United States District Court, N.D. Illinois, Eastern Division
For United States Securities and Exchange Commission, Plaintiff: Jonathan Stephen Polish, LEAD ATTORNEY, U.S. Securities and Exchange Commission, Senior Trial Counsel, Division of Enforcement, Chicago, IL; Daniel J. Hayes, United States Securities and Exchange Commission, Senior Trial Counsel/Enforcement Division, Chicago, IL; Eric A. Celauro, Securities and Exchange Commission, Chicago, IL; John E Birkenheier, John J. Sikora, Jr., Kent W. McAllister, Securities & Exchange Commission, Chicago, IL.
For Stefan H. Benger, SHB Capital, Inc., Defendants: Howard J. Stein, LEAD ATTORNEY, Attorney at Law, Chicago, IL.
Jason B Meyers, Defendant, Pro se, Chicago, IL.
Philip T Powers, Defendant, Pro se, Chicago, IL.
For Philip T Powers, Defendant: Nancy L. Hendrickson, Hendrickson Law Firm, Chicago, IL; Philip Thomas Powers, Greenberg Traurig, LLP, Chicago, IL.
For Frank I Reinschreiber, Global Financial Management, LLC, Defendants: Peter B. Shaeffer, Attorney at Law, Chicago, IL.
For CTA Worldwide Services, SA, Relief Defendant, Stephan von Hase, Relief Defendant, Defendants: James Arthur McGurk, LEAD ATTORNEY, Law Offices of James A. McGurk, P.C., Chicago, IL.
For Pamela Benger, Intervenor: Linda M. Perry, LEAD ATTORNEY, Law Office of Linda M. Perry, Chicago, IL.
Jeffrey Cole, UNITED STATES MAGISTRATE JUDGE.
MEMORANDUM OPINION AND ORDER
In an earlier Opinion, the motion of certain defendants for partial summary judgment was granted. S.E.C. v. Benger, 2013 WL 593952 (N.D.Ill. 2013). This opinion will deal with Count V, which charges certain defendants with having acted as brokers or dealers in connection with the foreign sales of IBI stock, Benger, supra , without having been registered with the SEC pursuant to Section 15(a)(1) of the Securities and Exchange Act of 1934. 15 U.S.C. § 78o(a)(1). It is the defendants' contention that since their activities did not involve domestic sales of stock, they were not required to register under Section 15(a) of the Act. The argument is based on Morrison v. National Australia Bank Ltd.,
__ U.S. __,130 S.Ct. 2869, 177 L.Ed.2d 535 (2010), which held that § 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 were not intended to have extraterritorial effect to provide a cause of action in federal courts for fraudulent conduct in connection with the sale of foreign securities on foreign exchanges, even if part of the fraudulent activities occurred in the United States.
The holding was based on the " 'longstanding principle of American law'" that, " unless a contrary intent appears, legislation of Congress is meant to apply only within the territorial jurisdiction of the United States." :
This principle...rests on the perception that Congress ordinarily legislates with respect to domestic, not foreign matters. Thus, 'unless there is the ...