The recent decision by the United States Court of Appeals for the Second Circuit in Absolute Activist Value Master Fund Limited v. Ficeto has clarified the criteria for application of §10(b) of the Securities Exchange Act of 1934 to transnational transactions involving securities not listed on U.S. domestic exchanges.  See “Second Circuit Clarifies When Offshore Hedge Funds Can Make Section 10(b) Securities Fraud Claims in Connection with ‘Domestic Transactions’ with Conduct and Effects in the United States,” Hedge Fund Law Report, Vol. 5, No. 11 (Mar. 16, 2012).  Although in Absolute Activist the Second Circuit did not discuss what facts in any particular case would be sufficient to satisfy their subject matter jurisdiction test for application of Rule 10b-5, this ruling has practical implications for offshore hedge funds (and other non-U.S. purchasers) who acquire privately placed securities directly from U.S. issuers or on the secondary market.  In a guest article, Bradley Kulman and Bruce Schneider, both Partners at Stroock & Stroock & Lavan LLP, discuss the factual background and legal analysis in the case as well as some of the practical implications stemming from the decision for offshore hedge funds.