On March 29, the United States District Court for the Southern District of New York dismissed a securities class action lawsuit against Shearman & Sterling client Fairfax Financial Holdings Limited in Kenneth Parks, et al., v. Fairfax Financial Holdings Limited, et al. The Court, relying in part on the Second Circuit's 2008 decision in Morrison v. National Australia Bank ("NAB "), held that there was no subject matter jurisdiction over this "foreign-cubed" securities class action (i.e., a case in which foreign plaintiffs sue a foreign issuer for violations of U.S. securities laws based on transactions in foreign countries). Interestingly, this case was decided on the same day as the U.S. Supreme Court heard oral argument in the NAB case — a closely watched case in which the Supreme Court will determine the extent to which the antifraud provisions of the U.S. securities laws can be invoked in "foreign-cubed" securities cases.

The Fairfax Financial Holdings case arose out of a drop in Fairfax's stock following disclosure of an SEC investigation into accounting for finite risk reinsurance and a subsequent restatement. This case involved Canadian plaintiffs who bought shares of a Canadian company on a Canadian stock exchange. The Court held that plaintiffs lacked subject matter jurisdiction as neither the conduct nor the effects test provided a basis for jurisdiction.

The Shearman & Sterling team was led by partner Brian Polovoy (New York-Litigation) and included associate Jeffrey Resetarits (New York-Litigation).