The U.S. Court of Appeals for the Eleventh Circuit recently vacated a district court's dismissal of a complaint for lack of subject matter jurisdiction, finding that the district court erred in holding that Section 10(b) and Rule 10b-5 did not apply to a sale of shares in a foreign corporation that closed in the United States.

Plaintiff Quail Cruises Ship Management Ltd. brought a claim for securities fraud against Agencia de Viagens CVC Tur Limitada (CVC), alleging that CVC orchestrated a series of misrepresentations in order to induce Quail to purchase the M/V Pacific, a boat once featured in The Love Boat television series. The acquisition was effected through the transfer of shares of Templeton International Inc., whose principal asset was the M/V Pacific. Because the Templeton stock was not listed on a United States exchange, pursuant to the Supreme Court's decision in Morrison v. Nat'l Australia Bank Ltd., Section 10(b) would only reach the transaction if the sale occurred here.