Dennis v. JPMorgan Chase & Co., US District Court for the Southern District of New York, November 28, 2018
Investors who traded in financial instruments in the US based on the “BBSW” benchmark originating in Australia sued many banks and brokerages claiming to have been injured because the benchmark was set through collusion and the defendants otherwise manipulated the market. They brought suit under the antitrust laws, the securities laws, and RICO.
As relevant here, the defendants argued that the complaint required an impermissibly extraterritorial application of the US antitrust laws because all the allegedly unlawful conduct occurred in Australia. The FTAIA generally permits an antitrust claim to proceed in a cross-border context where an ex-US act has a “direct, substantial and reasonably foreseeable effect” on US commerce that gives rise to an antitrust claim. The Court observed that the requisite “effect” need not occur as an “immediate consequence” of the defendant’s ex-US conduct so long as there is a “reasonably proximate causal nexus between the conduct and the effect.” The Court found that test to be met because BBSW was used as a pricing benchmark globally and “substantial quantities” of BBSW-based derivatives were allegedly sold in the US. The Court thus refused to characterize the ex-US conduct as having merely a “ripple effect” in the US, which would not have satisfied the test.
[Editor’s note: The Dennis case is also addressed in the RICO, Securities Law/Commodities Exchange Act (CEA), and Personal Jurisdiction/Forum non Conveniens sections of this report.]