” see
Superintendent of Ins. of N. Y. v. Bankers Life & Casualty
Co., 404 U. S. 6, 12 (1971); it is parties or prospective
parties to those transactions that the statute seeks to
“protec[t],” id., at 10. See also Ernst & Ernst v.
Hochfelder, 425 U. S. 185, 195 (1976). And it is in our
view only transactions in securities listed on domestic
exchanges, and domestic transactions in other securities,
to which §10(b) applies.9
The primacy of the domestic exchange is suggested by
the very prologue of the Exchange Act, which sets forth as
its object “[t]o provide for the regulation of securities
exchanges . . . operating in interstate and foreign com­
merce and through the mails, to prevent inequitable and
unfair practices on such exchanges . . . .” 48 Stat. 881. We
know of no one who thought that the Act was intended to
“regulat[e]” foreign securities exchanges—or indeed who
even believed that under established principles of interna­
tional law Congress had the power to do so. The Act’s
registration requirements apply only to securities listed on
national securities exchanges. 15 U. S. C. §78l(a).
——————
9 The concurrence seems to think this test has little to do with our
conclusion in Part III, supra, that §10(b) does not apply extraterritori­
ally. See post, at 11–12. That is not so. If §10(b) did apply abroad, we
would not need to determine which transnational frauds it applied to; it
would apply to all of them (barring some other limitation). Thus,
although it is true, as we have said, that our threshold conclusion that
§10(b) has no extraterritorial effect does not resolve this case, it is a
necessary first step in the analysis.
The concurrence also makes the curious criticism that our evaluation
of where a putative violation occurs is based on the text of §10(b) rather
than the doctrine in the Courts of Appeals. Post, at 1–2. Although it
concedes that our test is textually plausible, post, at 1, it does not (and
cannot) make the same claim for the Court-of-Appeals doctrine it
endorses. That is enough to make our test the better one.
 Cite as: 561 U. S. ____ (2010) 19

Opinion of the Court

With regard to securities not registered on domestic
exchanges, the exclusive focus on domestic purchases and
sales10 is strongly confirmed by §30(a) and (b), discussed
earlier. The former extends the normal scope of the Ex­
change Act’s prohibitions to acts effecting, in violation of
rules prescribed by the Commission, a “transaction” in a
United States security “on an exchange not within or
subject to the jurisdiction of the United States.” §78dd(a).
And the latter specifies that the Act does not apply to “any
person insofar as he transacts a business in securities
without the jurisdiction of the United States,” unless he
does so in violation of regulations promulgated by the
Commission “to prevent evasion [of the Act].” §78dd(b).
Under both provisions it is the foreign location of the
transaction that establishes (or reflects the presumption
of) the Act’s inapplicability, absent regulations by the
Commission.
The same focus on domestic transactions is evident in
the Securities Act of 1933, 48 Stat. 74, enacted by the
same Congress as the Exchange Act, and forming part of
the same comprehensive regulation of securities trading.
See Central Bank of Denver, N. A. v. First Interstate Bank
of Denver, N. A., 511 U. S. 164, 170–171 (1994). That
legislation makes it unlawful to sell a security, through a
prospectus or otherwise, making use of “any means or
instruments of transportation or communication in inter­
——————
10 That is in our view the meaning which the presumption against
extraterritorial application requires for the words “purchase or sale, of
. . . any security not so registered” in §10(b)’s phrase “in connection with
the purchase or sale of any security registered on a national securities
exchange or any security not so registered” (emphasis added). Even
without the presumption against extraterritorial application, the only
alternative to that reading makes nonsense of the phrase, causing it to
cover all purchases and sales of registered securities, and all purchases
and sales of nonregistered securities—a thought which, if intended,
would surely have been expressed by the simpler phrase “all purchases
and sales of securities.”
20 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

state commerce or of the mails,” unless a registration
statement is in effect. 15 U. S. C. §77e(a)(1). The Com­
mission has interpreted that requirement “not to include
. . . sales that occur outside the United States.” 17 CFR
§230.901 (2009).
Finally, we reject the notion that the Exchange Act
reaches conduct in this country affecting exchanges or
transactions abroad for the same reason that Aramco
rejected overseas application of Title VII to all domesti­
cally concluded employment contracts or all employment
contracts with American employers: The probability of
incompatibility with the applicable laws of other countries
is so obvious that if Congress intended such foreign appli­
cation “it would have addressed the subject of conflicts
with foreign laws and procedures.” 499 U. S., at 256. Like
the United States, foreign countries regulate their domes­
tic securities exchanges and securities transactions occur­
ring within their territorial jurisdiction. And the regula­
tion of other countries often differs from ours as to what
constitutes fraud, what disclosures must be made, what
damages are recoverable, what discovery is available in
litigation, what individual actions may be joined in a
single suit, what attorney’s fees are recoverable, and many
other matters. See, e.g., Brief for United Kingdom of
Great Britain and Northern Ireland as Amicus Curiae 16–
21. The Commonwealth of Australia, the United Kingdom
of Great Britain and Northern Ireland, and the Republic of
France have filed amicus briefs in this case. So have
(separately or jointly) such international and foreign
organizations as the International Chamber of Commerce,
the Swiss Bankers Association, the Federation of German
Industries, the French Business Confederation, the Insti­
tute of International Bankers, the European Banking
Federation, the Australian Bankers’ Association, and the
Association Française des Entreprises Privées. They all
complain of the interference with foreign securities regula­
 Cite as: 561 U. S. ____ (2010) 21

Opinion of the Court

tion that application of §10(b) abroad would produce, and
urge the adoption of a clear test that will avoid that conse­
quence. The transactional test we have adopted—whether
the purchase or sale is made in the United States, or
involves a security listed on a domestic exchange—meets
that requirement.
B
The Solicitor General suggests a different test, which
petitioners also endorse: “[A] transnational securities
fraud violates [§]10(b) when the fraud involves significant
conduct in the United States that is material to the fraud’s
success.” Brief for United States as Amicus Curiae 16; see
Brief for Petitioners 26. Neither the Solicitor General nor
petitioners provide any textual support for this test. The
Solicitor General sets forth a number of purposes such a
test would serve: achieving a high standard of business
ethics in the securities industry, ensuring honest securi­
ties markets and thereby promoting investor confidence,
and preventing the United States from becoming a “Bar­
bary Coast” for malefactors perpetrating frauds in foreign
markets. Brief for United States as Amicus Curiae 16–17.
But it provides no textual support for the last of these
purposes, or for the first two as applied to the foreign
securities industry and securities markets abroad. It is
our function to give the statute the effect its language
suggests, however modest that may be; not to extend it to
admirable purposes it might be used to achieve.
If, moreover, one is to be attracted by the desirable
consequences of the “significant and material conduct”
test, one should also be repulsed by its adverse conse­
quences. While there is no reason to believe that the
United States has become the Barbary Coast for those
perpetrating frauds on foreign securities markets, some
fear that it has become the Shangri-La of class-action
litigation for lawyers representing those allegedly cheated
22 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

in foreign securities markets. See Brief for Infineon Tech­
nologies AG as Amicus Curiae 1–2, 22–25; Brief for Euro­
pean Aeronautic Defence & Space Co. N. V. et al. as Amici
Curiae 2–4; Brief for Securities Industry and Financial
Markets Association et al. as Amici Curiae 10–16; Coffee,
Securities Policeman to the World? The Cost of Global
Class Actions, N. Y. L. J. 5 (2008); S. Grant & D. Zilka,
The Current Role of Foreign Investors in Federal Securi­
ties Class Actions, PLI Corporate Law and Practice Hand­
book Series, PLI Order No. 11072, pp. 15–16 (Sept.-Oct.
2007); Buxbaum, Multinational Class Actions Under
Federal Securities Law: Managing Jurisdictional Conflict,
46 Colum. J. Transnat’l L. 14, 38–41 (2007).
As case support for the “significant and material con­
duct” test, the Solicitor General relies primarily on
Pasquantino v. United States, 544 U. S. 349 (2005).11 In
——————
11 Discussed in Brief for United States as Amicus Curiae 22–23. The

Solicitor General also cites, without description, a number of antitrust
cases to support the proposition that domestic conduct with conse­
quences abroad can be covered even by a statute that does not apply
extraterritorially: Continental Ore Co. v. Union Carbide & Carbon
Corp., 370 U. S. 690 (1962); United States v. Sisal Sales Corp., 274
U. S. 268 (1927); Thomsen v. Cayser, 243 U. S. 66 (1917); United States
v. Pacific & Arctic R. & Nav. Co., 228 U. S. 87 (1913). These are no
longer of relevance to the point (if they ever were), since Continental
Ore overruled the holding of American Banana Co. v. United Fruit Co.,
213 U. S. 347, 357 (1909), that the antitrust laws do not apply extrater­
ritorially. See W. S. Kirkpatrick & Co. v. Environmental Tectonics
Corp. Int’l, 493 U. S. 400, 407–408 (1990). Moreover, the pre-
Continental Ore cases all involved conspiracies to restrain trade in the
United States, see Sisal Sales, supra, at 274–276; Thomsen, supra, at
88; Pacific & Arctic, supra, at 105–106. And although a final case cited
by the Solicitor General, Steele v. Bulova Watch Co., 344 U. S. 280,
287–288 (1952), might be read to permit application of a nonextraterri­
torial statute whenever conduct in the United States contributes to a
violation abroad, we have since read it as interpreting the statute at
issue—the Lanham Act—to have extraterritorial effect, EEOC v.
Arabian American Oil Co., 499 U. S. 244, 252 (1991) (quoting 15
U. S. C. §1127).
 Cite as: 561 U. S. ____ (2010) 23

Opinion of the Court

that case we concluded that the wire-fraud statute, 18
U. S. C. §1343 (2009 ed., Supp. II), was violated by defen­
dants who ordered liquor over the phone from a store in
Maryland with the intent to smuggle it into Canada and
deprive the Canadian Government of revenue. 544 U. S.,
at 353, 371. Section 1343 prohibits “any scheme or artifice
to defraud,”—fraud simpliciter, without any requirement
that it be “in connection with” any particular transaction
or event. The Pasquantino Court said that the petitioners’
“offense was complete the moment they executed the
scheme inside the United States,” and that it was “[t]his
domestic element of petitioners’ conduct [that] the Gov­
ernment is punishing.” 544 U. S., at 371. Section 10(b),
by contrast, punishes not all acts of deception, but only
such acts “in connection with the purchase or sale of any
security registered on a national securities exchange or
any security not so registered.” Not deception alone, but
deception with respect to certain purchases or sales is
necessary for a violation of the statute.
The Solicitor General points out that the “significant
and material conduct” test is in accord with prevailing
notions of international comity. If so, that proves that if
the United States asserted prescriptive jurisdiction pursu­
ant to the “significant and material conduct” test it would
not violate customary international law; but it in no way
tends to prove that that is what Congress has done.
Finally, the Solicitor General argues that the Commis­
sion has adopted an interpretation similar to the “signifi­
cant and material conduct” test, and that we should defer
to that. In the two adjudications the Solicitor General
cites, however, the Commission did not purport to be
providing its own interpretation of the statute, but relied
on decisions of federal courts—mainly Court of Appeals
decisions that in turn relied on the Schoenbaum and
Leasco decisions of the Second Circuit that we discussed
earlier. See In re United Securities Clearing Corp., 52
24 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

Opinion of the Court

S. E. C. 92, 95, n. 14, 96, n. 16 (1994); In re Robert F.
Lynch, Exchange Act Release No. 11737, 8 S. E. C. Docket
75, 77, n. 15 (1975). We need “accept only those agency
interpretations that are reasonable in light of the princi­
ples of construction courts normally employ.” Aramco, 499
U. S., at 260 (SCALIA, J., concurring in part and concurring
in judgment). Since the Commission’s interpretations
relied on cases we disapprove, which ignored or discarded
the presumption against extraterritoriality, we owe them
no deference.
* * *
Section 10(b) reaches the use of a manipulative or de­
ceptive device or contrivance only in connection with the
purchase or sale of a security listed on an American stock
exchange, and the purchase or sale of any other security in
the United States. This case involves no securities listed
on a domestic exchange, and all aspects of the purchases
complained of by those petitioners who still have live
claims occurred outside the United States. Petitioners
have therefore failed to state a claim on which relief can
be granted. We affirm the dismissal of petitioners’ com­
plaint on this ground.
It is so ordered.

JUSTICE SOTOMAYOR took no part in the consideration or
decision of this case.
 Cite as: 561 U. S. ____ (2010) 1

Opinion of BREYER, J.

SUPREME COURT OF THE UNITED STATES
_________________

No. 08–1191
_________________

ROBERT MORRISON, ET AL., PETITIONERS v.

NATIONAL AUSTRALIA BANK

LTD. ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

[June 24, 2010]

JUSTICE BREYER, concurring in part and concurring in
the judgment.
Section 10(b) of the Securities Exchange Act of 1934
applies to fraud “in connection with” two categories of
transactions: (1) “the purchase or sale of any security
registered on a national securities exchange” or (2) “the
purchase or sale of . . . any security not so registered.” 15
U. S. C. §78j(b). In this case, the purchased securities are
listed only on a few foreign exchanges, none of which has
registered with the Securities and Exchange Commission
as a “national securities exchange.” See §78f. The first
category therefore does not apply. Further, the relevant
purchases of these unregistered securities took place
entirely in Australia and involved only Australian inves
tors. And in accordance with the presumption against
extraterritoriality, I do not read the second category to
include such transactions. Thus, while state law or other
federal fraud statutes, see, e.g., 18 U. S. C. §1341 (mail
fraud), §1343 (wire fraud), may apply to the fraudulent
activity alleged here to have occurred in the United States,
I believe that §10(b) does not. This case does not require
us to consider other circumstances.
To the extent the Court’s opinion is consistent with
these views, I join it.
 Cite as: 561 U. S. ____ (2010) 1

STEVENS, J., concurring in judgment

SUPREME COURT OF THE UNITED STATES
_________________

No. 08–1191
_________________

ROBERT MORRISON, ET AL., PETITIONERS v.

NATIONAL AUSTRALIA BANK

LTD. ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

[June 24, 2010]

JUSTICE STEVENS, with whom JUSTICE GINSBURG joins,
concurring in the judgment.
While I agree that petitioners have failed to state a
claim on which relief can be granted, my reasoning differs
from the Court’s. I would adhere to the general approach
that has been the law in the Second Circuit, and most of
the rest of the country, for nearly four decades.
I
Today the Court announces a new “transactional test,”
ante, at 21, for defining the reach of §10(b) of the Securi­
ties Exchange Act of 1934 (Exchange Act), 15 U. S. C.
§78j(b), and SEC Rule 10b–5, 17 CFR §240.10b–5(b)
(2009): Henceforth, those provisions will extend only to
“transactions in securities listed on domestic exchanges
. . . and domestic transactions in other securities,” ante, at
18. If one confines one’s gaze to the statutory text, the
Court’s conclusion is a plausible one. But the federal
courts have been construing §10(b) in a different manner
for a long time, and the Court’s textual analysis is not
nearly so compelling, in my view, as to warrant the aban­
donment of their doctrine.
The text and history of §10(b) are famously opaque on
the question of when, exactly, transnational securities
2 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

STEVENS, J., concurring in judgment

frauds fall within the statute’s compass. As those types of
frauds became more common in the latter half of the 20th
century, the federal courts were increasingly called upon
to wrestle with that question. The Court of Appeals for
the Second Circuit, located in the Nation’s financial cen­
ter, led the effort. Beginning in earnest with Schoenbaum
v. Firstbrook, 405 F. 2d 200, rev’d on rehearing on other
grounds, 405 F. 2d 215 (1968) (en banc), that court strove,
over an extended series of cases, to “discern” under what
circumstances “Congress would have wished the precious
resources of the United States courts and law enforcement
agencies to be devoted to [transnational] transactions,”
547 F. 3d 167, 170 (2008) (internal quotation marks omit­
ted). Relying on opinions by Judge Henry Friendly,1 the
Second Circuit eventually settled on a conduct-and-effects
test. This test asks “(1) whether the wrongful conduct
occurred in the Unites States, and (2) whether the wrong­
ful conduct had a substantial effect in the United States or
upon United States citizens.” Id., at 171. Numerous cases
flesh out the proper application of each prong.
The Second Circuit’s test became the “north star” of
§10(b) jurisprudence, ante, at 8, not just regionally but
nationally as well. With minor variations, other courts
converged on the same basic approach.2 See Brief for
United States as Amicus Curiae 15 (“The courts have
——————
1 See, e.g., IIT, Int’l Inv. Trust v. Cornfeld, 619 F. 2d 909 (CA2 1980);

IIT v. Vencap, Ltd., 519 F. 2d 1001 (CA2 1975); Bersch v. Drexel Fire
stone, Inc., 519 F. 2d 974 (CA2 1975); Leasco Data Processing Equip.
Corp. v. Maxwell, 468 F. 2d 1326 (CA2 1972).
2 I acknowledge that the Courts of Appeals have differed in their ap­

plications of the conduct-and-effects test, with the consequence that
their respective rulings are not perfectly “cohesive.” Ante, at 10, n. 4.
It is nevertheless significant that the other Courts of Appeals, along
with the other branches of Government, have “embraced the Second
Circuit’s approach,” ante, at 9. If this Court were to do likewise, as I
would have us do, the lower courts would of course cohere even more
tightly around the Second Circuit’s rule.
 Cite as: 561 U. S. ____ (2010) 3

STEVENS, J., concurring in judgment

uniformly agreed that Section 10(b) can apply to a trans­
national securities fraud either when fraudulent conduct
has effects in the United States or when sufficient conduct
relevant to the fraud occurs in the United States”); see
also 1 Restatement (Third) of Foreign Relations Law of the
United States §416 (1986) (setting forth conduct-and­
effects test). Neither Congress nor the Securities Ex­
change Commission (Commission) acted to change the
law. To the contrary, the Commission largely adopted the
Second Circuit’s position in its own adjudications. See
ante, at 23–24.
In light of this history, the Court’s critique of the deci­
sion below for applying “judge-made rules” is quite mis­
placed. Ante, at 11. This entire area of law is replete with
judge-made rules, which give concrete meaning to Con­
gress’ general commands.3 “When we deal with private
actions under Rule 10b–5,” then-Justice Rehnquist wrote
many years ago, “we deal with a judicial oak which has
grown from little more than a legislative acorn.” Blue
Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 737
(1975). The “ ‘Mother Court’ ” of securities law tended to
that oak. Id., at 762 (Blackmun, J., dissenting) (describing
the Second Circuit). One of our greatest jurists—the judge
who, “without a doubt, did more to shape the law of securi­
ties regulation than any [other] in the country”4—was its
master arborist.
The development of §10(b) law was hardly an instance of
——————
3 It is true that “when it comes to ‘the scope of [the] conduct prohib­

ited by [Rule 10b–5 and] §10(b), the text of the statute [has] control[led]
our decision[s].’ ” Ante, at 12, n. 5 (quoting Central Bank of Denver, N.
A. v. First Interstate Bank of Denver, N. A., 511 U. S. 164, 173 (1994);
some brackets in original). The problem, when it comes to transna­
tional securities frauds, is that the text of the statute does not provide a
great deal of control. As with any broadly phrased, longstanding
statute, courts have had to fill in the gaps.
4 Loss, In Memoriam: Henry J. Friendly, 99 Harv. L. Rev. 1722, 1723

(1986).
4 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

STEVENS, J., concurring in judgment

judicial usurpation. Congress invited an expansive role
for judicial elaboration when it crafted such an open-ended
statute in 1934. And both Congress and the Commission
subsequently affirmed that role when they left intact the
relevant statutory and regulatory language, respectively,
throughout all the years that followed. See Brief for
Alecta pensionsförsäkring, ömsesidigt et al. as Amici
Curiae 31–33; cf. Musick, Peeler & Garrett v. Employers
Ins. of Wausau, 508 U. S. 286, 294 (1993) (inferring from
recent legislation Congress’ desire to “acknowledg[e]” the
10b–5 action without “entangling” itself in the precise
formulation thereof). Unlike certain other domains of
securities law, this is “a case in which Congress has en­
acted a regulatory statute and then has accepted, over a
long period of time, broad judicial authority to define
substantive standards of conduct and liability,” and much
else besides. Stoneridge Investment Partners, LLC v.
Scientific-Atlanta, Inc., 552 U. S. 148, 163 (2008).
This Court has not shied away from acknowledging that
authority. We have consistently confirmed that, in apply­
ing §10(b) and Rule 10b–5, courts may need “to flesh out
the portions of the law with respect to which neither the
congressional enactment nor the administrative regula­
tions offer conclusive guidance.” Blue Chip, 421 U. S., at
737. And we have unanimously “recogniz[ed] a judicial
authority to shape . . . the 10b–5 cause of action,” for that
is a task “Congress has left to us.” Musick, Peeler, 508
U. S., at 293, 294; see also id., at 292 (noting with ap­
proval that “federal courts have accepted and exercised
the principal responsibility for the continuing elaboration
of the scope of the 10b–5 right and the definition of the
duties it imposes”). Indeed, we have unanimously en­
dorsed the Second Circuit’s basic interpretive approach to
§10(b)—ridiculed by the Court today—of striving to “di­
 Cite as: 561 U. S. ____ (2010) 5

STEVENS, J., concurring in judgment

vin[e] what Congress would have wanted,” ante, at 12.5
“Our task,” we have said, is “to attempt to infer how the
1934 Congress would have addressed the issue.” Musick,
Peeler, 508 U. S., at 294.
Thus, while the Court devotes a considerable amount of
attention to the development of the case law, ante, at 6–
10, it draws the wrong conclusions. The Second Circuit
refined its test over several decades and dozens of cases,
with the tacit approval of Congress and the Commission
and with the general assent of its sister Circuits. That
history is a reason we should give additional weight to the
Second Circuit’s “judge-made” doctrine, not a reason to
denigrate it. “The longstanding acceptance by the courts,
coupled with Congress’ failure to reject [its] reasonable
interpretation of the wording of §10(b), . . . argues signifi­
cantly in favor of acceptance of the [Second Circuit] rule
by this Court.” Blue Chip, 421 U. S., at 733.
II
The Court’s other main critique of the Second Circuit’s
approach—apart from what the Court views as its exces­
sive reliance on functional considerations and recon­
structed congressional intent—is that the Second Circuit
——————
5 Even as the Court repeatedly declined to grant certiorari on cases

raising the issue, individual Justices went further and endorsed the
Second Circuit’s basic approach to determining the transnational reach
of §10(b). See, e.g., Scherk v. Alberto-Culver Co., 417 U. S. 506, 529–
530 (1974) (Douglas, J., joined by Brennan, White, and Marshall, JJ.,
dissenting) (“It has been recognized that the 1934 Act, including the
protections of Rule 10b–5, applies when foreign defendants have
defrauded American investors, particularly when . . . they have profited
by virtue of proscribed conduct within our boundaries. This is true
even when the defendant is organized under the laws of a foreign
country, is conducting much of its activity outside the United States,
and is therefore governed largely by foreign law” (citing, inter alia,
Leasco, 468 F. 2d, at 1334–1339, and Schoenbaum v. Firstbrook, 405
F. 2d 200, rev’d on rehearing on other grounds, 405 F. 2d 215 (CA2
1968) (en banc))).
6 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

STEVENS, J., concurring in judgment

has “disregard[ed]” the presumption against extraterrito­
riality. Ante, at 6. It is the Court, however, that misap­
plies the presumption, in two main respects.
First, the Court seeks to transform the presumption
from a flexible rule of thumb into something more like a
clear statement rule. We have been here before. In the
case on which the Court primarily relies, EEOC v. Ara
bian American Oil Co., 499 U. S. 244 (1991) (Aramco),
Chief Justice Rehnquist’s majority opinion included a
sentence that appeared to make the same move. See id.,
at 258 (“Congress’ awareness of the need to make a clear
statement that a statute applies overseas is amply demon­
strated by the numerous occasions on which it has ex­
pressly legislated the extraterritorial application of a
statute”). Justice Marshall, in dissent, vigorously ob­
jected. See id., at 261 (“[C]ontrary to what one would
conclude from the majority’s analysis, this canon is not a
‘clear statement’ rule, the application of which relieves a
court of the duty to give effect to all available indicia of the
legislative will”).
Yet even Aramco—surely the most extreme application
of the presumption against extraterritoriality in my time
on the Court6—contained numerous passages suggesting
that the presumption may be overcome without a clear
directive. See id., at 248–255 (majority opinion) (repeat­
edly identifying congressional “intent” as the touchstone of
the presumption). And our cases both before and after
Aramco make perfectly clear that the Court continues to
give effect to “all available evidence about the meaning” of
a provision when considering its extraterritorial applica­
tion, lest we defy Congress’ will. Sale v. Haitian Centers
Council, Inc., 509 U. S. 155, 177 (1993) (emphasis added).7
——————
6 And also one of the most short lived. See Civil Rights Act of 1991,

§109, 105 Stat. 1077 (repudiating Aramco).
7 See also, e.g., Hartford Fire Ins. Co. v. California, 509 U. S. 764
 Cite as: 561 U. S. ____ (2010) 7

STEVENS, J., concurring in judgment

Contrary to JUSTICE SCALIA’s personal view of statutory
interpretation, that evidence legitimately encompasses
more than the enacted text. Hence, while the Court’s
dictum that “[w]hen a statute gives no clear indication of
an extraterritorial application, it has none,” ante, at 6,
makes for a nice catchphrase, the point is overstated. The
presumption against extraterritoriality can be useful as a
theory of congressional purpose, a tool for managing in­
ternational conflict, a background norm, a tiebreaker. It
does not relieve courts of their duty to give statutes the
most faithful reading possible.
Second, and more fundamentally, the Court errs in
suggesting that the presumption against extraterritorial­
ity is fatal to the Second Circuit’s test. For even if the
presumption really were a clear statement (or “clear indi­
cation,” ante, at 6, 16) rule, it would have only marginal
relevance to this case.
It is true, of course, that “this Court ordinarily construes

——————
(1993) (declining to apply presumption in assessing question of
Sherman Act extraterritoriality); Smith v. United States, 507 U. S. 197,
201–204 (1993) (opinion for the Court by Rehnquist, C. J.) (considering
presumption “[l]astly,” to resolve “any lingering doubt,” after consider­
ing structure, legislative history, and judicial interpretations of Federal
Tort Claims Act); cf. Sale, 509 U. S., at 188 (stating that presumption
“has special force when we are construing treaty and statutory provi­
sions that,” unlike §10(b), “may involve foreign and military affairs for
which the President has unique responsibility”); Dodge, Understanding
the Presumption Against Extraterritoriality, 16 Berkeley J. Int’l L. 85,
110 (1998) (explaining that lower courts “have been unanimous in
concluding that the presumption against extraterritoriality is not a
clear statement rule”). The Court also relies on Microsoft Corp. v.
AT&T Corp., 550 U. S. 437, 455–456 (2007). Ante, at 16. Yet Micro
soft’s articulation of the presumption is a far cry from the Court’s rigid
theory. “As a principle of general application,” Microsoft innocuously
observed, “we have stated that courts should ‘assume that legislators
take account of the legitimate sovereign interests of other nations when
they write American laws.’ ” 550 U. S., at 455 (quoting F. Hoffmann-La
Roche Ltd v. Empagran S. A., 542 U. S. 155, 164 (2004)).
8 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

STEVENS, J., concurring in judgment

ambiguous statutes to avoid unreasonable interference
with the sovereign authority of other nations,”
F. Hoffmann-La Roche Ltd v. Empagran S. A., 542 U. S.
155, 164 (2004), and that, absent contrary evidence, we
presume “Congress is primarily concerned with domestic
conditions,” Foley Bros., Inc. v. Filardo, 336 U. S. 281, 285
(1949). Accordingly, the presumption against extraterrito­
riality “provides a sound basis for concluding that Section
10(b) does not apply when a securities fraud with no ef­
fects in the United States is hatched and executed entirely
outside this country.” Brief for United States as Amicus
Curiae 22. But that is just about all it provides a sound
basis for concluding. And the conclusion is not very illu­
minating, because no party to the litigation disputes it.
No one contends that §10(b) applies to wholly foreign
frauds.
Rather, the real question in this case is how much, and
what kinds of, domestic contacts are sufficient to trigger
application of §10(b).8 In developing its conduct-and­
effects test, the Second Circuit endeavored to derive a
solution from the Exchange Act’s text, structure, history,
and purpose. Judge Friendly and his colleagues were well
aware that United States courts “cannot and should not
expend [their] resources resolving cases that do not affect
Americans or involve fraud emanating from America.”
547 F. 3d, at 175; see also id., at 171 (overriding concern is
“ ‘whether there is sufficient United States involvement’ ”
(quoting Itoba Ltd. v. Lep Group PLC, 54 F. 3d 118, 122
(CA2 1995))).
The question just stated does not admit of an easy an­
——————
8 Cf. Dodge, 16 Berkeley J. Int’l L., at 88, n. 25 (regardless whether

one frames question as “whether the presumption against extraterrito­
riality should apply [or] whether the regulation is extraterritorial,” “one
must ultimately grapple with the basic issue of what connection to the
United States is sufficient to justify the assumption that Congress
would want its laws to be applied”).
 Cite as: 561 U. S. ____ (2010) 9

STEVENS, J., concurring in judgment

swer. The text of the Exchange Act indicates that §10(b)
extends to at least some activities with an international
component, but, again, it is not pellucid as to which ones.9
The Second Circuit draws the line as follows: §10(b) ex­
tends to transnational frauds “only when substantial acts
in furtherance of the fraud were committed within the
United States,” SEC v. Berger, 322 F. 3d 187, 193 (CA2
2003) (internal quotation marks omitted), or when the
fraud was “ ‘intended to produce’ ” and did produce “ ‘det­
rimental effects within’ ” the United States, Schoenbaum,
405 F. 2d, at 206.10
This approach is consistent with the understanding
——————
9 By its terms, §10(b) regulates “interstate commerce,” 15 U. S. C.
§78j, which the Exchange Act defines to include “trade, commerce,
transportation, or communication . . . between any foreign country and
any State, or between any State and any place or ship outside thereof.”
§78c(a)(17). Other provisions of the Exchange Act make clear that
Congress contemplated some amount of transnational application. See,
e.g., §78b(2) (stating, in explaining necessity for regulation, that “[t]he
prices established and offered in [securities] transactions are generally
disseminated and quoted throughout the United States and foreign
countries and constitute a basis for determining and establishing the
prices at which securities are bought and sold”); §78dd(b) (exempting
from regulation foreign parties “unless” they transact business in
securities “in contravention of such rules and regulations as the Com­
mission may prescribe as necessary or appropriate to prevent the
evasion of this chapter” (emphasis added)); see also Schoenbaum, 405
F. 2d, at 206–208 (reviewing statutory text and legislative history).
The Court finds these textual references insufficient to overcome the
presumption against extraterritoriality, ante, at 13–15, but as ex­
plained in the main text, that finding rests upon the Court’s misappli­
cation of the presumption.
10 The Government submits that a “transnational securities fraud

violates Section 10(b) if significant conduct material to the fraud’s
success occurs in the United States.” Brief for United States as Amicus
Curiae 6. I understand the Government’s submission to be largely a
repackaging of the “conduct” prong of the Second Circuit’s test. The
Government expresses no view on that test’s “effects” prong, as the
decision below considered only respondents’ conduct. See id., at 15,
n. 2; 547 F. 3d 167, 171 (CA2 2008).
10 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

STEVENS, J., concurring in judgment

shared by most scholars that Congress, in passing the
Exchange Act, “expected U. S. securities laws to apply to
certain international transactions or conduct.” Buxbaum,
Multinational Class Actions Under Federal Securities
Law: Managing Jurisdictional Conflict, 46 Colum. J.
Transnat’l L. 14, 19 (2007); see also Leasco Data Process
ing Equip. Corp. v. Maxwell, 468 F. 2d 1326, 1336 (CA2
1972) (Friendly, J.) (detailing evidence that Congress
“meant §10(b) to protect against fraud in the sale or pur­
chase of securities whether or not these were traded on
organized United States markets”). It is also consistent
with the traditional understanding, regnant in the 1930’s
as it is now, that the presumption against extraterritorial­
ity does not apply “when the conduct [at issue] occurs
within the United States,” and has lesser force when “the
failure to extend the scope of the statute to a foreign set­
ting will result in adverse effects within the United
States.” Environmental Defense Fund, Inc. v. Massey, 986
F. 2d 528, 531 (CADC 1993); accord, Restatement (Second)
of Foreign Relations Law of the United States §38 (1964–
1965); cf. Small v. United States, 544 U. S. 385, 400 (2005)
(THOMAS, J., joined by SCALIA and KENNEDY, JJ., dissent­
ing) (presumption against extraterritoriality “lend[s] no
support” to a “rule restricting a federal statute from reach­
ing conduct within U. S. borders”); Continental Ore Co. v.
Union Carbide & Carbon Corp., 370 U. S. 690, 705 (1962)
(presumption against extraterritoriality not controlling
“[s]ince the activities of the defendants had an impact
within the United States and upon its foreign trade”).
And it strikes a reasonable balance between the goals of
“preventing the export of fraud from America,” protecting
shareholders, enhancing investor confidence, and deter­
ring corporate misconduct, on the one hand, and conserv­
ing United States resources and limiting conflict with
 Cite as: 561 U. S. ____ (2010) 11

STEVENS, J., concurring in judgment

foreign law, on the other.11 547 F. 3d, at 175.
Thus, while §10(b) may not give any “clear indication”
on its face as to how it should apply to transnational
securities frauds, ante, at 6, 16, it does give strong clues
that it should cover at least some of them, see n. 9, supra.
And in my view, the Second Circuit has done the best job
of discerning what sorts of transnational frauds Congress
meant in 1934—and still means today—to regulate. I do
not take issue with the Court for beginning its inquiry
with the statutory text, rather than the doctrine in the
Courts of Appeals. Cf. ante, at 18, n. 9. I take issue with
the Court for beginning and ending its inquiry with the
statutory text, when the text does not speak with geo­
graphic precision, and for dismissing the long pedigree of,
and the persuasive account of congressional intent embod­
ied in, the Second Circuit’s rule.
Repudiating the Second Circuit’s approach in its en­
tirety, the Court establishes a novel rule that will foreclose
private parties from bringing §10(b) actions whenever the
relevant securities were purchased or sold abroad and are
not listed on a domestic exchange.12 The real motor of the
——————
11 Given its focus on “domestic conditions,” Foley Bros., Inc. v. Filardo,

336 U. S. 281, 285 (1949), I expect that virtually all “ ‘foreign-cubed’ ”
actions—actions in which “(1) foreign plaintiffs [are] suing (2) a foreign
issuer in an American court for violations of American securities laws
based on securities transactions in (3) foreign countries,” 547 F. 3d, at
172—would fail the Second Circuit’s test. As they generally should.
Under these circumstances, the odds of the fraud having a substantial
connection to the United States are low. In recognition of the Exchange
Act’s focus on American investors and the novelty of foreign-cubed
lawsuits, and in the interest of promoting clarity, it might have been
appropriate to incorporate one bright line into the Second Circuit’s test,
by categorically excluding such lawsuits from §10(b)’s ambit.
12 The Court’s opinion does not, however, foreclose the Commission

from bringing enforcement actions in additional circumstances, as no
issue concerning the Commission’s authority is presented by this case.
The Commission’s enforcement proceedings not only differ from private
§10(b) actions in numerous potentially relevant respects, see Brief for
12 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

STEVENS, J., concurring in judgment

Court’s opinion, it seems, is not the presumption against
extraterritoriality but rather the Court’s belief that trans­
actions on domestic exchanges are “the focus of the Ex­
change Act” and “the objects of [its] solicitude.” Ante, at
17, 18. In reality, however, it is the “public interest” and
“the interests of investors” that are the objects of the
statute’s solicitude. Europe & Overseas Commodity Trad
ers, S. A. v. Banque Paribas London, 147 F. 3d 118, 125
(CA2 1998) (citing H. R. Rep. No. 1838, 73d Cong., 2d
Sess., 32–33 (1934)); see also Basic Inc. v. Levinson, 485
U. S. 224, 230 (1988) (“The 1934 Act was designed to
protect investors against manipulation of stock prices”
(citing S. Rep. No. 792, 73d Cong., 2d Sess., 1–5 (1934));
Ernst & Ernst v. Hochfelder, 425 U. S. 185, 195 (1976)
(“The 1934 Act was intended principally to protect inves­
tors . . . ”); S. Rep. No. 1455, 73d Cong., 2d Sess., 68 (1934)
(“The Securities Exchange Act of 1934 aims to protect the
interests of the public against the predatory operations of
directors, officers, and principal stockholders of corpora­
tions . . . ”). And while the clarity and simplicity of the
Court’s test may have some salutary consequences, like all
bright-line rules it also has drawbacks.
Imagine, for example, an American investor who buys
shares in a company listed only on an overseas exchange.
That company has a major American subsidiary with
executives based in New York City; and it was in New
York City that the executives masterminded and imple­
mented a massive deception which artificially inflated the
stock price—and which will, upon its disclosure, cause the
——————
United States as Amicus Curiae 12–13, but they also pose a lesser
threat to international comity, id., at 26–27; cf. Empagran, 542 U. S., at
171 (“ ‘[P]rivate plaintiffs often are unwilling to exercise the degree of
self-restraint and consideration of foreign governmental sensibilities
generally exercised by the U. S. Government’ ” (quoting Griffin, Extra­
territoriality in U. S. and EU Antitrust Enforcement, 67 Antitrust L. J.
159, 194 (1999); alteration in original)).
 Cite as: 561 U. S. ____ (2010) 13

STEVENS, J., concurring in judgment

price to plummet. Or, imagine that those same executives
go knocking on doors in Manhattan and convince an unso­
phisticated retiree, on the basis of material misrepresen­
tations, to invest her life savings in the company’s doomed
securities. Both of these investors would, under the
Court’s new test, be barred from seeking relief under
§10(b).
The oddity of that result should give pause. For in
walling off such individuals from §10(b), the Court nar­
rows the provision’s reach to a degree that would surprise
and alarm generations of American investors—and, I am
convinced, the Congress that passed the Exchange Act.
Indeed, the Court’s rule turns §10(b) jurisprudence (and
the presumption against extraterritoriality) on its head,
by withdrawing the statute’s application from cases in
which there is both substantial wrongful conduct that
occurred in the United States and a substantial injurious
effect on United States markets and citizens.
III
In my judgment, if petitioners’ allegations of fraudulent
misconduct that took place in Florida are true, then re­
spondents may have violated §10(b), and could potentially
be held accountable in an enforcement proceeding brought
by the Commission. But it does not follow that sharehold­
ers who have failed to allege that the bulk or the heart of
the fraud occurred in the United States, or that the fraud
had an adverse impact on American investors or markets,
may maintain a private action to recover damages they
suffered abroad. Some cases involving foreign securities
transactions have extensive links to, and ramifications for,
this country; this case has Australia written all over it.
Accordingly, for essentially the reasons stated in the Court
of Appeals’ opinion, I would affirm its judgment.
The Court instead elects to upend a significant area of
securities law based on a plausible, but hardly decisive,
14 MORRISON v. NATIONAL AUSTRALIA BANK LTD.

STEVENS, J., concurring in judgment

construction of the statutory text. In so doing, it pays
short shrift to the United States’ interest in remedying
frauds that transpire on American soil or harm American
citizens, as well as to the accumulated wisdom and experi­
ence of the lower courts. I happen to agree with the result
the Court reaches in this case. But “I respectfully dis­
sent,” once again, “from the Court’s continuing campaign
to render the private cause of action under §10(b)
toothless.” Stoneridge, 552 U. S., at 175 (STEVENS, J.,
dissenting).