Corporate Governance

Israeli Investors: Dual Listing Preserves Protection of US Securities Law

By Jay D. Dean

The Supreme Court?s ruling in Morrison v. National Australia Bank Ltd does not strip investors in US companies who purchased their shares overseas of securities fraud protections under US law if the shares were dual listed, say Israel?s securities regulation authority and a group of Israeli investors.

The Israel Securities Authority has submitted an opinion letter to the SEC, concluding that securities listed under Israel?s dual-listed regime, which allows U.S. listed companies to automatically list on the Tel Aviv Stock Exchange (?TASE?) without any additional reporting requirements, should be excepted from Morrison?s ruling.

In the courts, four Israeli institutional investors in the Perrigo Co. securities litigation contend that they have satisfied Morrsion?s ?listing? requirement, because they purchased their common stock under Israel?s dual listing regime.

The Perrigo defendants sought to dismiss these investors? claims, arguing that their purchases of Perrigo shares on the TASE (as opposed to the NASDAQ) precluded their participation in the action under Morrison. The Israeli investors responded that the shares they purchased were listed both on the NASDAQ and the TASE, and that, in light of the ISA?s stance that such dual listed securities should be included in U.S. federal securities class actions, concerns of international comity cited by the Supreme Court in Morrison did not apply.

Full post as published by PomTalk on March 21, 2011 (boomark / email).