It has become increasingly apparent that the world’s financial markets are deeply interconnected.  U.S. banks regularly lend money to foreign borrowers, foreign investors and companies invest in real estate and securities in the U.S., and American investors, in particular hedge funds, routinely buy and sell shares of foreign companies on foreign stock exchanges.  What happens, then, when a foreign company that only trades its securities on a foreign exchange commits acts that would constitute violations of the anti-fraud provisions of the U.S. securities laws, but are not necessarily violations of its own country’s securities laws, and American investors are harmed?  Do those investors have any legal remedy?  Will a court in the U.S. apply the U.S. securities laws to a case involving the purchase or sale of shares of a foreign company on a foreign exchange?  In a guest article, Christopher F. Robertson and Erik W. Weibust, Partner and Associate, respectively, at Seyfarth Shaw LLP, address these questions as they relate to hedge funds.  Their discussion includes a detailed examination of the legal consequences of Porsche’s disclosure in October 2008 that it held a majority interest in Volkswagen, and the resulting short squeeze that caused substantial losses for many hedge funds.