Is an SEC Enforcement Monsoon Forecast for Israel?
How far is the reach of the United States Securities and Exchange Commission? Unquestionably, the Commission may enforce U.S. securities laws against Israeli companies whose securities trade in the U.S. But what if none of the company’s securities trades there? The Commission claims it may enforce U.S. securities law in that situation, too, so long as alleged misconduct related to the securities transaction occurred in the U.S. or has a foreseeable, substantial effect within the U.S. That claim will be tested before a U.S. appeals court this month, and the court’s decision has potentially far-reaching consequences, literally. In this article, we discuss the case, S.E.C. v. Traffic Monsoon, LLC, evaluate the Commission’s claim, and suggest how Israeli companies can minimize the risk of adverse Commission scrutiny if the appeals court sides with the Commission. *Written with U.S. law firm Murphy & McGonigle
