The Securities and Exchange Act of 1934 was by all accounts a sweeping piece of legislation, creating the Securities Exchange Commission as well as fully and finally establishing federal control in the securities domain, hitherto the domain of the states.
Eight decades later, every section of the act continues to carry water, regardless of ostensible obscurity. Section 10(b), for example, allows the SEC to “as necessary or appropriate in the public interest or for the protection of investors, establish limits (including related hedge exemption provisions) on the size of positions in any security-based swap that may be held by any person.”
Sound esoteric? Not for any investor in America, nor for the attorneys representing them, insofar as the section acts as a major safeguard against manipulation and fraud. It should come as no surprise, then, that the 2010 United States Supreme Court decision Morrison V. National Australia Bank caused a major stir in the investment community when it held that 10(b) did not apply extraterritorially. Specifically, the Court "reject[ed] the notion that the Exchange Act reaches conduct in this country affecting exchanges or transactions abroad.”