For First Time, Federal Appellate Court Holds That Dodd-Frank Broadened Extraterritorial Reach of SEC Enforcement Actions

In the first federal appellate court opinion to interpret Section 929P(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the 10th Circuit Court of Appeals issued a decision last week that makes it easier for the U.S. Securities and Exchange Commission (the “SEC”) to bring enforcement actions in connection with securities law violations that take place outside the United States.

Affirming a grant of injunctive relief, the 10th Circuit in SEC v. Scoville and Traffic Monsoon held that the SEC can rely on the broader “conduct-and-effects test” to determine whether the U.S. federal securities laws reach conduct outside the United States, rather than having to satisfy the more stringent test set out in 2010 by the U.S. Supreme Court in Morrison v. National Australia Bank.

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