Kauthar SDN BHD v. Sternberg
United States Court of Appeals for the Seventh Circuit
149 F.3d 659 (1998)
Rimsat, Ltd. (defendant), a Nevis corporation based in Fort Wayne, Indiana, planned to provide satellite television to Pacific island nations. Kauthar SDN BHD (plaintiff), a Malaysian corporation, wired $38 million to a Rimsat bank account in Indiana as an investment, but Rimsat soon filed for bankruptcy. Kauthar sued, alleging Rimsat made fraudulent misrepresentations in violation of federal securities law. The district court dismissed for lack of jurisdiction, and Kauthar appealed to the Seventh Circuit.
Whether federal courts have jurisdiction over an alleged violation of the antifraud provisions of federal securities law when the alleged conduct occurring in the United States directly causes the plaintiff's alleged loss.