On Monday, Judge Scheindlin dismissed securities fraud claims brought by a putative class of investors in Optimal, an investment fund that invested 100% of its assets with Bernie Madoff and his firm. On March 6, Judge Scheindlin had issued an Order to Show Cause why the plaintiffs’ securities law claims should not be dismissed in light of the Second Circuit’s decision in <emAbsolute Activist Value Master Fund, Ltd. v. Ficeto, which clarified the scope of extraterritorial application of the Exchange Act after the Supreme Court’s decision in Morrison v. National Australia Bank. In briefing, the plaintiffs argued not that their investments in Optimal took place in the U.S., but instead that their purchases of shares in the fund were “‘in connection with the purchase or sale of a security listed on an American stock exchange’ –namely, Madoff’s purported trades on the New York Stock Exchange.” The plaintiffs sought to rely on the “broad interpretation generally given to the phrase ‘in connection with’” by courts.
Continue Reading Judge Scheindlin Throws Out Madoff-Related Securities Fraud Case Under Morrison