US Investor Suits Over Foreign-Born Securities Show Law in Flux

In just a matter of months, three rulings and one settlement showed just how scattered courts are on whether US law reaches some American depositary receipts, stand-ins for stock traded on foreign exchanges.

The securities fraud cases, which involve Bayer AG, Toshiba Corp., and other companies, illustrate the complexities and difficult policy choices facing courts assessing whether purchases of new ADRs qualify as foreign or domestic under US law when the issuer didn’t arrange for their appearance in the US market. The divergent outcomes likely herald a US Supreme Court revisit and resolution.

Once ADRs are on a ...