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Sunday, May 19, 2024 | Back issues
Courthouse News Service Courthouse News Service

Shareholders Can’t Sue over Fraud from Abroad

MANHATTAN (CN) - Shareholders cannot sue an Australian bank for securities fraud because the alleged stock-inflation scheme originated abroad, the 2nd Circuit ruled.

"We are an American court, not the world's court," Judge Parker wrote. "We should not expend our resources resolving cases that do not affect Americans or involve fraud emanating from America."

Robert Morrison led a group of foreign stockholders in a class action against National Australian Bank, which owns the sixth largest mortgage service company in the United States, HomeSide Lending Inc.

On two occasions, NAB had to readjust the value of HomeSide's mortgage servicing rights, resulting in drops in the price of NAB stock.

The plaintiffs alleged that HomeSide improperly manipulated its financial records and then sent the results back to Australia for publication.

However, the circuit court agreed with the lower court that HomeSide's conduct was "a link in the chain of a scheme that culminated abroad."

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