SDNY Dismisses Securities Class Action Against The Royal Bank of Scotland Group

On January 11, 2011, Federal District Judge Deborah Batts of the Southern District of New York dismissed several claims in a securities class action against the Royal Bank of Scotland Group (“RBS”). The dismissed putative class claims were brought on behalf of purchasers and acquirers of RBS ordinary shares, which trade outside the U.S., and allege that RBS made false and misleading statements when it failed to adequately disclose that it had accumulated billions of pounds of subprime, Alt-A, and other high-risk RMBS-related assets. The court dismissed the claims, relying on the 2010 Supreme Court decision in Morrison v. National Australia Bank Ltd., which held that U.S. federal securities laws do not apply to purchases of foreign securities outside the U.S. The court declined plaintiffs’ invitation to apply U.S. law to the RBS ordinary shares on the basis that other RBS securities (ADRs) are listed and trade on a U.S. Exchange. Decision.