One of the enduring questions following in the wake of the U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank is whether transactions in a non-U.S. company’s unsponsored Level I American Depository Receipts (ADRs) can be the subject of a damages action under the U.S. Securities laws. As I noted in a blog post at the time (here), a prior federal district court decision in the long-running Toshiba securities class action lawsuit established that a non-U.S. company whose Level I ADRs trade in the U.S. can be the subject of a U.S. securities suit – even if the ADRs are unsponsored. However, a recent decision at the class certification stage in the same Toshiba case suggests that while claimants may well be able to plead a claim based on trading in unsponsored Level I ADRs, the claimants may or may not be able to sustain the claim as a class action – or, at a minimum, the question of whether the claim can go forward as a class action can depend on minute details about how the named plaintiffs’ ADR transactions actually took place.
Continue Reading U.S. Securities Law Claims Based on Unsponsored Level I ADRs Cannot Proceed as Class Action