When Domestic Securities Fall Outside Scope Of Federal Law

Law360 (February 22, 2021, 5:57 PM EST) -- On Jan. 25, the U.S. Court of Appeals for the Second Circuit issued an opinion in Cavello Bay Reinsurance Ltd. v. Stein affirming the dismissal of a claim under Section 10(b) of the Exchange Act, holding that a private sale of restricted shares between two Bermudan companies was "so predominantly foreign" as to be impermissibly extraterritorial under the facts presented.

The court came to this conclusion despite a defendant's principal place of business being in New York and the parties entering a subscription agreement that was partially signed in New York, governed by New York law, and that required any resales...

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