THE LONG-ARM OF U.S. JUSTICE: SCOVILLE'S RESTORATION OF "CONDUCT AND EFFECTS" IN SECURITIES ENFORCEMENT AND IMPLICATIONS FOR CHINESE CORPORATIONS

Commencing with the U.S. Supreme Court's ruling in Morrison v. National Australia Bank Ltd., a shift away from the "conduct and effects" test and the prior expansion of extraterritorial jurisdiction in U.S. courts seemed inevitable. However, Morrison and other Court rulings held that the presumption against territoriality was rebuttable by showing the U.S. Congress had intended that the statute applied to overseas misconduct via either language, structure or context. In a decision of first impression, the Tenth Circuit in Scoville v. SEC held that the Dodd-Frank law had indeed demonstrated Congressional intent with respect to extraterritorial governmental enforcement of U.S. securities laws thus overriding the presumption. The court therefore reverted to the decades-long "conduct and effects" test in evaluating whether overseas violations of securities laws would come within the purview of extraterritorial jurisdiction. The ruling has potentially significant implications for Chinese corporations that violate Federal laws outside the United States in non-securities contexts as well. Chinese corporations conduct business globally and might violate the anti-bribery provisions of the United States Foreign Corrupt Practices Act ("FCPA"). This article examines the implications for Chinese corporations in light of the Scoville ruling through the lens of the FCPA opining that the context and construct of the FCPA militate strongly in finding Congressional intent to have the FCPA applicable extraterritorially. Moreover, in an age of geo-strategic hegemonic rivalry, U.S. courts may - depending upon the specific facts - find the violation as having "effects on the United States" - thus falling within the governmental enforcement powers of the U.S. Securities and Exchange Commission and Department of Justice.