Offshore hedge funds should no longer assume that the federal securities laws will universally provide them with protection with respect to their securities transactions that have conduct and effects in the United States. Recent caselaw makes clear that offshore hedge funds do not have unfettered rights to state claims for relief under Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) with respect to all such transactions. Thus, an offshore hedge fund’s failure to understand the scope of protection afforded pursuant to Section 10(b) can lead to legal risk if securities fraud should occur, particularly as it relates to domestic transactions in securities other than those listed on domestic exchanges. A recent Second Circuit opinion clarifies the scope of transactions that will constitute “domestic transactions” in such unlisted securities. This article summarizes the facts of the case and the Court’s reasoning in its opinion.