Thursday, November 7, 2013

Kauthar SDN BHD v. Sternberg case brief

Kauthar SDN BHD v. Sternberg case brief summary
149 F.3d 659 (1998)

Plaintiff foreign corporation appealed the order of the United States District Court for the Northern District of Indiana, which granted defendants' motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6) and motion for summary judgment.

Plaintiff foreign corporation brought suit against defendants, alleging federal securities law violations. Defendants sought dismissal under Fed. R. Civ. P. 12(b)(6), as well as summary judgment. The district court granted defendants' motions, concluding that it lacked subject matter jurisdiction over the claims and that the claims were time-barred. Plaintiff appealed.

  • On review, the court concluded that the district court erred in determining that it lacked subject matter jurisdiction over the securities claims, where they involved transnational securities transactions without a sufficient connection to the United States. 
  • Jurisdiction was proper where the conduct occurring within the United States was material to the successful completion of the fraudulent scheme. 
  • In affirming, however, the court concluded that plaintiff's securities claims were time barred where they were not brought within one year after discovery of the securities law violations. 
  • Plaintiff waived the remainder of its claims, and the court rejected plaintiff's argument that it had raised the issues by incorporating them by reference. 
  • Such a practice was not a valid presentation of an argument on appeal.

The district court order granting defendants' motion to dismiss and motion for summary judgment was affirmed. Plaintiff foreign corporation's federal securities claims were barred where plaintiff failed to pursue them within a year of discovery. The remainder of plaintiff's claims were waived because plaintiff failed to assert them on appeal, but instead, merely attempted to incorporate them by reference.

Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials

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