Vanderbilt Journal of Transnational Law

First Page



While international securities transactions have become the norm in today's globalized economy, such transactions necessarily implicate the laws of more than one nation, thereby creating both conflict and confusion. Due to the depth and breadth of U.S. securities laws, plaintiffs often prefer to sue in the United States under U.S. law. Yet inappropriately applying U.S. law to transnational transactions may offend notions of comity. This Note discusses the different tools used to decide the following jurisdictional issues. First, under what circumstances do U.S. anti-fraud rules apply to securities transactions? Second, under what circumstances do U.S. registration laws apply? Over the past two decades, the judicially created "conduct" and 'effects" tests used to decide whether U.S. anti-fraud laws apply have produced inconsistent results and have created uncertainty and unpredictability for both investors and issuers. Conversely, Regulation S, used to determine whether U.S. registration laws apply, was designed by the Securities and Exchange Commission (SEC) to promote predictability and clarity. While commentators have recommended revising the conduct and effects tests to more closely resemble the bright line of Regulation S, the Second Circuit did the reverse in 1998. In Europe and Overseas Commodities Traders, S.A. v. Banque Paribas London (EOC), the Second Circuit essentially revised Regulation S to more closely resemble the conduct and effects tests. This Note begins with an historical analysis of the United States securities laws and the effect of globalization on these laws. It then analyzes the issues and holding of EOC and the SEC's response. Finally, it evaluates the weakness of the Second Circuit's decision and predicts its international ramifications.