NOTE 

THE SECOND CIRCUIT’S 

EXTRATERRITORIAL APPLICATION OF 

THE COMMODITY EXCHANGE ACT 

Mary Jean Whitsell 

      In August 2019, the Second Circuit ruled in Prime 

International Trading, Ltd. v BP P.L.C. that plaintiffs 

bringing a private action under the Commodity Exchange Act 

(CEA) must plead a domestic transaction and domestic 

violative conduct. By requiring that plaintiffs plead domestic 

illegal conduct, Prime International’s holding will severely 

limit plaintiffs’ ability to seek damages in the United States, 

even when they trade entirely on U.S. markets. The high 

pleading bar imposed by Prime International is especially 

impactful given that trading commodities and futures 

contracts is more accessible than ever due to electronic 

platform-based trading, which allows traders to access U.S. 

and foreign markets with ease. 

      This Note argues that Prime International improperly 

narrowed the domestic application of CEA section 22, which 

grants plaintiffs a private right of action. Instead, courts 

should adopt the “sufficiently domestic” analysis from 

Parkcentral Global Hub Ltd. v. Porsche Automobile Holdings. 

Under this suggested analysis, a plaintiff would need to allege 

that violative conduct impacted a domestic transaction to 

plead section 22. Additionally, the court would need to 

evaluate whether the claim is properly domestic or 

impermissibly foreign. Unlike the Prime International 

standard, domestic conduct would not be necessary—though it 

would likely satisfy the sufficiency analysis. 

 

 J.D. 2022, Columbia Law School. I thank my family for their support and 

the editors at the Columbia Business Law Review for their time and 

helpful feedback. 



  

984                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

 

I. Introduction ........................................................................ 985 
II. Background ....................................................................... 987 

A. Introduction to the Commodity Exchange Act ... 987 
B. Morrison v. National Australia Bank and the 

Presumption Against Extraterritoriality ............ 990 
C. The Ninth and Second Circuits Disagree Whether 

Domestic Transaction Is Sufficient to Satisfy 

Morrison’s Transactional Test ............................. 993 
1. The Second Circuit’s Sufficiency Test in 

Parkcentral Global Hub Ltd. v. Porsche 

Automobile ....................................................... 993 
2. The Ninth Circuit Rejects Parkcentral’s 

Sufficiency Test................................................ 994 
D. The Second Circuit’s Application of Morrison and 

Parkcentral to the CEA ........................................ 996 
III. The Second Circuit Improperly Limited the 

Extraterritorial Reach of the CEA in Prime International

........................................................................................... 999 
A. Prime International Is Inconsistent with 

Parkcentral and Morrison .................................. 1000 
1. Prime International Misapplied 

Parkcentral’s “Impermissibly Foreign” 

Gloss ............................................................... 1000 
2. Prime International’s Domestic Conduct Is 

Contrary to Morrison’s Domestic 

Application Test ............................................. 1001 
B. Requiring Domestic Conduct Runs Contrary 

Purpose of the CEA............................................. 1005 
1. Congress Has Recognized the Global Nature 

of Modern Derivatives in CEA Section 2(i) 

and the Reauthorization Act ........................ 1006 
2. Prime International Is Inconsistent with 

Congress’s Stated Purpose for the CEA ...... 1007 
C. Requiring Domestic Conduct Undercuts the 

CFTC’s Enforcement Capabilities ..................... 1010 
1. The CFTC Depended on CEA Section 6(c)(1) 

and 9(a)(2) in Benchmark Manipulation 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 985 

Cases To Protect U.S. Markets Against 

Foreign Violative Conduct ............................ 1011 
2. Private Causes of Action Help Protect U.S. 

Markets .......................................................... 1014 
IV. The Second Circuit Should Abrogate Prime 

International’s Domestic Conduct Requirement and 

Adopt Parkcentral’s “Impermissibly Foreign” Carveout

......................................................................................... 1015 
A. To Follow Morrison, the Second Circuit Should 

Abrogate the Domestic Conduct Requirement and 

Apply Parkcentral’s Sufficiency Test to the CEA

 .............................................................................. 1016 
1. The Supreme Court Has Not Definitively 

Ruled That a Domestic Transaction Is 

Sufficient To Plead a Violation of SEA 

Section 10(b) or CEA Section 22................... 1016 
2. Allowing Plaintiffs To Plead CEA Section 22 

Whenever the Underlying Transaction is 

Domestic Would Undermine Morrison’s 

Presumption Against Extraterritoriality .... 1018 
3. International Comity Concerns Require that 

Domestic Transactions Be Necessary, but 

Not Sufficient, To Plead a Violation of CEA 

Section 22 ....................................................... 1020 
B. Under the Proposed Standard, CEA Section 22’s 

Domestic Application Would Depend on the Nature 

of the Transaction and Conduct, in Addition to 

Requiring a Domestic Transaction .................... 1023 
1. The Proposed Standard Does Not Run Afoul 

of Morrison ..................................................... 1023 
2. Considerations Under the Sufficiency Test .. 1025 

C. Applying Parkcentral’s Sufficiency Test to Laydon 

v. Mizuho Bank, a District Court Case Decided 

Under Prime International’s Requirements ..... 1026 
V. Conclusion ...................................................................... 1028 
 

I. INTRODUCTION 

      In the first half of 2019, global derivative markets saw 



  

986                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

$640 trillion in trading activity.1 Because the markets for 

commodities and commodity derivatives are so vast and 

interconnected, price changes ripple throughout U.S. and 

international markets. Indeed, in March 2020, U.S. markets’ 

worst day in over a decade was attributable in part to a severe 

decline in Brent crude prices, which function as an 

international benchmark for global oil prices.2 Yet, in the 2019 

case Prime International Trading, Ltd. v. BP P.L.C., the 

Second Circuit affirmed the dismissal of the plaintiffs’ claims 

that the defendants had manipulated the Brent crude prices 

and benchmarks affecting their positions on U.S. markets.3 In 

doing so, the Second Circuit prohibited plaintiffs from 

bringing suit under the Commodity Exchange Act (CEA) when 

the alleged violative conduct occurs abroad.4 The holding that 

plaintiffs can only bring suit under the CEA when the 

plaintiffs’ affected transaction and the alleged manipulative 

conduct are domestic5 will severely limit plaintiffs’ ability to 

seek damages in the United States, even when they trade 

entirely on U.S. markets. The high pleading bar imposed by 

Prime International is particularly impactful given that 

commodities and futures contracts are more accessible than 

ever due to electronic platform-based trading, which allows 

 

1 Valdis Dombrovskis & Heath Tarbert, A New Pact Will Help 

Derivatives Markets, WALL ST. J. (Sept. 16, 2020, 6:56 PM) 

https://www.wsj.com/articles/a-new-pact-will-help-derivatives-markets-

11600297002?mod=opinion_lead_pos11 (on file with the Columbia 

Business Law Review). 
2 Rosie Perper, Oil Is Down 21% After Its Biggest Drop in Decades 

Following Saudi Price Cuts That Sparked a Race to the Bottom with 

Russia, BUS. INSIDER: MKTS. INSIDER (Mar. 8, 2020, 7:27 PM), 

https://markets.businessinsider.com/news/stocks/oil-price-crash-market-

drop-global-price-war-futures-coronavirus-2020-3-1028974518 

[https://perma.cc/YYH6-5BFE]; see also Petition for a Writ of Certiorari at 

*10, Atl. Trading USA, LLC v. BP P.L.C., 141 S. Ct. 113 (2020) (mem.) 

(No. 19-1141), denying cert. to 937 F.3d 94 (2d Cir. 2019), 2020 WL 

1313359. 
3 Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 98–100 (2d Cir. 

2019), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
4 See id. at 105. 
5 Id. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 987 

traders to access U.S. and foreign markets with ease.6 

      This Note argues that the Second Circuit in Prime 

International improperly narrowed the domestic application 

of CEA section 22, which grants plaintiffs a private right of 

action,7 and that courts should adopt the “sufficiently 

domestic” analysis from Parkcentral Global Hub Ltd. v. 

Porsche Automobile Holdings.8 Part II introduces the CEA 

and commodities extraterritoriality law, much of which comes 

from securities cases. Next, Part III argues that the Second 

Circuit incorrectly applied Parkcentral’s sufficiency test to the 

CEA by creating a bright-line rule that requires both a 

domestic transaction and domestic conduct. Finally, Part IV 

suggests that the Second Circuit should apply Parkcentral’s 

sufficiency analysis to the CEA and offers an alternative 

standard that abrogates Prime International and is consistent 

with Supreme Court and Second Circuit case law.   

II. BACKGROUND 

A. Introduction to the Commodity Exchange Act 

      The CEA regulates commodity derivative markets and 

transactions. As defined by the CEA, “commodities” include 

financial instruments—such as currency and interest rates—

in addition to physical commodities like agricultural products 

and natural resources.9 A “derivative” is a financial 

instrument whose price “is directly dependent upon (i.e., 

‘derived from’) the value of” an underlying commodity.10 

 

6 David E. Kovel & Andrew M. McNeela, The Commodities Exchange 

Act and the Presumption Against Extraterritoriality: An Examination of 

Transnational, Platform-Based Electronic Trading Under Second Circuit 

Precedent, 18 J. INT’L BUS. & L. 147, 147 (2019). 
7 7 U.S.C. § 25 (2018). 
8 763 F.3d 198 (2d Cir. 2014) (per curiam). 
9 CFTC Glossary: “Co”, U.S. COMMODITY FUTURES TRADING COMM’N, 

https://www.cftc.gov/LearnAndProtect/EducationCenter/CFTCGlossary/glo

ssary_co.html [https://perma.cc/K3PK-9B83] (last visited Feb. 11, 2021). 
10  CFTC Glossary: “D”, COMMODITY FUTURES TRADING COMM’N 

(emphasis added), 



  

988                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

Individuals and businesses use these markets to hedge risk 

and as “price discovery mechanism[s] that reflect[] the 

collective views of all market participants with regard to the 

future supply and demand prospects of a commodity.”11 

      Early on, Congress recognized that commodity derivative 

markets were international in nature.12 In the CEA’s 

predecessor, the 1922 Grain Futures Act, Congress 

acknowledged that grain futures were “affected with a 

national public interest” in part because “the prices involved 

in such transactions are generally quoted and disseminated 

throughout the United States and in foreign countries as a 

basis for determining . . . prices.”13 In 1936, Congress passed 

the CEA, and for nearly 40 years, the commodities regulated 

by the Act grew to include a wide array of goods.14 

      In 1974, Congress overhauled the CEA and created the 

Commodity Futures Trading Commission (CFTC), greatly 

extending the scope of commodity futures regulation.15 The 

CEA’s definition of “commodity” was further expanded to 

preempt the need for iterative updates by including nearly 

 

https://www.cftc.gov/LearnAndProtect/EducationCenter/CFTCGlossary/glo

ssary_d.html [https://perma.cc/T9D6-H762]. 
11 Introduction to Commodities and Commodity Derivatives, CFA 

INST., https://www.cfainstitute.org/en/membership/professional-

development/refresher-readings/introduction-commodities-commodity-

derivatives [https://perma.cc/3C4D-VXY6]. 
12 Brief for Amicus Curiae U.S. Commodity Futures Trading Comm’n 

in Support of Neither Party at 7, Prime Int’l Trading, Ltd. v. BP P.L.C., 

937 F.3d 94 (2d Cir. 2019) (No. 17-2233), cert. denied, 141 S. Ct. 113 (2020) 

(mem.). 
13 Grain Futures Act of 1922, Pub. L. No. 67-331, § 3, 42 Stat. 998, 

999 (codified as amended at 7 U.S.C. § 5(a) (2018)); see also Introduction to 

Commodities and Commodity Derivatives, supra note 11 (“[C]ommodity 

exchanges allow important parties beyond traditional suppliers and 

buyers . . . to participate in the[] price discovery and risk transfer 

processes.”). 
14 See Brief for Amicus Curiae U.S. Commodity Futures Trading 

Comm’n in Support of Neither Party, supra note 12, at 7–8; History of the 

CFTC, U.S. COMMODITY FUTURES TRADING COMM’N, 

https://www.cftc.gov/About/HistoryoftheCFTC/history_precftc.html 

[https://perma.cc/UYT3-EERS] (last visited Feb. 14, 2021). 
15 See Brief for Amicus Curiae U.S. Commodity Futures Trading 

Comm’n in Support of Neither Party, supra note 12, at 8. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 989 

“‘all’ goods and articles, ‘services, rights and interests.’”16 This 

broad definition included foreign commodities such as “coffee, 

cocoa, copper, and foreign currency” futures.17 Indeed, 

Congress stated that the foreign nature of a commodity 

matters little to domestic purchasers, sellers, and processors 

as well as “to U.S. consumers whose prices are affected by the 

futures market.”18 Congress further emphasized that all 

commodities, regardless of their origin, should be regulated 

“under a single regulatory umbrella.”19   

      A recent study shows that risk in global commodities 

markets is increasingly connected.20 Since the 2008 financial 

crisis, average connectedness has risen from fifteen percent to 

fifty percent.21 Interconnectedness “serves as a conduit for 

contagion” and is recognized as an aspect of systemic risk.22 

When an interconnected entity fails, the “impact . . . can 

spread rapidly and extensively across the financial system, to 

the point where it can cause worldwide financial instability.”23 

In commodities markets, for example, this means an 

increased dependence between food prices and international 

oil prices.24 The current CEA’s purpose is to serve the public 

interest in these markets through self-regulation and CFTC 

oversight.25 Consequently, effective regulation by the CFTC 

 

16 Id. (quoting Commodity Futures Trading Commission Act of 1974, 

Pub. L. No. 93-463, sec. 201(b), § 2(a), 88 Stat. 1389, 1395 (codified as 

amended at 7 U.S.C. § 1a(9))). 
17 Id. 
18 Id. at 9 (internal quotation marks omitted) (quoting S. REP. NO. 93-

1131, at 19 (1974)). 
19 Id. (internal quotation marks omitted) (quoting H.R. REP. NO. 93-

975, at 41–42 (1974)). 
20 Dayong Zhang & David C. Broadstock, Global Financial Crisis and 

Rising Connectedness in the International Commodity Markets, INT’L REV. 

FIN. ANALYSIS, 2020, at 1, 10. 
21 Id. 
22 DTCC, UNDERSTANDING INTERCONNECTEDNESS RISKS TO BUILD A 

MORE RESILIENT FINANCIAL SYSTEM 4 (2015), 

https://www.dtcc.com/~/media/Files/Downloads/WhitePapers/Interconnecte

dnessWP-101815.pdf?la=en [https://perma.cc/23C8-SSQX]. 
23 Id. 
24 Zhang & Broadstock, supra note 20, at 10. 
25 7 U.S.C. § 5(b) (2018). 



  

990                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

includes “global oversight” and the cooperation of regulators.26 

Thus, to achieve the CEA’s purpose, the global 

interconnectedness of commodities markets necessitates that 

the CEA’s anti-fraud provisions reach some international 

conduct that affects U.S. markets and market participants. 

B. Morrison v. National Australia Bank and the 
Presumption Against Extraterritoriality 

      Because of the similarities between commodities and 

securities anti-fraud statutes,27 the relevant commodities 

extraterritoriality jurisprudence originates in securities law. 

In particular, the 2010 Supreme Court case Morrison v. 

National Australia Bank, which established a new test for 

whether federal law and section 10(b) of the Securities 

Exchange Act (SEA)28 apply extraterritorially or domestically, 

is the foundation of commodities extraterritoriality caselaw.29 

 

26 Heath P. Tarbert, Chairman, Commodity Futures Trading Comm’n, 

Remarks to the 36th Annual FIA Expo 2020 (Nov. 10, 2020), 

https://www.cftc.gov/PressRoom/SpeechesTestimony/tarbetstatement1110

20 [https://perma.cc/X7V2-A7AR]. 
27 For example, CEA section 6(c)(1) is based closely on section 10(b) of 

the Securities Exchange Act. Compare 7 U.S.C. § 9(1) (“It shall be 

unlawful for any person . . . to use or employ, or attempt to use or employ, 

in connection with any swap, or a contract of sale of any commodity in 

interstate commerce, or for future delivery on or subject to the rules of any 

registered entity, any manipulative or deceptive device or contrivance, in 

contravention [of CFTC rules.]”), with 15 U.S.C. § 78j(b) (2018) (“It shall 

be unlawful for any person . . . (b) To use or employ, in connection with the 

purchase or sale of any security registered on a national securities 

exchange or any security not so registered, or any securities-based swap 

agreement any manipulative or deceptive device or contrivance in 

contravention [of SEC rules.]”). See also CFTC v. Monex Credit Co., 931 

F.3d 966, 976 (9th Cir. 2019) (“CEA [section 6(c)(1)] is a mirror image of § 

10(b) of the Securities Exchange Act . . . . We presume that by copying § 

10(b)’s language and pasting it in the CEA, Congress adopted § 10(b)’s 

judicial interpretations as well.”). 
28 15 U.S.C. § 78j(b). Section 10(b) of the 1934 Act is the securities 

law’s general anti-fraud statute. It prohibits using any manipulative or 

deceptive device in connection with the purchase or sale of a security or 

security swap in contravention of rules and regulations prescribed by the 

SEC. Id. 
29 Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 255 (2010). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 991 

Thus, it is helpful to consider Morrison and its securities law 

progeny before turning to the CEA. 

      Prior to Morrison, the Second Circuit relied on the 

“conduct” and “effects” tests to determine when a plaintiff’s 

claim was within SEA section 10(b)’s reach.30 The Second 

Circuit reasoned that when the SEA was silent on the 

extraterritorial application of a statutory provision, it was the 

court’s role to “discern” whether Congress would have wanted 

the statute to apply.31 To guide this analysis, the Second 

Circuit created the “conduct” and “effects” tests, under which 

a 10(b) claim could be premised on “a substantial effect in the 

United States or upon United States citizens” or on “wrongful 

conduct” in the United States.32 In practice, the test was 

difficult to administer and unpredictable in application.33 

      The Supreme Court in Morrison critiqued the “conduct” 

and “effects” tests for lacking clarity and textual basis.34 To 

guide the extraterritorial analysis of all federal law claims, 

the Court replaced the Second Circuit’s test with a two-

pronged textual framework to determine whether a statute 

reaches a plaintiff’s claim.35 The first part of the Morrison 

framework is the presumption against extraterritoriality. 

Under this prong, a statute is presumed only to apply 

domestically, unless “‘the affirmative intention of the 

Congress [is] clearly expressed’ to give a statute 

extraterritorial effect.”36 When a statute does not rebut the 

presumption against extraterritoriality, thus failing the first 

 

30 Id. at 257 (internal quotation marks omitted) (quoting SEC v. 

Berger, 322 F.3d 187, 192–93 (2d Cir. 2003), abrogated by Morrison, 561 

U.S. 247). 
31 Id. (internal quotation marks omitted) (quoting Morrison v. Nat’l 

Austl. Bank, 547 F.3d 167, 170 (2d Cir. 2008), aff’d on other grounds, 561 

U.S. 247). 
32 Id. (emphasis added) (quoting Berger, 322 F.3d at 192–93). 
33 Id. at 258. 
34 Id. at 258, 260–61. 
35 Id. at 262, 266. 
36 Id. at 255 (quoting EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 264 

(1991), superseded by statute on other grounds, Civil Rights Act of 1991, 

Pub. L. No. 102-166, sec. 109(a), § 701(f), 105 Stat. 1071, 1077 (codified at 

42 U.S.C. § 2000e(f) (2018))). 



  

992                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

step, a plaintiff can seek the domestic application of the 

statute under Morrison’s second step. Under this prong, the 

Court instructed judges to examine whether the statute’s 

focus targets the alleged conduct to determine whether 

domestic application of the statute is permissible.37 The 

presumption against extraterritoriality and domestic 

application framework generally applies to federal statutes, 

though how the Morrison Court applies the framework to SEA 

section 10(b) is particularly instructive for the CEA. 

      First, the Supreme Court found “no affirmative indication 

in the Exchange Act that § 10(b) applies extraterritorially,” 

and concluded that section 10(b) did not rebut the 

presumption against extraterritoriality.38 In holding that 

section 10(b) does not apply extraterritorially, the Court 

rejected several arguments which indicated that the SEA 

considered some elements of foreignness. For example, the 

Court stated that the statute’s “general reference to foreign 

commerce in the definition of ‘interstate commerce’ does not 

defeat the presumption against extraterritoriality.”39 Nor 

were “possible interpretations of statutory language” or 

“uncertain indications” sufficient.40 Instead, the Court 

emphasized that “a clear statement of extraterritorial effect” 

is required to rebut the presumption.41 

      Under the domestic application prong, the Court noted 

that SEA section 10(b) only punishes deceptive conduct in 

connection with securities transactions.42 Accordingly, the 

Court found that section 10(b)’s focus is on the “purchase[] and 

sale[] of securities in the United States.”43 Therefore, the 

Court concluded that section 10(b) only reaches “transactions 

in securities listed on domestic exchanges, and domestic 

transactions in other securities.”44 Because the case at hand 

 

37 Id. at 266. 
38 Id. at 265. 
39 Id. at 263. 
40 Id. at 264–65. 
41 Id. at 265. 
42 Id. at 266. 
43 Id. 
44 Id. at 267. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 993 

did not involve a security listed on a domestic exchange, and 

the purchases occurred outside the United States, the Court 

dismissed the plaintiffs’ section 10(b) claims as impermissibly 

extraterritorial and thus outside the reach of the statute.45 

The Court bolstered its conclusion by looking to the text of the 

entire Exchange Act, which the Court determined focuses on 

domestic exchanges and transactions.46 

C. The Ninth and Second Circuits Disagree Whether 
Domestic Transaction Is Sufficient To Satisfy 
Morrison’s Transactional Test 

      Although Morrison aimed to clarify the extraterritorial 

scope of securities regulation, there is a circuit split on what 

constitutes a domestic application of SEA section 10(b). 

Specifically, the Ninth and Second Circuits disagree on 

whether a domestic transaction is sufficient to allege a 

domestic application of Rule 10b-5.47 To be within 10b-5’s 

reach, the Second Circuit has ruled that the conduct could not 

be “so predominantly foreign as to be impermissibly 

extraterritorial.”48 In contrast, the Ninth Circuit has rejected 

the “predominantly foreign” gloss and has held that a 

domestic transaction is sufficient to allege a violation of 10b-

5.49   

1. The Second Circuit’s Sufficiency Test in 
Parkcentral Global Hub Ltd. v. Porsche 

 

45 Id. at 273. 
46 Id. at 267–69. 
47 Section 10(b) grants the SEC the power to prescribe anti-

manipulation and anti-deception regulation “as necessary or appropriate 

in the public interest or for the protection of investors.” 15 U.S.C. § 78j 

(2018). Promulgated under Section 10, Rule 10b-5, 17 C.F.R. § 240.10b-5 

(2020), is the SEC’s implementing regulation and specifies the statute’s 

reach. See Jay B. Kasner & Mollie M. Kornreich, Section 10(b) Litigation: 

The Current Landscape, BUS. L. TODAY, Oct. 2014, at 1, 1. 
48 Parkcentral Glob. Hub Ltd. v. Porsche Auto. Holdings, 763 F.3d 

198, 216 (2d Cir. 2014) (per curiam). 
49 Stoyas v. Toshiba Corp., 896 F.3d 933, 949–50 (9th Cir. 2018). 



  

994                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

Automobile 

      In Parkcentral Global Hub Ltd. v. Porsche Automobile 

Holdings, the Second Circuit found that a domestic 

transaction is necessary, but not sufficient, to state a claim 

under section 10(b).50 The Parkcentral plaintiffs, some thirty 

international hedge funds with short positions in Volkswagen 

(VW) security-based swaps in U.S. markets, alleged that 

Porsche fraudulently concealed its planned acquisition of VW 

to manipulate the company’s stock price in violation of section 

10(b).51 When Porsche ultimately revealed the acquisition, 

VW stock skyrocketed, and the plaintiffs’ swaps suffered huge 

losses.52 

      The Second Circuit found that because the swaps’ 

underlying security was foreign and the defendants traded on 

a foreign market and were not privy to the swap agreement, 

the plaintiffs’ claims were impermissibly foreign, and, thus, 

not a valid claim.53 The court declined to apply Morrison’s 

transactional test, stating that a domestic transaction is 

necessary but not sufficient to plead a violation of section 

10(b).54 Therefore, the court identified a carveout to 

Morrison’s transactional test (the “impermissibly foreign” 

carveout or gloss). It is important to note, however, that the 

Second Circuit emphasized that its conclusion could not “be 

perfunctorily applied to other cases based on the perceived 

similarity of a few facts,” nor did the court “purport to proffer 

a test that will reliably determine when a particular 

invocation of § 10(b) will be deemed appropriately domestic or 

impermissibly extraterritorial.”55 Thus, the Second Circuit 

cabined the holding of Parkcentral and stressed that the 

sufficiency analysis is highly fact-dependent. 

2. The Ninth Circuit Rejects Parkcentral’s 

 

50 Parkcentral, 763 F.3d at 215. 
51 Id. at 203. 
52 Id. at 205. 
53 Id. at 216. 
54 Id. 
55 Id. at 217. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 995 

Sufficiency Test 

      In Stoyas v. Toshiba Corp., the Ninth Circuit rejected 

Parkcentral’s “impermissibly foreign” carveout and found that 

alleging a domestic transaction was sufficient to satisfy 

Morrison’s transactional test.56 Following Toshiba’s admission 

of accounting fraud and restatements of pre-tax profits, 

plaintiffs brought a securities fraud class action suit against 

Toshiba and several of its executives.57 The plaintiffs did not 

own Toshiba stock, which trades on the Tokyo Stock 

Exchange, but owned American depository receipts (ADRs) 

pegged to Toshiba stock.58 

      Toshiba urged that the court should dismiss plaintiffs’ 

section 10(b) claim because they “did not allege any connection 

between Toshiba and the Toshiba ADR transactions.”59 The 

Ninth Circuit flatly rejected this argument, stating that 

Morrison and section 10(b) compel examining the 

transaction’s location and that “it does not matter that a 

foreign entity was not engaged in the transaction.”60 The court 

differentiated between when section 10(b) applies, which 

requires a domestic transaction, and whether Toshiba would 

ultimately be found in violation of the statute and therefore 

 

56 Stoyas v. Toshiba Corp., 896 F.3d 933, 949–50 (9th Cir. 2018). 
57 Id. at 937. 
58 Id. at 937–38. “ADRs ‘allow U.S. investors to invest in non-U.S. 

companies and give non-U.S. companies easier access to U.S. capital 

markets.’” Id. at 940 (quoting OFF. OF INV. EDUC. & ADVOC., SEC, INVESTOR 

BULLETIN: AMERICAN DEPOSITARY RECEIPTS 1 (2012), 

https://www.sec.gosv/investor/alerts/adr-bulletin.pdf 

[https://perma.cc/38G9-CEUN]). Practically, ADRs share many similarities 

with securities of a company, including voting rights, but they do not 

represent the legal title of shares. Id. at 940–42. Instead, ADRs represent 

a beneficial interest in a specific number of shares that are held by the 

U.S. depositary institution. Id. at 940. The Toshiba ADRs at issue were 

unsponsored, meaning that the depositary institution could issue ADRs to 

U.S. investors without Toshiba’s participation “and possibly without its 

acquiescence.” Id. at 941 (citing American Depositary Receipts, 56 Fed. 

Reg. 24,420, 24,422 (May 30, 1991)). 
59 Id. at 949. 
60 Id. 



  

996                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

liable for the plaintiffs’ loss.61 

      Additionally, the Ninth Circuit explicitly stated that it 

would not follow Parkcentral “because [the decision] is 

contrary to Section 10(b) and Morrison itself.”62 First, the 

court stated that Parkcentral’s predominantly foreign 

carveout is contrary to the broad language of Section 10(b), 

which encompasses “the domestic ‘purchase or sale of any 

security registered on a national securities exchange or any 

securities not so registered.’”63 Moreover, the court critiqued 

Parkcentral as speculating about congressional intent and 

creating an “open-ended, under-defined multifactor test”—the 

type of test Morrison explicitly rebuffed.64 The court then 

reiterated that whether there was a connection between the 

alleged violative conduct and the purchase or sale of a security 

was a question on the merits, not about extraterritoriality.65 

D. The Second Circuit’s Application of Morrison and 
Parkcentral to the CEA 

      The Second Circuit has applied both Morrison and 

Parkcentral to the CEA. Specifically, in analyzing CEA section 

22, the court has adopted Morrison’s presumption against 

extraterritoriality and transaction test and, in Prime 

International Trading, Ltd. v. BP P.L.C, recently has applied 

Parkcentral’s “impermissibly foreign” gloss.66 

      Section 22 grants an express private cause of action 

against defendants who violate certain provisions of the 

CEA.67 Relevant to the analysis at hand, section 22 allows 

plaintiffs to recover actual damages where a defendant 

manipulates the price of a “contract or swap or the price of the 

commodity underlying such contract or swap,” or uses a 

manipulative device “in connection with a swap, or a contract 

 

61 Id. 
62 Id. at 950. 
63 Id. (quoting 15 U.S.C. § 78j(b)). 
64 Id. 
65 See id. at 950–51. 
66 Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 104–05 (2d Cir. 

2019), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
67 7 U.S.C. § 25 (2018). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 997 

of sale of a commodity, in interstate commerce, or for future 

delivery.”68 Thus, a plaintiff who engaged in a swap of a 

commodities future or options contract and who suffered harm 

as the result of manipulation can sue a defendant for violating 

the CEA’s anti-manipulation statutes—sections 9(a)(2) and 

6(c)(1).69 

      CEA section 6(c)(1) prohibits using or attempting to use 

any manipulative or deceptive device or contrivance “in 

connection with any swap, or a contract of sale of any 

commodity in interstate commerce, or for future delivery on or 

subject to the rules of any registered entity.”70 CEA section 

6(c)(1)(A) specifies that unlawful manipulation includes 

communicating a false, misleading, or inaccurate report 

concerning “conditions that affect . . . the price of any 

commodity in interstate commerce.”71 CEA section 9(a)(2) 

prohibits manipulation of “the price” of the products contained 

in section 6(c)(1)’s categories, cornering the market of a 

commodity in interstate commerce, and false or misleading 

reporting.72 

      The plaintiffs in Prime International traded futures and 

derivative contracts pegged to Brent crude oil on the New 

York Mercantile Exchange (NYMEX) and the 

Intercontinental Exchange Futures Europe (ICE Futures 

Europe).73 The defendants were entities that “produc[ed], 

refin[ed], and distribut[ed] Brent crude,” in addition to 

trading Brent crude on the physical and derivative markets.74 

The plaintiffs alleged that the defendants engaged in artificial 

trades of physical Brent crude to manipulate the physical and 

futures Brent crude markets, causing the plaintiffs financial 

 

68 Id. § 25(a)(1)(D). 
69 See Prime Int’l, 937 F.3d at 101. The Second Circuit does not 

recognize a right to sue for alleged manipulation that transpired 

extraterritorially. Id. at 101–03. 
70 7 U.S.C. § 9(1). 
71 Id. § 9(1)(A). 
72 Id. § 13(a)(2). 
73 Prime Int’l, 947 F.3d. at 98. 
74 Id. at 98–99. 



  

998                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

losses.75 

      However, the plaintiffs did not claim that the defendants 

directly engaged in manipulative transactions on ICE Futures 

Europe or NYMEX.76 Instead, the defendants allegedly 

manipulated over-the-counter physical transactions in foreign 

markets, “initiat[ing] a chain of events that caused ripple 

effects across global commodities markets.”77 This, the 

plaintiffs asserted, affected Brent futures prices on NYMEX 

and ICE Futures Europe to their detriment.78 

      The Second Circuit reasoned that the “text and structure 

of Section 22” and the presumption against extraterritoriality 

compelled applying Parkcentral to Prime International.79 

First, the court noted that section 22 requires the violation of 

a substantive CEA provision, and the underlying anti-fraud 

statutes at issue, CEA sections 6(c)(1) and 9(a)(2), “apply only 

to domestic conduct, and not to foreign conduct.”80 Therefore, 

as with Parkcentral’s application to the SEA, while a domestic 

transaction is necessary to fall under section 22, it is not 

sufficient. Rather, the structure of the CEA also requires 

plaintiffs to allege domestic conduct, such as manipulation, 

under sections 6(c)(1) or 9(a)(2).81 

      The Second Circuit then explained how the presumption 

against extraterritoriality suggested that Parkcentral should 

be applied to Prime International. The court emphasized that 

allowing plaintiffs to bring claims merely based on a foreign 

transaction is insufficient to rebut the presumption against 

extraterritoriality and could result in conflicts between U.S. 

and foreign laws.82 Applying Parkcentral, the court found that 

plaintiffs’ claims were “impermissibly extraterritorial” 

because they did not allege any violative domestic conduct.83 

 

75 Id. at 100. 
76 Id. 
77 Id. 
78 Id. 
79 Id. at 105–06. 
80 Id. at 105. 
81 See id. 
82 Id. at 106. 
83 Id. at 105–07. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 999 

      Lower courts have subsequently read Prime International 

as requiring violative domestic conduct, in addition to a 

domestic transaction, to allege a violation of section 22. For 

example, in In re Platinum & Palladium Antitrust Litigation, 

the Southern District of New York stated that Prime 

International requires the court to “assess whether Plaintiffs’ 

CEA claims are predominantly foreign.”84 Furthermore, 

where the plaintiff alleges a domestic transaction, Prime 

International directs the court to “focus . . . where the 

allegedly unlawful manipulation occurred.”85 In Laydon v. 

Mizuho Bank, Ltd., the Southern District again arrived at a 

similar result, finding that because the defendants’ alleged 

violative conduct was “almost entirely foreign,” the plaintiffs’ 

claim was “impermissibly extraterritorial.”86 

III. THE SECOND CIRCUIT IMPROPERLY LIMITED 
THE EXTRATERRITORIAL REACH OF THE CEA IN 

PRIME INTERNATIONAL 

      Prime International’s holding, that plaintiffs can only 

bring suit under the CEA when the alleged transaction and 

manipulative conduct are domestic, constrains U.S. plaintiffs’ 

ability to seek damages. The high pleading bar is particularly 

demanding because U.S. commodities and commodity 

derivatives markets are widely available outside the United 

States.87 Beyond this concern, Prime International is 

problematic because it improperly limits the scope of the 

CEA’s extraterritorial application. First, Prime International 

is contrary to Morrison and Parkcentral. Second, Prime 

International’s version of the “impermissibly foreign” carveout 

contravenes the CEA’s purpose of protecting market integrity 

and market participants. Third, Prime International and its 

line of cases wrongly constrain the CFTC’s enforcement 

 

84 In re Platinum & Palladium Antitrust Litig., 449 F. Supp. 3d 290, 

331 (S.D.N.Y. 2020). 
85 Id. 
86 Laydon v. Mizuho Bank, No. 12 Civ. 3419, 2020 WL 5077186, at *2 

(S.D.N.Y. Aug. 27, 2020). 
87 See Kovel & McNeela, supra note 6, at 147. 



  

1000                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

capabilities. 

A. Prime International Is Inconsistent with Parkcentral 
and Morrison 

1. Prime International Misapplied Parkcentral’s 
“Impermissibly Foreign” Gloss 

      Prime International purports to adopt Parkcentral’s rule, 

but the court’s bright-line domestic conduct requirement is 

not supported by Parkcentral’s qualified and fact-dependent 

holding. Prime International presented the question of 

whether Parkcentral’s conclusion “that ‘a domestic 

transaction or listing is necessary’ but ‘not alone sufficient’ to 

state a claim under Section 10(b)” applies to the CEA.88 The 

Second Circuit answered this question affirmatively, noting 

“that courts ‘have looked to the securities laws’ when . . . 

‘interpret[ing] similar provisions of the CEA.’”89 However, 

Prime International did not merely adopt Parkcentral’s 

holding but also significantly broadened it. 

      In Parkcentral, the Second Circuit held that the 

defendants’ conduct was “so predominantly German” that the 

plaintiffs’ claim could not be “consistent with the presumption 

against extraterritoriality.”90 The Parkcentral court did not 

offer any rule besides stating that a domestic transaction, 

while necessary to state a section 10(b) claim, may not be 

sufficient. Indeed, the court cautioned that 

[i]n a world of easy and rapid transnational 

communication and financial innovation, transactions 

in novel financial instruments . . . can come in 

innumerable forms of which we are unaware and 

which we cannot possibly foresee. We do not purport 

to proffer a test that will reliably determine when a 

 

88 Prime Int’l, 937 F.3d at 105 (quoting Parkcentral Glob. Hub Ltd. v. 

Porsche Auto. Holdings, 763 F.3d 198, 215–16 (2d Cir. 2014)). 
89 Id. at 106 (quoting Loginovskaya v. Batratchenko, 764 F.3d 266, 

272 (2d. Cir. 2014)). Recall that Parkcentral concerned interpretation of 

securities law. Parkcentral, 763 F.3d at 209. 
90 Parkcentral, 763 F.3d at 216. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1001 

particular invocation of § 10(b) will be deemed 

appropriately domestic or impermissibly 

extraterritorial.91 

In addition to declining to establish a test, the Parkcentral 

court emphasized that its decision was highly dependent on 

the facts before the court and that its holding could not “be 

perfunctorily applied to other cases.”92 

      In applying Parkcentral to the CEA, however, the Second 

Circuit created a bright-line and generally applicable test for 

section 22 claims. Parkcentral guided courts to pay “careful 

attention to the facts of each case and to combinations of facts 

that have proved determinative in prior cases, so as 

eventually to develop a reasonable and consistent governing 

body of law.”93 Nonetheless, in Prime International, the 

Second Circuit developed a test whose factual inquiry is 

limited to two bright-line requirements. A plaintiff must 

allege (1) a domestic transaction and (2) domestic violative 

conduct to plead a permissible domestic application of the 

CEA.94 In contrast to Parkcentral’s fact-dependent analysis, 

the court in Prime International identified and relied on the 

geographic locations of transactions and violative conduct and 

instructed other courts to do the same without further inquiry 

into the manipulative scheme, type of financial instrument, 

parallel enforcement actions, or comity concerns.95 Therefore, 

Prime International’s strict and generally applicable test is 

not aligned with Parkcentral’s narrow and fact-intensive 

sufficiency test. 

2. Prime International’s Domestic Conduct Is 
Contrary to Morrison’s Domestic Application 

 

91 Id. at 217. 
92 Id. 
93 Id. 
94 Prime Int’l, 937 F.3d at 105. 
95 Compare id. (“[T]he conduct regulating provisions of the CEA . . . 

apply only to domestic conduct, and not to foreign conduct.”), with 

Parkcentral, 763 F.3d at 217 (“[C]ourts must carefully make their way 

with careful attention to the facts of each case[.]”). 



  

1002                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

Test 

      The Second Circuit’s analysis in Prime International 

incorrectly interpreted the sections at issue in the CEA, and 

therefore is contrary to Morrison’s domestic application test. 

The Prime International court stated that the focuses of CEA 

sections 6(c)(1) and 9(a)(2) are the prevention of manipulation 

in commodities markets and of the price of any commodity, 

respectively.96 According to the Prime International court, it 

follows that the domestic application of sections 6(c)(1) and 

9(a)(2) requires “manipulative conduct or statements made in 

the United States.”97 This requirement for domestic conduct is 

unsound. Both the statutory text of the provisions at issue and 

the CEA as a whole support the conclusion that, similar to 

SEA section 10(b), the focuses of CEA sections 6(c)(1) and 

9(a)(2) are on domestic transactions, not domestic conduct. 

      When analyzing the domestic application of a statute, the 

Supreme Court instructs lower courts to consider the 

“‘conduct’ . . . [a] statute ‘seeks to regulate,’ as well as ‘the 

parties and interests it seeks to protect or vindicate.’”98 A 

court considers both the statute’s text99 and how “the 

statutory provision at issue works in tandem with other 

provisions.”100 Neither the text of the statutes at issue in 

Prime International nor other provisions of the CEA focus on 

domestic conduct.101 Rather, they are concerned with 

protecting U.S. markets and vindicating U.S. market 

participants’ rights.102   

 

96 Prime Int’l, 937 F.3d at 107–08. 
97 Id. at 108. 
98 See id. at 104 (quoting WesternGeco LLC v. ION Geophysical Corp., 

138 S. Ct. 2129, 2137 (2018)); Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 

266–70 (2010). 
99 See Morrison, 561 U.S. at 266–70 (analyzing the text of the 

Exchange Act to determine its focus). 
100 WesternGeco, 138 S. Ct. at 2137. 
101 E.g., Prime Int’l, 937 F.3d at 107 (“There is nothing in Section 

6(c)(1)’s text suggesting that it is focused on [domestic transactions].”). 
102 Id. (“[T]he CEA . . . suggests that the focus is on rooting out 

manipulation and ensuring market integrity—not on the geographical 

coordinates of the transaction.”). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1003 

      Indeed, the congressional focus of CEA sections 6(c)(1) and 

9(a)(2) is on domestic transactions, not domestic conduct. 

Section 6(c)(1) prohibits using “in connection with any swap, 

or a contract of sale of any commodity in interstate commerce, 

or for future delivery . . . any manipulative or deceptive 

device.”103 Thus, the statute’s focus is on manipulation in 

connection with a transaction specified by the provision. 

Similarly, section 9(a)(2) forbids manipulating the price of 

“any commodity in interstate commerce, or for future delivery 

. . . or of any swap, or . . . corner[ing] or attempt[ing] to corner 

any such commodity.”104 While this statute does not explicitly 

require a transaction, when read in tandem with the CEA’s 

purpose, it is clear that the statute’s focus is “to ensure the 

financial integrity of all transactions”105 by prohibiting the 

manipulation of prices. Consequently, the focus of both 

provisions, as expressed by the text of the statute, is to 

prevent the manipulation of domestic transactions. 

      In contrast, the Second Circuit held that because sections 

6(c)(1) and 9(a)(2) do not mention the “purchase or sale” of 

commodities or a “national securities exchange,” unlike SEA 

10(b), Morrison’s transactional test does not control the CEA’s 

anti-fraud and anti-manipulation statutes.106 This analysis is 

flawed. First, the text of the statutes, as discussed above, 

centers around manipulation in connection with a 

transaction, especially when read in light of the CEA’s 

purpose. Second, the Second Circuit confused “national 

securities exchange” with the CEA’s equivalent “registered 

entity,” which generally refers to contract markets, derivative 

clearing organizations, swap execution facilities, and 

electronic trading facilities.107 And since section 6(c)(1) 

prohibits manipulative devices and price manipulation “in 

connection with . . . any commodity . . . for future delivery on 

 

103 7 U.S.C. § 9(1) (2018). 
104 Id. § 13(a)(2). 
105 Id. § 5(b). 
106 Prime Int’l, 937 F.3d at 107 (internal quotation marks omitted) 

(first quoting Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 266 (2010); and 

then quoting 15 U.S.C. § 78j(b)). 
107 See 7 U.S.C. § 1a(40). 



  

1004                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

or subject to the rules of any registered entity,”108 its focus is 

likewise on domestic transactions. Thus, by not considering 

the provisions at issue in context, the Second Circuit 

incorrectly assumed that Congress’s intent in writing sections 

6(c)(1) and 9(a)(2) was to regulate manipulative conduct and 

not manipulative conduct in connection with a transaction. 

      Generally, the CEA’s purpose is to maintain the integrity 

of U.S. commodities and commodity derivatives markets and 

protect participants in those markets. The CEA is a remedial 

statute that seeks to protect the public interest by “deter[ring] 

and prevent[ing] price manipulation [and] any other 

disruptions to market integrity” and protecting market 

participants.109 In writing the CEA, Congress found that the 

transactions subject to the statute “are entered into regularly 

in interstate and international commerce and are affected 

with a national public interest.”110 Indeed, since the first 

commodity regulations, Congress has recognized the need for 

law to reach foreign commodities and conduct when they 

affect prices on U.S. markets.111 

      The CEA, and specifically sections 6(c)(1) and 9(a)(2), 

seeks to regulate conduct that affects domestic markets and 

market participants. Therefore, the Second Circuit should 

have applied the Morrison transactional test in Prime 

International and should not have created an additional 

domestic conduct requirement. By doing so, the court wrongly 

foreclosed valid manipulation claims from being heard in 

court. A brief written by the CFTC explains the problem 

clearly: 

[I]magine a scenario in which traders in Turkey 

establish positions in Black Sea Wheat contracts on 

CME, under which the foreign wheat is deliverable 

only in Romania, Russia, and Ukraine. This group can 

also control or disrupt a significant portion of the 

physical supply of wheat. They do so with the intent 

to distort the price of the Black Sea Wheat contract, 

 

108  Id. § 9(1). 
109 Id. § 5(b). 
110 Id. § 5(a) (emphasis added). 
111 See supra Section II.A. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1005 

and they are successful. This wrongdoing causes 

injury to other traders on CME, in Chicago. On that 

clean set of facts, there is no question that the 

overseas traders in the foreign commodity triggered 

all elements of manipulation, including for private 

damages. The target of the wrongdoing was in the 

United States, the CFTC would pursue those 

wrongdoers, and the Court in Morrison could not have 

intended to prevent that.112 

In other words, Morrison could not have intended to prevent 

a private party from suing a party who intentionally 

manipulated the price of a commodity in interstate commerce 

or traded on a registered entity.113 Yet under Prime 

International, if a party engages in such manipulation from 

outside the United States, they are not within the reach of the 

statute.114 Not only does Prime International’s reading of the 

CEA’s anti-fraud and anti-manipulation statutes conflict with 

the language and purpose of the CEA, but giving this meaning 

to the presumption against extraterritoriality would reduce 

the CEA to a “craven watchdog” of domestic markets.115 

B. Requiring Domestic Conduct Runs Contrary Purpose 
of the CEA 

     The Second Circuit’s strict requirement of domestic 

conduct runs contrary to Congress’s intent to protect U.S. 

commodities and derivatives markets from foreign 

interference. From the first commodities regulations to the 

modern CEA, Congress has sought to protect domestic 

commodity and derivative markets regardless of the 

 

112 Brief for Amicus Curiae U.S. Commodity Futures Trading Comm’n 

in Support of Neither Party, supra note 12, at 24. 
113 Id. 
114 Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 108 (2d Cir. 

2019), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
115 See Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 266 (2010) 

(warning that the presumption against extraterritoriality should not “be a 

craven watchdog”). 



  

1006                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

commodity’s foreignness.116 Indeed, Congress acknowledged 

that U.S. market participants and consumers whose prices 

are impacted by futures markets care little about the 

underlying commodities’ origins.117 

1. Congress Has Recognized the Global Nature of 
Modern Derivatives in CEA Section 2(i) and 
the Reauthorization Act 

      With the development of complex derivative trading, 

Congress recognized that U.S. markets are affected by a wide 

range of foreign conduct. In the wake of the 2008 financial 

crisis, Congress passed several cross-border swap regulations 

as part of the Dodd-Frank Act (Dodd-Frank).118 Congress 

found these CEA provisions necessary to “reduce systematic 

risk, increase transparency, and promote market integrity” 

given the global nature of swaps.119 

      Additionally, Dodd-Frank amended the CEA by adding 

section 2(i) to strengthen the CEA’s reach over foreign 

swaps.120 Section 2(i) specifies that the CEA’s swap provisions 

apply to activities outside the United States with either “(1) 

[a] direct and significant effect on U.S. commerce; or in the 

alternative, (2) a direct and significant connection with 

activities in U.S. commerce.”121 The purpose of this provision 

is to create a “comprehensive scheme of risk regulation” and 

address risk created by “interconnections in the swap 

 

116 See Brief for Amicus Curiae U.S. Commodity Futures Trading 

Comm’n in Support of Neither Party, supra note 12, at 7–8. 
117 Id. at 9. 
118 See Dodd-Frank Wall Street Reform and Consumer Protection Act, 

Pub. L. No. 111-203, §§ 714, 752, 124 Stat. 1376, 1647, 1749–50 (codified 

at 15 U.S.C. §§ 8303, 8325 (2018)). 
119 See Cross-Border Application of the Registration Thresholds and 

Certain Requirements Applicable to Swap Dealers and Major Swap 

Participants, 85 Fed. Reg. 56,924, 56,925 (Sept. 14, 2020) (to be codified at 

17 C.F.R. pt. 23). 
120 Dodd-Frank Wall Street Reform and Consumer Protection Act § 

722(d), 124 Stat. at 1673. 
121 Cross-Border Application of the Registration Thresholds and 

Certain Requirements Applicable to Swap Dealers and Major Swap 

Participants, 85 Fed. Reg. at 56,929. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1007 

market.”122 It allows the CFTC to enforce swap provisions 

with “the requisite connection with activities in U.S. 

commerce, regardless of whether a ‘harmful domestic effect’ 

has occurred.”123 

      For now, section 2(i)’s reach is limited to swaps. However, 

the CFTC Reauthorization Act of 2019 (Reauthorization Act) 

includes a provision which, had it passed, would have 

extended the CFTC’s fraud and manipulation enforcement 

capabilities to foreign activities with “a reasonably foreseeable 

substantial effect within the United States.”124 The House 

Committee on Agriculture’s Report on the Reauthorization 

Act cites Prime International as the impetus for this 

provision.125 The report opines that “[t]he [c]ourt’s ruling 

opens the possibility that would-be fraudsters or 

manipulators of commodity markets within the United States 

would seek safe havens from—and assert challenges to—the 

CFTC’s enforcement authority by conducting their 

manipulative or fraudulent activities outside the territory of 

the United States.”126 Thus, the Committee on Agriculture 

was aware that financial derivatives other than swaps are 

global in nature, can affect U.S. markets, and should be 

regulated as such. Although this bill failed to make it out of 

the House of Representatives, it nevertheless showed 

congressional concern regarding the implications of Prime 

International. This Section proceeds to explain how Prime 

International is inconsistent with the purpose of the CEA even 

without revision. 

2. Prime International Is Inconsistent with 
Congress’s Stated Purpose for the CEA 

      Prime International suggests that a private party who 

brings a claim under section 2(i) would easily rebut the 

 

122 Id. 
123 Id. 
124 CFTC Reauthorization Act of 2019, H.R. 4895, 116th Cong. § 112 

(2019). 
125 H.R. REP. NO. 116-313, at 28 (2019). 
126 Id. 



  

1008                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

presumption against extraterritoriality because the swap 

provision contains a “clear statement of extraterritorial” 

application.127 Yet, if we accept this statement and the court’s 

requirement of domestic conduct and a domestic transaction 

to plead a domestic application of sections 6(c)(1) and 9(a),128 

the results would be arbitrary and absurd. Under this 

formulation, a plaintiff who alleges a direct and significant 

relation with or effect on U.S. commerce in connection with 

swaps would immediately rebut the presumption against 

extraterritoriality—no domestic conduct or transaction 

required. However, a plaintiff who alleges that they were 

harmed while trading commodities futures on U.S. markets 

must also allege that the defendant committed violative 

conduct on U.S. soil, or they would be turned away for failure 

to state a claim. This result would be inconsistent with 

Congress’s recognition that commodity markets are global 

and that “a single regulatory umbrella” should cover all 

derivatives trading.129 

      Congress passed Dodd-Frank’s swap provisions in 

response to the 2008 financial crisis; swaps “were at the 

center” of the crisis,130 which made clear the risky and “global 

nature” of swap markets.131 While this context explains 

Congress’s myopic focus on swaps in 2010, Congress has 

repeatedly recognized the international nature of 

commodities markets from the inception of the CEA.132 

 

127 Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 103 (2d Cir. 

2019) (internal quotation marks omitted) (quoting Morrison v. Nat’l Austl. 

Bank, 561 U.S. 247, 265 (2010)), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
128 Id. at 105. 
129 Brief for Amicus Curiae U.S. Commodity Futures Trading Comm’n 

in Support of Neither Party, supra note 12, at 9 (internal quotation marks 

omitted) (quoting H.R. REP. NO. 93-975, at 41–42 (1974)). 
130 Dodd-Frank Act, U.S. COMMODITY FUTURES TRADING COMM’N, 

https://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm 

[https://perma.cc/L4RB-MX9Z] (last visited Feb. 12, 2021). 
131 See Cross-Border Application of the Registration Thresholds and 

Certain Requirements Applicable to Swap Dealers and Major Swap 

Participants, 85 Fed. Reg. 56,924, 56,925 (Sept. 14, 2020) (to be codified at 

17 C.F.R. pt. 23). 
132 See Section II.A. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1009 

Indeed, “protecting U.S. markets and market participants 

from manipulation, including manipulation using 

transactions in international commerce, is a core stated 

purpose of the CEA” and is not limited to swap transactions.133 

Thus, while only section 2(i) applies extraterritorially, the 

Second Circuit should reevaluate the domestic application of 

sections 6(c)(1) and 9(a) in light of Congress’s aim in enacting 

the CEA. 

      Furthermore, the CEA’s purpose is to protect market 

integrity and market participants, yet risks to markets do not 

depend on where violative conduct occurs.134 By requiring that 

plaintiffs allege a domestic transaction and domestic violative 

conduct to plead a cause of action under the CEA, the Second 

Circuit has created a significant loophole for fraudsters. Those 

who wish to avoid liability can trade on U.S. markets and 

intentionally target U.S. markets. As long as they do not 

commit any illegal conduct physically within the United 

States, they cannot be haled into court for harming Americans 

or traders on U.S. markets. Additionally, electronic platform-

based trading makes U.S. markets easily accessible to foreign 

actors, who would not be liable under Prime International’s 

formulation.135 Indeed, bright-line rules, such as the one 

proclaimed in Prime International, generally offer potential 

commodities law violators a roadmap of how to avoid being 

dragged into court136—especially given the increasing 

accessibility and complexity of trading.   

      Prime International’s domestic conduct requirement 

cannot be squared with the CEA’s purpose of protecting 

 

133 See Brief for Amicus Curiae U.S. Commodity Futures Trading 

Comm’n in Support of Neither Party, supra note 12, at 3 (citing 7 U.S.C. § 

5 (2012)). 
134 See id. at 9–10. 
135 Kovel & McNeela, supra note 6, at 147. 
136 Cf. Parkcentral Glob. Hub Ltd. v. Porsche Auto. Holdings, 763 F.3d 

198, 221 (2d Cir. 2014) (Leval, J., concurring) (“Bright-line rules (unless 

seriously over-inclusive) would permit unscrupulous securities dealers to 

design their transactions with their victims so as to stay on the side of the 

line that is outside the reach of the statute. Defrauded victim investors 

would have no recourse to the law Congress passed to secure the integrity 

of U.S. securities markets.”). 



  

1010                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

domestic markets, regardless of the manipulation’s 

geographic origin. While Congress has only explicitly applied 

the CEA’s swap provisions extraterritorially,137 it has 

recognized the international and interconnected nature of 

commodities and commodity futures.138 Moreover, Congress 

never intended to limit private manipulation actions to 

foreign conduct, as it would lead to absurd and unfair results 

to private plaintiffs—and potentially harm the CFTC’s ability 

to ensure market integrity for all participants. 

C. Requiring Domestic Conduct Undercuts the CFTC’s 
Enforcement Capabilities 

      Although Prime International involved private party 

plaintiffs, the court’s domestic conduct requirement in the 

case appears to apply generally to any fraud or manipulation 

claim under sections 6(c)(1) and 9(a)(2). In Prime 

International, the court found that the plaintiffs failed the 

Parkcentral sufficiency test because they did not allege 

domestic conduct that was violative of a substantive provision 

of the CEA, such as section 6(c)(1) or section 9(a)(2).139 

Moreover, the Second Circuit determined that the focuses of 

sections 6(c)(1) and 9(a)(2) are conduct that manipulates 

commodities markets and the price of commodities, 

respectively.140 Since the plaintiffs failed to allege any 

domestic manipulative conduct, the court dismissed their 

claim as impermissibly foreign.141   

      Though Prime International was a private suit, the court’s 

analysis of sections 6(c)(1) and 9(a)(2) appears to apply to any 

claim under those sections. Indeed, there is no reason to think 

that the CEA’s anti-fraud and anti-manipulation protections 

would have different meanings depending on who brings an 

action. However, if the Second Circuit adopts this reasoning 

 

137 See Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 103 (2d 

Cir. 2019), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
138 See supra Section II.A. 
139 Prime Int’l, 937 F.3d at 105–06. 
140 Id. at 107–08. 
141 Id. at 106. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1011 

more generally and applies it to CFTC actions, it could 

severely handicap the agency’s enforcement actions, which 

regularly rely on sections 6(c)(1) and 9(a)(2). 

1. The CFTC Depended on CEA Section 6(c)(1) 
and 9(a)(2) in Benchmark Manipulation Cases 
To Protect U.S. Markets Against Foreign 
Violative Conduct 

      Since Morrison, the Department of Justice (DOJ) and 

CFTC have protected the integrity of U.S. markets by 

bringing manipulation actions against foreign conduct that 

affects U.S. markets and exchanges. Prominent examples are 

the interest rate benchmark abuse actions and settlements 

arising from the London Inter-Bank Offered Rate (LIBOR), 

Euroyen Tokyo Interbank Offering Rate (Euroyen TIBOR), 

and Euro Interbank Offered Rate (Euribor) scandals. These 

actions were primarily the result of foreign conduct 

manipulating global interest rate benchmarks, which affected 

“trillions of dollars of financial instruments, including” 

futures and swaps traded on U.S exchanges.142 As a result of 

these actions, the CFTC “imposed penalties of nearly $2.7 

billion on six [major] financial institutions and two interdealer 

brokers.”143 The CFTC additionally imposed fines of over $1.4 

 

142 Press Release, U.S. Commodity Futures Trading Comm’n, CFTC 

Orders Société Générale S.A. To Pay $475 Million Penalty to Resolve 

Charges of Manipulation, Attempted Manipulation, and False Reporting of 

LIBOR and Euribor (June 4, 2018), 

https://www.cftc.gov/PressRoom/PressReleases/7736-18 

[https://perma.cc/75R4-ZKVN] (announcing a penalty for LIBOR and 

Euribor manipulation); see also Press Release, U.S. Commodity Futures 

Trading Comm’n, CFTC Orders Citibank, N.A. and Japanese Affiliates To 

Pay $175 Million Penalty for Attempted Manipulation of Yen LIBOR and 

Euroyen LIBOR, and False Reporting of Euroyen TIBOR and U.S. Dollar 

LIBOR (May 25, 2016), cftc.gov/PressRoom/PressReleases/7372-16 

[https://perma.cc/Y42S-N7DE] (announcing a penalty for, inter alia, 

Euroyen TIBOR misstatements). 
143 Press Release, U.S. Commodity Futures Trading Comm’n, 

Deutsche Bank To Pay $800 Million Penalty To Settle CFTC Charges of 

Manipulation, Attempted Manipulation, and False Reporting of LIBOR 

and Euribor, CFTC (Apr. 23, 2015), 



  

1012                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

billion on five financial institutions for “similar conduct 

relating to foreign exchange benchmarks.”144 

    One particular action, United States v. Sindzingre, was 

decided three months before Prime International.145 There, 

the government charged two defendant employees of Société 

Générale with participating in a scheme to manipulate 

LIBOR for the U.S. dollar (USD) by submitting false and 

misleading USD LIBOR rates.146 Société Générale’s “false and 

misleading submissions artificially reduced the USD LIBOR 

fix and affected millions of USD LIBOR-based financial 

transactions.”147 The defendants were French citizens and 

residents; all their alleged conduct occurred in France.148 

Nevertheless, the district court found that the indictment 

alleged a domestic application of the CEA section 9(a)(2) 

because one of the defendants “caused to be transmitted into 

the United States false reports that affected the prices of 

commodities in commerce in the United States—‘the objects 

of the statute’s solicitude.’”149 

    To determine the proper domestic application of section 

9(a)(2), the Sindzingre court first considered the purpose of 

the CEA and recognized that “[i]t ‘is a remedial statute that 

serves the crucial purpose of protecting the innocent 

individual investor.’”150 Next, the court looked to the text “of 

Section 9(a)(2), which prohibits the ‘manipulat[ion] or 

attempt[ed] . . . manipulat[ion of] the price of any commodity 

 

https://www.cftc.gov/PressRoom/PressReleases/7159-15 

[https://perma.cc/RU65-AZY7] (giving a total from early 2015). 
144 Id. 
145 United States v. Sindzingre, 17-CR-0464, 2019 WL 2290494 

(E.D.N.Y. filed May 29, 2019), appeal docketed, No. 19-1698 (2d. Cir. June 

10, 2019). 
146 Id. at *1–2. 
147 Id. at *2 (citing Indictment at 4, United States v. Sindzingre, 17-

CR-0464, 2019 WL 2290494 (E.D.N.Y. May 29, 2019), appeal docketed, No. 

19-1698 (2d Cir. June 10, 2019)). 
148 Id. at *3. 
149 Id. at *13 (quoting Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 

267 (2010)). 
150 Id. at *11 (quoting Loginovskaya v. Batratchenko, 764 F.3d 266, 

270 (2d Cir. 2014)). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1013 

in interstate commerce, or for future delivery on or subject to 

the rules of any registered entity.’”151 With the text of the 

subsection and the purpose of the CEA in mind, the court 

determined that a claim is properly domestic “if it involves (1) 

commodities in interstate commerce or (2) futures contracts 

traded on domestic exchanges.”152 The court found that the 

claim was permissibly domestic because the defendant’s 

foreign conduct affected the prices of USD LIBOR, a 

commodity within the meaning of the CEA.153 

      Requiring the CFTC to show domestic conduct 

significantly limits the DOJ and CFTC’s ability to bring fraud 

and manipulation cases under sections 6(c)(1) and 9(a)(2)—

and would appear to affect cases like the one against the 

employees of Société Générale. Indeed, had the Sindzingre 

court applied Prime International’s domestic conduct 

requirement, it would have dismissed the case as 

impermissibly extraterritorial. Rather than looking at how 

the conduct involved commodities in interstate commerce, the 

court would have focused on whether the defendants 

submitted false reports while in the United States. Since the 

defendants lived in France, the case would fall outside the 

reach of the CEA under Prime International’s rule. 

Furthermore, had courts accepted Prime International’s 

understanding of the CEA’s anti-fraud and anti-manipulation 

statutes, such an interpretation would have severely 

constrained the CFTC’s and DOJ’s bargaining power in 

reaching settlements with banks in the LIBOR, Euroyen 

TIBOR, and Euribor scandals. Yet, as the then-CFTC Director 

of Enforcement, David Meister, described: 

The American public, as well as people and companies 

around the globe, rely on interest rate benchmarks 

every day for mortgages, loans and other transactions, 

trusting that the underlying benchmark rates are 

 

151 Id. (alterations in original) (quoting 7 U.S.C. § 13(a)(2)). 
152 See id. (internal quotation marks omitted) (quoting In re LIBOR-

Based Fin. Instruments Antitrust Litig., 935 F. Supp. 2d 666, 696 

(S.D.N.Y. 2013), rev’d and remanded on other grounds sub nom. Gelboim 

v. Bank of Am., 823 F.3d 759 (2d Cir. 2016)). 
153 Id. at *12–13. 



  

1014                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

honest. Market integrity is seriously compromised 

where, as here, a bank spins its rate submissions to 

boost trading profits, pays off a network of brokers to 

disseminate false rate information, or makes false 

submissions to protect its reputation.154 

      If the Sindzingre court followed Prime International, 

whose domestic conduct requirement appears to apply to any 

section 9(a)(2) claim, the case likely would not have survived 

a motion to dismiss. The CFTC also would not have been able 

to secure interest rate benchmarks. 

2. Private Causes of Action Help Protect U.S. 
Markets 

      If the CFTC cannot rely on private plaintiffs to sue those 

who commit fraud and manipulate markets from overseas, 

Prime International’s domestic conduct requirement will 

burden the agency.155 Thanks to electronic platforms, 

individuals can trade commodity derivatives on international 

markets, and derivative prices are interconnected.156 

Individuals can access U.S. markets from abroad as well as 

trade commodity derivatives on several markets. This makes 

it easier to conduct fraudulent or manipulative schemes 

outside the United States and broadens the ripple effect of 

such behavior. When it is not in the CFTC’s interests to 

prosecute this manipulation, the CFTC benefits from having 

private individuals pursue manipulation claims because the 

threat of private litigation may deter individuals from illegal 

 

154 Press Release, U.S. Commodity Futures Trading Comm’n, CFTC 

Orders UBS To Pay $700 Million Penalty To Settle Charges of 

Manipulation, Attempted Manipulation and False Reporting of LIBOR and 

Other Benchmark Interest Rates (Dec. 19, 2012) (internal quotation marks 

omitted), https://www.cftc.gov/PressRoom/PressReleases/6472-12 

[https://perma.cc/TRC3-UQDV]. 
155 See Gabrielle Schwartz, ‘Deriving’ an Understanding of the 

Extraterritorial Applicability of the Commodity Exchange Act, 91 ST. 

JOHN’S L. REV. 769, 788 (2017) (explaining the importance of private 

enforcement to the “underfunded and overstretched” CFTC). 
156 See Kovel & McNeela, supra note 6, at 148–49. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1015 

conduct that harms U.S. markets.157 In addition to providing 

fraudsters a roadmap for committing illegal acts, Prime 

International’s domestic transaction and conduct 

requirements may also embolden fraudsters who are safe from 

private actions.158 

IV. THE SECOND CIRCUIT SHOULD ABROGATE 
PRIME INTERNATIONAL’S DOMESTIC CONDUCT 

REQUIREMENT AND ADOPT PARKCENTRAL’S 
“IMPERMISSIBLY FOREIGN” CARVEOUT 

      Prime International’s domestic transaction and domestic 

conduct requirements are too demanding a pleading standard 

for section 22. Yet, if the Second Circuit allows plaintiffs to 

plead any claim with a domestic transaction, as pre-Prime 

International caselaw suggested,159 Morrison’s presumption 

against extraterritoriality could become a “craven watchdog 

indeed.”160 Although some commentators161 and the Ninth 

Circuit162 disagree with Parkcentral’s sufficiency analysis, the 

analysis imposes important limits on who can allege a 

violation of SEA section 10(b) by recognizing that 

manipulative conduct is sometimes simply too foreign and 

unrelated to the underlying claim.163 Therefore, the Second 

Circuit should adopt the Parkcentral sufficiency test for CEA 

section 22. 

      Under this suggested analysis, a plaintiff would need to 

allege that violative conduct impacted a domestic transaction 

 

157 See Schwartz, supra note 155, at 790 n.110. 
158 See Parkcentral Glob. Hub Ltd. v. Porsche Auto. Holdings, 763 

F.3d 198, 221 (2d Cir. 2014) (Leval, J., concurring) (making a similar 

argument in an Exchange Act case). 
159 Cf., e.g., Myun-Uk Choi v. Tower Rsch. Cap. LLC, 890 F.3d 60, 67 

(2d Cir. 2018) (determining that a domestic transaction, at least if it 

triggers irrevocable liability, is “a sufficient basis to resolve the 

extraterritoriality question”), abrogated by Prime Int’l Trading, Ltd. v. BP 

P.L.C., 937 F.3d 94 (2d Cir. 2019), cert. denied, 141 S. Ct. 113 (2020) 

(mem.). 
160 See Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 266 (2010). 
161 Kovel & McNeela, supra note 6, at 160 n.144. 
162 See Stoyas v. Toshiba Corp., 896 F.3d 933, 950 (9th Cir. 2018). 
163 See Parkcentral, 763 F.3d at 215–16 (per curiam). 



  

1016                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

to plead section 22. Yet, the court also would need to evaluate 

whether the claim is properly domestic or impermissibly 

foreign. Unlike the Prime International standard, domestic 

conduct would not be necessary—though it would likely 

satisfy the sufficiency analysis. 

A. To Follow Morrison, the Second Circuit Should 
Abrogate the Domestic Conduct Requirement and 
Apply Parkcentral’s Sufficiency Test to the CEA 

      In Parkcentral, the Second Circuit determined that while 

a domestic transaction or listing is necessary under Morrison, 

it is not alone sufficient to state a section 10(b) claim.164 The 

court arrived at this conclusion for three reasons. First, the 

Second Circuit noted that the Morrison court did not say that 

a domestic transaction or listing was sufficient to place a claim 

within the statute’s reach.165 Second, the Second Circuit found 

that applying section 10(b) whenever the plaintiff alleged a 

domestic transaction, “regardless of the foreignness of . . . the 

defendant’s alleged violation, would seriously undermine 

Morrison’s insistence that § 10(b) has no extraterritorial 

application.”166 Finally, the court found that if pleading a 

domestic transaction was sufficient to plead a violation of 

section 10(b), it would inevitably lead to conflicts of 

international law.167 Parkcentral’s sufficiency holding should 

be applied to CEA section 22 for parallel reasons, especially 

because that SEA case law is regularly embraced when 

interpreting the CEA. 

1. The Supreme Court Has Not Definitively Ruled 
That a Domestic Transaction Is Sufficient To 
Plead a Violation of SEA Section 10(b) or CEA 
Section 22 

      As stated above, the “first, and most important,” reason 

 

164 See id. 
165 Id. at 215. 
166 Id. 
167 Id. at 215–16. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1017 

for Parkcentral’s sufficiency test was that Morrison did not 

say if a domestic transaction is sufficient to plead a violation 

of section 10(b).168 This reasoning has come into question in 

recent years because of the Supreme Court’s reiteration of the 

presumption against extraterritoriality in two non-securities 

cases. In a Racketeer Influenced and Corrupt Organizations 

Act case and a subsequent patent infringement case, the 

Supreme Court treated the domestic application as a “binary 

test.”169 Specifically, the Court stated, “‘[i]f the conduct 

relevant to the statute’s focus occurred in the United States, 

then the case involves a permissible domestic application’ of 

the statute, ‘even if other conduct occurred abroad.’”170 

      Although its simplicity is appealing, this argument should 

not decide whether a domestic transaction is sufficient to 

plead a violation of CEA section 22 for two reasons. First, it is 

not clear that these non-securities cases foreclose the 

possibility that pleading domestic application of SEA section 

10(b) requires more than a domestic transaction. The 

Supreme Court is “‘acutely aware . . . that [it] sit[s] to decide 

concrete cases and not abstract propositions of law’ and has 

therefore ‘decline[d] to lay down . . . broad rule[s] . . . to govern 

all conceivable future questions in [an] area.’”171 Moreover, the 

Morrison court dismissed the plaintiffs’ section 10(b) claim 

because the plaintiffs failed to plead a domestic transaction, 

and the court did not determine whether a domestic 

transaction was sufficient to plead section 10(b).172 This 

remains an open issue, as the Supreme Court has denied the 

 

168 Id. at 215. 
169 See Brief for Amicus Curiae U.S. Commodity Futures Trading 

Comm’n in Support of Neither Party, supra note 12, at 19 (citing RJR 

Nabisco, Inc. v. Eur. Cmty., 136 S. Ct. 2090, 2101 (2016)). 
170 WesternGeco LLC v. ION Geophysical Corp., 138 S. Ct. 2129, 2137 

(2018) (emphasis added) (quoting RJR Nabisco, 136 S. Ct. at 2101). 
171 Parkcentral, 763 F.3d at 214 (alterations in original) (quoting 

Upjohn Co. v. United States, 449 U.S. 383, 386 (1981)). 
172 See Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 267 (2010) (“And 

it is in our view only transactions in securities listed on domestic 

exchanges, and domestic transactions in other securities, to which § 10(b) 

applies.” (emphasis added)). 



  

1018                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

petitions for a writ of certiorari in both Stoyas173 and Prime 

International.174 

      Second—and more importantly—the structure of the 

CEA’s private right of action is different from that of SEA 

section 10(b). Therefore, even if the Supreme Court rules that 

pleading any domestic transaction satisfies SEA section 10(b), 

the same does not necessarily apply to CEA section 22. In 

contrast with the judicially created private right of action 

under 10(b), CEA section 22 expressly grants private 

plaintiffs a cause of action only if they allege a substantive 

violation of the CEA.175 Since the Supreme Court advises 

lower courts to consider how “the statutory provision . . . 

works in tandem with other provisions,”176 the “text and 

structure of Section 22” require that courts evaluate the focus 

of the substantive provision at issue in addition to section 22’s 

transactional focus.177 

      The Supreme Court has not stated that a domestic 

transaction is sufficient to plead a 10(b) violation. Moreover, 

because of the structural differences between the SEA’s and 

CEA’s private right of actions, Morrison should not stand in 

the way of a section 22 sufficiency analysis. In fact, requiring 

more than a domestic transaction will strengthen Morrison’s 

presumption against extraterritoriality. 

2. Allowing Plaintiffs To Plead CEA Section 22 
Whenever the Underlying Transaction Is 
Domestic Would Undermine Morrison’s 

 

173 Toshiba Corp. v. Auto. Indus. Pension Tr. Fund, 139 S. Ct. 2766 

(2019) (mem.), denying cert. to 896 F.3d 933 (9th Cir. 2018). 
174 Atl. Trading USA, LLC v. BP P.L.C., 141 S. Ct. 113 (2020) (mem.), 

denying cert. to 937 F.3d 94 (2d Cir. 2019). 
175 Compare 7 U.S.C. § 25(a)(1) (2018) (imposing liability for “the 

commission of a violation of this chapter), with 15 U.S.C. 78j(b) (imposing 

liability for the use of “manipulate or deceptive device[s] or contrivance[s] 

in contravention” of SEC rules). See also Prime Int’l Trading, Ltd. v. BP 

P.L.C., 937 F.3d 94, 105 (2d Cir. 2019), cert. denied, 141 S. Ct. 113 (2020) 

(mem.). 
176 See WesternGeco LLC v. ION Geophysical Corp., 138 S. Ct. 2129, 

2137 (2018). 
177 Prime Int’l, 937 F.3d at 105. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1019 

Presumption Against Extraterritoriality 

      The Parkcentral court ruled that permitting plaintiffs to 

state an SEA section 10(b) claim whenever the suit alleged a 

domestic transaction, “regardless of the foreignness of [other] 

facts . . . would seriously undermine Morrison’s” ruling that 

10(b) is not extraterritorially applicable.178 When a 

transaction’s location is unrelated to the parties’ conduct, 

Morrison’s transaction test, taken alone and read narrowly, 

allows cases whose foreignness conflicts with the presumption 

against extraterritoriality to be brought in U.S. courts.179 

Morrison cautioned that “it is a rare case . . . that lacks all 

contact with the territory of the United States. But the 

presumption against extraterritorial application would be a 

craven watchdog indeed if it retreated to its kennel whenever 

some domestic activity is involved in the case.”180 The Second 

Circuit’s reasoning in Parkcentral ensures that, where 

entirely foreign conduct affects a derivative financial 

instrument traded on U.S. markets, courts have the flexibility 

to dismiss the claim as impermissibly extraterritorial.181 

      It is logical to extend Parkcentral’s sufficiency analysis to 

CEA section 22 because the Second Circuit has repeatedly 

held that (1) section 22 does not apply extraterritorially and 

that (2) Morrison’s transaction test applies to the statute.182 

In Loginovskaya, the Second Circuit first applied Morrison to 

the CEA.183 At Morrison’s first step, the Second Circuit held 

that CEA section 22 did not apply extraterritorially.184 The 

 

178 Parkcentral Glob. Hub Ltd. v. Porsche Auto. Holdings, 763 F.3d 

198, 215 (2d Cir. 2014) (per curiam). 
179 See Kaitlin A. Bruno, Comment, The Halfway Point Between 

Barbary Coast and Shangri-La: Extraterritoriality and the Viability of the 

Economic Reality Method Post-Parkcentral Global Hub Ltd. v. Porsche 

Automobile Holdings SE, 65 AM. U. L. REV. 435, 455 (2015) (explaining the 

problems with a narrow reading of Morrison). 
180 Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 266 (2010). 
181 See Parkcentral, 763 F.3d at 216. 
182 See, e.g., Loginovskaya v. Batratchenko, 764 F.3d 266, 271–72 (2d. 

Cir. 2014). 
183 Id. at 270. 
184 Id. at 271–72. 



  

1020                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

Second Circuit then found that, like SEA section 10(b), section 

22 focuses on domestic transactions.185 Given the similarities 

between securities and commodities law, the court found that 

Morrison’s transactional test should decide the domestic reach 

of section 22.186 The Loginovskaya court rejected the argument 

that Morrison only governs substantive, not procedural, 

provisions because Morrison instructs courts to apply the 

presumption against extraterritoriality “generally to 

‘statutes.’”187 

      The Second Circuit has found that section 22 and SEA 

section 10(b) should be treated nearly equally with respect to 

extraterritorial analysis.188 Therefore, the Second Circuit 

should now apply the sufficiency test to the CEA because 

Parkcentral’s logic applies equally to the CEA. Where a 

derivative trade is several causal steps removed from the 

underlying and predominantly foreign fraud, private 

plaintiffs should not be able to hale foreign defendants into 

court.189 Moreover, by requiring a domestic transaction, but 

not finding one sufficient, Morrison’s presumption against 

extraterritoriality will be upheld in commodities fraud cases 

where the facts are so foreign that Congress could not have 

intended the statute to apply. 

3. International Comity Concerns Require That 
Domestic Transactions Be Necessary, but Not 
Sufficient, To Plead a Violation of CEA Section 
22 

      Because of the interconnected nature of commodities 

markets, international comity concerns will arise if the 

 

185 Id. at 272. 
186 Id. 
187 Id. (citing Morrison v. Nat’l Austl. Bank, 133 S. Ct. 2869, 2877–78 

(2010)). 
188 See Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 106 (2d 

Cir. 2019), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
189 See Parkcentral Glob. Hub Ltd. v. Porsche Auto. Holdings, 763 

F.3d 198, 216 (2d Cir. 2014) (per curiam) (finding an alleged foreign fraud 

affecting privately traded U.S. security-based swaps impermissibly 

foreign). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1021 

presumption against extraterritoriality does not have teeth. 

Indeed, central to Morrison’s presumption against 

extraterritoriality was the idea that if Congress wants a U.S. 

statute to apply extraterritorially, Congress “would . . . 

address[] the subject of conflict[ing] foreign laws and 

procedures.”190 Parkcentral sought to address this issue by 

inquiring into the facts of the alleged violation, in addition to 

requiring a domestic transaction, in its SEA section 10(b) 

territoriality analysis.191 The Second Circuit should also apply 

the sufficiency test to CEA section 22 because of the similar  

risk of conflicting international laws. 

      In Parkcentral, the Second Circuit reiterated Morrison’s 

comity concern as the third reason for establishing the 

sufficiency test. The complaint alleged that the defendants 

made statements “primarily in Germany with respect to stock 

in a German company traded only on exchanges in Europe.”192 

The Second Circuit reasoned that were the suit allowed to 

proceed solely on the basis of “an agreement independent from 

the reference securities . . . . [t]he potential for regulatory and 

legal overlap and conflict would have been obvious to any 

legislator.”193 Indeed, the alleged conduct was the subject of 

investigation and adjudication by German authorities.194 The 

Parkcentral court therefore ruled that complaint was “so 

predominantly German” that it could not rebut the 

presumption against extraterritoriality, though it had passed 

Morrison’s domestic transaction requirement.195 

      The same comity concerns expressed by Morrison and 

Parkcentral apply to the CEA. Indeed, regulatory leaders in 

the United States and Europe agree that a “commitment to 

 

190 Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 269 (2010) (internal 

quotation marks omitted) (quoting EEOC v. Arabian Am. Oil Co., 499 U.S. 

244, 256 (1991), superseded by statute on other grounds, Civil Rights Act of 

1991, Pub. L. No. 102-166, sec. 109(a), § 701(f), 105 Stat. 1071, 1077 

(codified at 42 U.S.C. § 2000e(f) (2018)). 
191 Parkcentral, 763 F.3d at 217. 
192 Id. at 216. 
193 Id. 
194 Id. 
195 See id. 



  

1022                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

international regulatory comity remains of vital importance 

in the financial world after the global financial crisis—and 

even more so in the post-COVID future.”196 To avoid conflicts 

with and offer deference to international law, U.S. courts 

cannot rely on a bright-line rule when financial, economic, and 

political relationships are in constant flux.197 Therefore, the 

Second Circuit should dismiss claims brought on an 

“attenuated ‘ripple effects’ theory,” where nearly all conduct 

is foreign, as being impermissibly foreign—even if the 

underlying transaction is domestic.198 

      The Restatement of Foreign Relations of the United States 

supports this proposition. The United States can prescribe law 

with respect to foreign conduct that has a substantial effect 

within the United States, harms U.S. nationals, or affects a 

fundamental U.S. interest.199 That said, the United States 

may not prescribe law to foreign persons or activity when the 

exercise of jurisdiction is unconstitutional or otherwise 

unreasonable.200 Whether an exercise of jurisdiction is 

unreasonable is determined by factors including the 

connection between the regulated activity or person to U.S. 

territory, the importance of the regulated activity to the 

United States, the extent to which another state may be 

interested in regulating the activity, and the likelihood of 

conflict with another state’s regulation.201 Thus, in deciding 

whether a plaintiff properly pleads a domestic application of 

section 22, a court must balance the U.S. interest in 

regulating the conduct with other states’ and consider 

 

196 See Dombrovskis & Tarbert, supra note 1. 
197 See id. (explaining the difficulty of harmonizing regulatory 

jurisdictions in “ever-changing” circumstances). 
198 See Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 106–07 (2d 

Cir. 2019), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
199 RESTATEMENT (FOURTH) OF FOREIGN RELS. L. OF THE U.S. § 402(1) 

(AM. L. INST. 2018). 
200 Id. §§ 403, 405 (stating that, in addition to constitutional 

limitations, “courts in the United States may interpret federal statutory 

provisions to include other limitations on their applicability”). 
201 See RESTATEMENT (THIRD) OF FOREIGN RELS. L. OF THE U.S. § 403(2) 

(AM. L. INST. 1987); RESTATEMENT (FOURTH) OF FOREIGN RELS. L. OF THE 

U.S. § 405 n.6 (noting continuity with the prior Restatement’s position). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1023 

potential regulatory conflicts. Specifically, within the 

Morrison framework, the Second Circuit should adopt 

Parkcentral’s sufficiency test as an additional barrier to the 

exercise of section 22 jurisdiction because it allows the court 

to consider international comity. 

B. Under the Proposed Standard, CEA Section 22’s 
Domestic Application Would Depend on the Nature 
of the Transaction and Conduct, in Addition to 
Requiring a Domestic Transaction 

      Under the proposed standard, a domestic CEA section 22 

claim (1) must allege a domestic transaction and (2) must be 

sufficiently domestic. As a threshold matter, a domestic 

transaction is required by Morrison and Loginovskaya.202 

However, the analysis does not end there; the claim must also 

be sufficiently domestic to satisfy Parkcentral’s prohibition of 

impermissibly foreign claims.203 The second step instructs 

courts to holistically consider the facts and context of the 

transaction and alleged violative conduct. This two-part 

standard does not conflict with Morrison because it maintains 

the supremacy of the Supreme Court’s transactional test, and 

it strengthens the presumption against extraterritoriality. At 

the same time, the sufficiency test’s fact-intensive analysis 

preserves international comity, prevents “gaming” of bright-

line rules, and allows courts to evolve extraterritoriality 

analysis with new innovations in financial instruments and 

derivatives. 

1. The Proposed Standard Does Not Run Afoul of 
Morrison 

      As discussed above, the Parkcentral sufficiency analysis 

does not contradict the Supreme Court’s decision in Morrison. 

Rather, the suggested test strengthens Morrison by allowing 

 

202 See Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 267 (2010); 

Loginovskaya v. Batratchenko, 764 F.3d 266, 272 (2d. Cir. 2014). 
203 Parkcentral Glob. Hub Ltd. v. Porsche Auto. Holdings, 763 F.3d 

198, 215–16 (2d Cir. 2014) (per curiam). 



  

1024                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

courts to dismiss claims “that are at odds with the 

presumption” against extraterritoriality, even if the claim 

alleges a domestic transaction.204 Moreover, the proposed 

standard is not a return to the open-ended and difficult-to-

administer tests that Morrison expressly rejected.205 

      The Ninth Circuit rejected Parkcentral’s sufficiency test in 

Stoyas v. Toshiba because Parkcentral “is contrary to Section 

10(b) and Morrison itself.”206 The Ninth Circuit criticized the 

Second Circuit’s analysis for whether a claim is impermissibly 

foreign as “akin to the vague and unpredictable tests that 

Morrison criticized and endeavored to replace with a ‘clear,’ 

administrable rule.”207 The court concluded that a domestic 

transaction is necessary and sufficient to plead a domestic 

violation of SEA section 10(b), regardless of any comity 

concerns.208 

      While less predictable than the Ninth Circuit’s bright-line 

rule, the suggested two-part standard balances 

administrability and clarity with deterring manipulation, 

respecting international law, and adapting to evolving 

financial instruments. This standard maintains predictability 

and administrability through the threshold transactional test. 

To state a domestic claim, a domestic transaction is necessary; 

this requirement sifts out claims that touch the United States 

but do not fall within section 22’s focus—transactions.209 On 

the other hand, the second step’s sufficiency analysis allows 

courts to assess whether the claim is permissibly domestic 

based on a variety of interests that Congress and Morrison 

aimed to protect.210 

 

204 See Bruno, supra note 179, at 453. 
205 See Morrison, 561 U.S. at 260–61 (criticizing these tests). 
206 Stoyas v. Toshiba Corp., 896 F.3d 933, 950 (9th Cir. 2018). 
207 Id. 
208 See id. at 949–50. 
209 Loginovskaya v. Batratchenko, 764 F.3d 266, 272 (2d. Cir. 2014) 

(identifying this focus). 
210 See, e.g., Morrison, 561 U.S. at 269 (expressing concern about 

conflicts with foreign laws). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1025 

2. Considerations Under the Sufficiency Test 

      Under the proposed standard, once plaintiffs allege a 

domestic transaction under section 22, courts would consider 

several factors when deciding whether the claim is 

permissibly domestic. The factors that courts would 

contemplate derive from case law and from an inquiry into 

Congress’s purpose in writing the CEA. The considerations 

suggested are not exhaustive but rather would develop over 

time and would evolve with innovations in trading and 

financial instruments. 

      As discussed above, a court should consider whether a 

concurrent investigation or action is proceeding against the 

defendant in a foreign court.211 A court should also assess 

whether allowing plaintiffs to bring their claims would conflict 

with any international regulatory law. In addition to any 

comity concerns, the nature of the defendant’s connection to 

the commodity or derivative at issue is relevant. For example, 

where a defendant’s actions affect an entirely privately traded 

derivative whose value is indirectly related to the alleged 

manipulation, such as the security swaps in Parkcentral212 or 

the futures tied to Brent crude in Prime International,213 a 

court may find the defendant’s relationship with the plaintiffs 

too attenuated to hale them into U.S. courts. 

      Foreign conduct alone is not a dispositive factor. In a pre-

Prime International case that did not decide whether 

Parkcentral applied to the CEA, the Southern District of New 

York suggested that the reasoning in Parkcentral “weigh[ed] 

in favor” of sustaining the plaintiff’s claims.214 In Dennis v. 

JPMorgan, the alleged foreign conduct was intended to affect 

a foreign benchmark interest rate that would increase the 

 

211 See supra text accompanying note 194. 
212 See Parkcentral Glob. Hub Ltd. v. Porsche Auto. Holdings, 763 

F.3d 198, 205–06 (2d Cir. 2014) (per curiam). 
213 See Prime Int’l Trading, Ltd. v. BP P.L.C., 937 F.3d 94, 99–100 (2d 

Cir. 2019), cert. denied, 141 S. Ct. 113 (2020) (mem.). 
214 Dennis v. JPMorgan Chase & Co., 343 F. Supp. 3d 122, 182 

(S.D.N.Y. 2018). 



  

1026                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

defendants’ derivative returns linked to that benchmark.215 

The court reasoned that the case was distinguishable from 

Parkcentral, and should be allowed to proceed, because the 

defendant’s conduct was intended to reach these benchmark 

derivatives worldwide—including in the United States.216 

Under Prime International’s test, this case would have been 

dismissed as impermissibly foreign because the alleged 

violative conduct occurred abroad.217 However, Congress’s 

intent in writing the CEA was to protect U.S. markets from 

this kind of foreign manipulation.218 Therefore, like in Dennis, 

courts should consider the type of commodity manipulated, 

how the manipulation affects U.S. markets, and the causal 

relationship between the alleged conduct and the plaintiff’s 

harm. The suggested analysis is not a return to open-ended 

tests against which Morrison admonished219 because it 

preserves the transaction test and reinforces the presumption 

against extraterritoriality.   

C. Applying Parkcentral’s Sufficiency Test to Laydon v. 
Mizuho Bank, a District Court Case Decided Under 
Prime International’s Requirements 

      In Laydon v. Mizuho Bank, the Southern District of New 

York perfunctorily applied Prime International’s domestic 

transaction and conduct tests.220 The court found the case 

impermissibly foreign because the alleged manipulation 

occurred abroad.221 In this private action, the plaintiffs sued 

several financial institutions to recover losses they suffered in 

Euroyen TIBOR short positions.222 The defendants were all 

banks who had previously settled with state regulators for 

 

215 Id. 
216 Id. 
217 See Prime Int’l, 937 F.3d at 107–08 (dismissing a claim because of 

its solely foreign violative conduct). 
218 See supra Section II.A. 
219 See Morrison v. Nat’l Austl. Bank, 561 U.S. 247, 260–61 (2010) 
220 Laydon v. Mizuho Bank, 12 Civ. 3419, 2020 WL 5077186, at *2–3 

(S.D.N.Y. Aug. 27, 2020). 
221 Id. at *2. 
222 Id. at *1. 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1027 

manipulating Euroyen TIBOR, Yen LIBOR, and the price of 

Euroyen TIBOR futures contracts during the class period.223 

Despite at least some defendants having admitted liability in 

enforcement actions,224 the Southern District of New York 

dismissed the private action because nearly all of the 

defendants’ conduct occurred overseas.225 The plaintiffs 

distinguished their claim from Prime International by 

highlighting how the defendants’ manipulation directly 

affected commodities in interstate commerce and that the 

plaintiffs’ harm had a closer causal relationship with the 

defendants’ violative conduct.226 

      Specifically, the plaintiffs alleged that the defendants 

intentionally manipulated commodities and futures contracts 

pegged to commodities in interstate commerce, in contrast 

with Prime International.227 Understanding that, on its face, 

Prime International’s domestic conduct requirement would 

extinguish their claim, the plaintiffs tried to reframe Prime 

International’s domestic conduct requirement. The plaintiffs 

argued that “manipulating a domestic commodity is domestic 

conduct” within Prime International’s requirement.228 The 

court rejected the domestic “conduct by operation of law” 

argument as being equivalent to an effects test.229 Instead, the 

court reasoned that Prime International required “boots on 

the ground” violative conduct.230 

      As other courts have done,231 the Laydon court dismissed 

 

223 See id. at *1 (identifying the defendants); Transcript of Oral 

Argument at 32, Laydon v. Mizuho Bank, 12 Civ. 3419, 2020 WL 5077186 

(S.D.N.Y. Aug. 27, 2020) (noting the defendants’ settlements). 
224 See Transcript of Oral Argument, supra note 223, at 32. 
225 Laydon, 2020 WL 5077186, at *2–3. 
226 See Transcript of Oral Argument, supra note 223, at 14–15. 
227 Id. at 14. 
228 Id. at 17. 
229 Id. at 18–22 (giving an extended exchange between the court and 

the plaintiffs’ attorney on the issue). 
230 See id. at 45 (recording plaintiffs’ attorney’s objection to such a 

requirement); Laydon, 2020 WL 5077186, at *2 (emphasizing the 

foreignness of defendants’ conduct in dismissing claims against them). 
231 In re Platinum & Palladium Antitrust Litig., 449 F. Supp. 3d 290, 

331–32 (S.D.N.Y. 2020). 



  

1028                       COLUMBIA BUSINESS LAW REVIEW [Vol. 2021 

the plaintiffs’ claims based on Prime International’s domestic 

conduct requirement.232 Importantly, domestic conduct would 

not be decisive under the suggested standard. Rather, the 

district court would have considered parallel enforcement 

actions, comity concerns, intent to affect U.S. markets, and 

the causal relation between the violative conduct and the 

plaintiffs’ harm. In favor of sustaining the plaintiffs’ claim, the 

court would note the purpose of the CEA, defendants’ intent 

to affect interstate commodities on U.S. markets, and the 

settlement with U.S. regulatory bodies over the violation. 

Conversely, the lack of a direct causal link between the 

defendants’ manipulation and the plaintiffs’ harm and the fact 

that most of the violative conduct occurred abroad233 point to 

dismissal. The court might also look to precedent, such as 

Prime International and Dennis v. JPMorgan, in assessing the 

territoriality of the claim and in building a consistent bedrock 

of case law. Under the suggested analysis, Laydon would have 

come out similarly to Dennis v. JPMorgan because the U.S. 

enforcement actions and defendants’ alleged intent to affect 

U.S. markets should weigh more heavily than the location of 

the defendants’ violative conduct. 

V. CONCLUSION 

      Sound regulation is the bedrock on which the global 

economy is built.234 The success of financial regulation is 

dependent on having both a sufficient scope and effective 

means to deter wrongdoing. Regulatory agencies rely on the 

courts to punish those defendants who violate their 

regulations, harming the markets and individuals that 

Congress intended to protect. Prime International deviates 

from this notion by favoring a bright-line rule with a high 

 

232 Laydon, 2020 WL 5077186 at *2. 
233 Id. 
234 Cf. Heath P. Tarbert, Rules for Principles and Principles for Rules: 

Tools for Crafting Sound Financial Regulation, HARV. BUS. L. REV. 

ONLINE, 2020, at 1, 1 (“The fundamental objective for any government 

agency overseeing financial markets and institutions should be sound 

regulation.”). 



  

No. 2:984] THE SECOND CIRCUIT’S EXTRATERRITORIAL 1029 

pleading bar which unfairly restricts plaintiffs’ private right 

of action. We should question rulings that erode the stability 

of the market and provide loopholes for potential malfeasants. 

Instead, clarity and predictability must be balanced with the 

necessary flexibility to adapt to rapid changes in technology 

and the marketplace.235 

 

 

235 See id. at 1–2.