## Facts

- Leasco Data Processing Equipment Corporation and related entities (Leasco) considered a transaction involving Pergamon Press, Ltd., a U.K. company controlled by Robert Maxwell, whose shares traded on the London Stock Exchange.
- Negotiations and related communications occurred in both England and New York, culminating in a conditional acquisition agreement signed in New York on June 17, 1969.
- Leasco alleged that Maxwell and associated entities and advisors conducted a coordinated effort to induce Leasco to acquire Pergamon by supplying false and misleading information about Pergamon’s business and finances and by creating artificial time pressure.
- Relying on the alleged misrepresentations, Leasco purchased more than 5,000,000 Pergamon shares on the London Stock Exchange for about $22 million.
- After further investigation, Leasco withdrew from the merger but remained exposed to losses on the Pergamon stock.
- Leasco sued in federal court under § 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, seeking damages for fraud connected to its purchases of Pergamon shares abroad.
- The district court denied motions to dismiss for lack of subject-matter and personal jurisdiction as to various defendants (with an earlier dismissal as to London solicitor Isidore Kerman), and certified jurisdictional questions for interlocutory appeal.

## Issues

1. Whether § 10(b) and Rule 10b-5 apply to alleged fraud with substantial conduct in the United States that resulted in purchases of foreign securities on a foreign exchange.
2. Whether the federal court in New York had personal jurisdiction over particular foreign defendants based on their individual contacts with the forum and the United States.

## Decision

- The court affirmed the denial of dismissal for lack of subject-matter jurisdiction, holding that § 10(b) and Rule 10b-5 could apply given alleged fraudulent conduct in the United States significantly connected to the foreign securities purchases.
- The court affirmed personal jurisdiction as to at least one foreign defendant whose alleged forum-directed acts were purposeful and significant.
- The court reversed as to other defendants and directed dismissal of the complaint against those over whom personal jurisdiction was lacking, leaving differing outcomes depending on each defendant’s contacts.

## Legal Principles

- Section 10(b) and Rule 10b-5 may reach transactions in foreign securities on foreign exchanges when substantial fraudulent conduct occurs in the United States and is materially connected to the purchase or sale.
- The statute’s coverage is not limited to securities traded on domestic exchanges; the locus and significance of deceptive conduct can support federal jurisdiction.
- At the pleading and pretrial jurisdiction stage, plaintiffs are entitled to favorable inferences where facts remain unresolved.
- Personal jurisdiction over foreign defendants requires defendant-specific minimum contacts and fairness; subject-matter jurisdiction under the securities laws does not automatically establish personal jurisdiction.
- Courts may apply federal statutes to foreign elements when U.S.-based conduct is significant and application is consistent with the statute’s protective purpose.

## Conclusion

The Second Circuit allowed a § 10(b)/Rule 10b-5 action to proceed based on alleged U.S.-based fraudulent conduct leading to foreign-market share purchases, while separately requiring proof of personal jurisdiction over each foreign defendant and dismissing those with insufficient forum contacts.


Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972)