Today, the U.S. Supreme Court twice took a narrow view of liability under federal law for fraudulent conduct.

In one case, the Court held that section 10(b) of the Securities Exchange Act of 1934 doesn't apply to overseas purchases and sales of securities.  That the fraud started in or affected the U.S. didn't defeat the presumption that federal statutes govern domestic conduct only.  "When a statute gives no clear indication of an extraterritorial application, it has none."    Morrison v. Nat'l Australia Bank Ltd., No. 08-1191, slip op. at 6 (U.S. June 24, 2010) (Scalia, J.).  Post on Second Circuit decision here.

The Court also gave Enron's former CEO, Jeff Skilling, a partial win.  By a 5-4 margin, the Court ruled against Skilling on his point that pretrial publicity and a short voir dire resulted in an unfair trial.  Skilling v. United States, No. 08-1394 (U.S. June 24, 2010).

But seven Justices joined in holding that the "honest services" piece of the federal wire and mail fraud statute see 18 U.S.C. 1346, applies only to bribery and kickbacks.  Because Skilling didn't take a bribe or a kickback and instead gained by his fraud through other means, the majority held, his conviction for conspiracy couldn't stand.  The Court remanded to the Fifth Circuit to determine whether the mistake in submitting the honest services questions to the jury amounted to harmless error and therefore didn't require a new trial.

WSJ reports here.  NYT here.