In this month’s column, we discuss Absolute Activist Value Master Fund Ltd. v. Ficeto,1 in which the U.S. Court of Appeals for the Second Circuit earlier this month addressed what constitutes a “domestic transaction” in securities not listed on a U.S. exchange permitting the extraterritorial application of Section 10(b) of the Securities Exchange Act and Rule 10(b)–5 promulgated thereunder. This decision, written by Judge Robert A. Katzmann and joined by Judges Jon O. Newman and Ralph K. Winter, held that under the Supreme Court’s 2010 decision in Morrison v. National Australia Bank,2 to establish a domestic transaction in securities not listed on a U.S. exchange, a plaintiff must allege facts plausibly showing either that irrevocable liability was incurred or that title was transferred within the United States.
Background
This case involved a classic “pump-and-dump” scheme. The plaintiffs, a group of Cayman Islands hedge funds (hereinafter the funds) with hundreds of investors around the world, including many investors in the United States, engaged Absolute Capital Management Holdings Limited (ACM) to act as the funds’ investment manager. Defendants were officers and employees of ACM, including its chief investment officer (CIO), chairman/chief executive officer and head of investor relations and marketing. In addition, the complaint named as a defendant Todd Ficeto—a resident of California and registered securities agent in California, Florida, Illinois, Massachusetts, New Jersey, New York, Texas and Washington—who was the president, director, and along with ACM’s CIO, a co-owner of defendant Hunter World Markets Inc., an SEC-registered broker-dealer incorporated and based in California, with offices in Beverly Hills.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
