Buffalo Law Review

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In 2010 the U.S. Supreme Court fundamentally reset the jurisdictional sweep of U.S. securities law in Morrison v. National Australia Bank. No longer could foreign plaintiffs access the U.S. courts if a defendant engaged in conduct in the U.S. affecting securities prices outside the U.S., or conduct outside the U.S. had a significant effect on securities prices inside the U.S. Under Morrison’s new “transactional test” only purchasers of securities on a U.S. exchange or in a U.S. transaction would be able to bring securities fraud claim under Section 10(b). The Morrison decision therefore greatly heightens the importance of alternative non-U.S. jurisdictions hosting securities fraud lawsuits. Prior to Morrison, however, the Netherlands had already begun to host global securities settlements under its statute allowing for the settlement of mass claims, the Wet Collectieve Afwikkeling Massaschade (WCAM). As of 2019, the WCAM has been used to settle global securities fraud claims in four major cases, including the 1.2 billion euro settlement in the Fortis case, the largest ever outside the United States. The WCAM differs in crucial ways from the U.S. securities fraud class action regime, however. Most importantly, because the WCAM does not afford plaintiff shareholders a collective means to sue, the balance of power shifts decisively towards the defendant as compared to the American system. A close look at Morrison and the WCAM settlements to date illustrates that to some extent the development of this law is an example of regulatory competition. Indeed, both the U.S. Supreme Court and the Dutch courts have understood their role as affording differing, though complementary, systems for solving securities fraud claims. The theory of regulatory competition is not the only cause driving the development of a global class action mechanism under Dutch law, however. The jurisprudential commitments of the Supreme Court’s conservative wing, as well as principles of justice and the workings of chance, have also shaped the development of this new body of law. This Article surveys the WCAM as a mechanism to settle securities fraud claims, with an eye towards comparing it to its American counterpart. While critics of the American system will be heartened by the fact that plaintiffs are deprived of the ability to launch in terrorem litigation, the Dutch system fails to improve on the more trenchant flaws of the American securities fraud class action regime.