Pyrenee, Ltd. v. Wocom Commodities, Ltd.

MEMORANDUM OPINION AND ORDER

This suit represents the second attempt to litigate against the defendants in United States to recover for an alleged commodity fraud scheme that occurred principally in Hong Kong. In a previous case, plaintiff Py-renee’s President, Michael Mak, was unsuccessful in establishing jurisdiction over the defendant Woeom entities. See Mak v. Wocom Commodities Ltd., 1996 WL 388408 (N.D.Ill.1996), aff'd, 112 F.3d 287 (7th Cir. 1997). Unfortunately, this “second bite at the apple” does not fare significantly better.

Pyrenee brings this lawsuit alleging violations of the Commodity Exchange Act (“CEA”) in connection with trades that Wo-com Commodities or Woeom Limited placed (or, in some cases, feigned placing) on the Chicago Mercantile Exchange (“CME”). Instead of executing the trades as Pyrenee requested, Woeom allegedly “bucketed” some, that is, conducted the trades privately in its Hong Kong office, and “stole the ticks” on others, that is, placed the trades but misrepresented their price and kept the difference. The legality of these rather complicated schemes is not at issue here. As an initial matter, we must confront the jurisdictional issues that Woeom raises in its motion. Reduced to its essentials, the motion contends that this Court lacks subject matter jurisdiction and personal jurisdiction over Pyrenee’s claims; should these grounds fail, Woeom urges us to dismiss the suit on forum non conveniens or statute of limitations grounds. Although we find subject matter and personal jurisdiction, we ultimately dismiss this suit for its resolution in Hong Kong, a more convenient forum under the circumstances. 1

*1152 RELEVANT FACTS 2

A. The Parties’ National Affiliations

The Wocom entities are Hong Kong corporations that do business in Hong Kong. Hung Aff. ¶ 2, 4; Li Aff. ¶¶2-3. From 1985 through 1990, Wocom Commodities (“WC”) was a Hong Kong broker/dealer trading in spot bullion, foreign currency, foreign exchange, and United States commodities and futures. Hung Aff. ¶ 2. Since 1990, WC has gradually limited its trading activities, and now deals only in Hong Kong spot bullion trading. Id. Wocom Limited (“WL”) operated as an investment holding company until 1990, when it began acting as a broker in foreign currency, commodities and futures. Li Aff. ¶ 2. Neither WL nor WC has ever had offices in the United States or solicited customers from the United States. Hung Aff. ¶¶ 4-6; Li Aff. ¶¶ 3-5. Nor have they registered as members of any United States exchange. Hung Aff. ¶ 5; Li Aff. ¶ 4. As nonmembers, WC and WL must rely on a United States-based registered futures commission merchant (“FCM”) to place their customers’ trades on American exchanges. PL Resp. Ex. 6.

Pyrenee was organized under the laws of Liberia and is registered there as an “Offshore Company.” Am. Compl. ¶ 3; Def. Mot. Dismiss/S.J. (“Def.Mot.”) Ex. D. Offshore companies are not permitted to trade in Liberia, which serves as a tax haven for businesses that operate elsewhere. Def. Mot. Ex. D. Pyrenee alleges that it does business in the United States as Pyrenee Real Estate Holding Co., a California business enterprise based in San Francisco and Menlo Park, CA. Am. Complt. ¶ 3. Pyrenee claims that it is currently qualified to do business in California and continues to own real estate, conduct real estate ventures, and perform under contracts there. Id. But Py-renee submits evidence of only one real estate transaction on California soil, and the evidence reveals that its status as a California corporation is uncertain. 3 We are left without a clear impression as to the location of Pyrenee’s primary business activities, although Pyrenee alleges that it does not do business in Hong Kong.

Pyrenee’s President, Michael Mak, is a Hong Kong citizen and resident. Am. Compl. ¶ 9; Def. Mot. Ex. B. From 1980 to 1985, he lived in California, directing the operations of Pyrenee Real Estate Holding Co. Pl. Resp. Ex. 2, ¶ 4.

B. Trading in Pyrenee’s Account

In May 1985, Mak returned to Hong Kong and opened a trading account with Wocom 4 *1153 in Pyrenee’s name. PI. Resp. Ex. 2, ¶ 5. Mak signed a “General Agreement for Customer Accounts” (“the Agreement”), which provided that Wocom would act as Pyrenee’s broker in executing trades for, among other things, foreign currency futures on various exchanges. Agreement p.l. Wocom acknowledged that any commodity trades in the United States would be subject to the Commodity Futures Trading Commission Act of 1974 and “any applicable Federal or State laws or regulations having the force of law.” Id. ¶ 4(c)—(d). In the event of a legal dispute, the Agreement granted Pyrenee the right to proceed in any court of competent jurisdiction. Id. ¶ 16(b).

From May 1985 to June 1996, Mak conducted trading in the Pyrenee account from Hong Kong, spending much of his time in Woeom’s offices for this purpose and for the purpose of placing trades in a personal account he maintained with Wocom. PI. Resp. Ex. 2, ¶ 5; Hung Aff. ¶ 8. In July 1996, Mak went back to the United States for six months. Am. Compl. ¶ 10. Mak remained in California until December 1996, all the while directing trading in Pyrenee’s Wocom account. PL Resp. Ex. 2, ¶ 6. Mak testifies that he frequently discussed Pyrenee’s account with Wocom representatives on the phone during this time, but his affidavit does not specify who initiated the calls. Id. Wo-com claims it had no idea that Mak had returned to the United States, or for that matter, that Pyrenee maintained offices in California as a real estate holding company. Supp. Hung Aff. ¶¶ 4-5. Wocom’s Director and General Manager testifies that all daily confirmations of Pyrenee’s trades were sent to Mak’s Hong Kong address. Hung Aff. ¶ 9. Mak states that the trade confirmations were forwarded to him in California, and contends that he made it clear to Wocom officials that California was his operational base in the latter half of 1996. Pl. Resp. Ex. 2, ¶ 6; Am. Compl. ¶ 10. According to Mak, Wocom acknowledged his change in residence by complying with requests to “notify” him (but it is unclear by what means) in California when various commodities reached threshold prices. Am. Compl. ¶ 10.

It was during the period of Mak’s California residence—July to December 1986—that Wocom allegedly began mishandling the Pyrenee account. Pyrenee claims that Wocom engaged in two distinct types of commodity fraud: “bucketing” and “stealing the ticks.” See 7 U.S.C. § 6b. Bucketing has been described as

a method of doing business wherein orders of customers for the purchase or sale of commodities for future delivery, instead of being executed by bona fide purchases and sales with other traders, are simply matched and offset in the soliciting firm’s own office and the firm itself takes the opposite side of the customer’s orders.

Purdy v. CFTC, 968 F.2d 510, 520 (5th Cir. 1992). In accordance with this scheme, Wocom allegedly ignored Mak’s requests to place foreign currency trades for Pyrenee on the CME and conducted the trades in its own offices instead, putting itself on the opposite side and reaping the profits. Am. Compl. ¶¶ 14-19. Secondly, Wocom allegedly “stole the ticks” from trades that it actually placed for Pyrenee on the CME. Id. ¶¶ 21-24. In other words, Wocom placed Pyrenee’s trades as requested, but then “confirmed the orders at a less favorable price than executed at the exchange and kept the difference.” Id. ¶ 22. Pyrenee allegedly did not discover this fraudulent activity until August 1994. Id. ¶¶ 12-13.

C. The Hong Kong Litigation

Mak returned to Hong Kong at the end of 1986 and, in 1990, filed suit in Hong Kong against Wocom in connection with trading on his personal account. Hung Aff. ¶ 10. The Hong Kong action alleged improprieties in “spot” foreign currency transactions, which, in contrast to currency futures trades, are not conducted on any exchange. PL Resp. Ex. 2, ¶ 9. The litigation centered on whether Wocom had followed Mak’s instructions in making these trades, and included claims that Wocom had made and retained “secret profits.” Hung Aff. Ex. 6 (Hong Kong Supreme Court’s Judgment in Michael Mak v. Wocom Commodities Ltd.). Following a *1154 three-month trial ending in June 1994, the court ruled against Mak and in favor of Wocom’s counterclaim. Id. at 63-64. The ruling was affirmed on appeal and currently awaits the next level of judicial review. Hung Aff. ¶ 10.

Through discovery conducted during the trial, Mak obtained in April 1994 Wocom’s office order documents memorializing other transactions in Mak’s personal account— trades in commodity futures. PI. Resp. Ex. 2, ¶ 9. Because Mak could not tell from these documents whether all his futures trades had been placed, he retained a commodity futures expert in August 1994 to review the records. Id. ¶ 10-11. The expert, Charles M. Seeger III, compared Wocom’s documents with information recorded at United States exchanges revealing the actual dates, times, and prices of the trades, and concluded that Wocom’s representations departed significantly. Seeger Aff. ¶ 15.

D. Actions in the United States

Based on Seeger’s analysis, Mak also filed suit in the United States alleging that Wo-com had bucketed trades in his personal futures account. That suit, which was filed one year before this litigation, was dismissed on July 9, 1996 for lack of subject matter jurisdiction. See Mak v. Wocom Commodities Ltd., 1996 WL 388408, at *8 (N.D.Ill. July 9, 1996). The Seventh Circuit affirmed the district court’s ruling on June 17, 1997. See Mak v. Wocom Commodities Ltd., 112 F.3d 287, 291 (7th Cir.1997). On July 18, 1996, while Mak’s appeal was pending, Pyre-nee brought this action in connection with its corporate account, alleging in Count I that Wocom bucketed Pyrenee’s commodity futures trades and including in Count II a claim that was not formally asserted in Mak’s action—tick stealing from Pyrenee’s futures trades. Pyrenee claims that Wocom’s bucketing and tick stealing both violate section 4b of the CEA (7 U.S.C. § 6b). 5 We now turn to the issue of whether we have jurisdiction over these claims and, if so, whether we should nevertheless dismiss the action on forum non conveniens grounds.

ANALYSIS

I. Subject Matter Jurisdiction

A. Legal Standards Governing Subject Matter Jurisdiction

Federal Rule of Civil Procedure 12(b)(1) governs motions to dismiss for lack of subject matter jurisdiction. In ruling on a 12(b)(1) motion, the court must assume the allegations in the complaint are true and draw all reasonable inferences in favor of the plaintiff. Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir.1993). Where, as here, the defendant challenges the existence of subject matter jurisdiction as a factual matter, the court may also look beyond the complaint “and view whatever evidence has been submitted on the issue ....” Id. The burden of proving jurisdiction rests with the plaintiff. Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir.1979).

The Seventh Circuit is clear on the jurisdictional analysis applicable to factual and legal circumstances that mirror those here: “subject matter jurisdiction over international disputes concerning commodity futures transactions is to be largely evaluated according to the ‘conduct’ and ‘effects’ tests set out in our decision in Tamari v. Bache & Co. (Lebanon) S.A.L., 730 F.2d 1103 (7th Cir. 1984).” Mak v. Wocom Commodities Ltd., 112 F.3d 287, 288-89 (7th Cir.1997). The Tamari court held that it had subject matter jurisdiction over a dispute between nonresident aliens under the CEA involving trades within the United States even though the parties’ other contacts took place outside the country. 730 F.2d at 1104. First, the court determined that Congress did not explicitly limit the CEA’s reach to transactions originating within American borders. Id. at 1107. Second, the court looked to the Second Restatement on Foreign Relations Law, which establishes principles for exercising jurisdiction over alien defendants and their activities using the “conduct” and “effects” tests. Id. n. 11. The conduct test “focuses on the foreigner’s conduct within the United States as it relates to the alleged scheme to defraud,” *1155 and authorizes jurisdiction when “the conduct occurring in the United States is material to the successful completion of the alleged scheme.” Id. at 1108 (citations omitted). In contrast, the effects test considers whether foreign activities have “caused foreseeable and substantial harm to interests in the United States.” Id. (citations omitted). Jurisdiction is proper if either test is satisfied. See North South Finance Corp. v. Al-Turki 100 F.3d 1046, 1051 (2d Cir.1996) (characterizing tests as “alternative”); Psimenos v. E.F. Hutton & Co., 722 F.2d 1041, 1045 (2d Cir. 1983) (finding jurisdiction based on conduct and declining to address whether effects test supplied “an independent basis for jurisdiction”); Continental Grain (Australia) Pty. Ltd. v. Pacific Oilseeds, Inc., 592 F.2d 409, 417 (8th Cir.1979) (“[JJurisdiction may be established by meeting the requirements of either, not both, the conduct or effects test.”); Straub v. Vaisman & Co., 540 F.2d 591, 595 (3d Cir.1976) (applying only conduct test); see also Tamari v. Bache & Co. (Lebanon) S.A.L., 547 F.Supp. 309, 311 (N.D.Ill. 1982) (noting that “the weight of authority” holds that meeting either test is sufficient). We now consider whether Pyrenee’s CEA claims meet either test.

B. Pyrenee’s Bucketing Claim Fails Both the Conduct and Effects Tests

To establish jurisdiction under the conduct test, the plaintiff must at the very least point to some United States activity by the defendant. Mak, 112 F.3d at 289; Tamari 547 F.Supp. at 313. As the Mak court explained, “the transmission of commodity futures orders to the United States from foreign parties is an essential step in the consummation of any scheme to defraud through futures trading on the United States exchanges.” Mak, 112 F.3d at 289 (citing Tamari 730 F.2d at 1108). Pyrenee’s bucketing claim fails the conduct test because it asserts that Wocom never executed on the CME the trades that Pyrenee requested. Rather, the entire bucketing scheme allegedly took place in Wocom’s Hong Kong office, where Wocom matched and offset Pyrenee’s orders and put itself on the opposite side of the transactions. In this respect, Pyrenee’s bucketing claim is no different than the claim Mak advanced, which the Seventh Circuit soundly rejected as insufficient to meet the conduct test:

What Mak complains about under the CEA did not happen in the United States and involves people who were not in the United States. Everything regarding these particular trades happened or did not happen in Hong Kong. None of the parties or their agents have ever been located in the United States.

Consequently, it is clear that the conduct test cannot be met in the present ease, as no transaction took place on a domestic exchange (in fact, none of the events of this ease took place in the United States).

Id. The court likewise rejected as too “hypothetical” Mak’s effects test argument that bucketing, in general, adversely affects United States interests by diverting business from American exchanges, potentially increasing transaction costs and distorting market prices. Id. at 290. We cannot distinguish the facts underlying Pyrenee’s bucketing claim from Mak’s in any material manner. Therefore, we have no basis for departing from the Seventh Circuit’s determinations in Mak.

Not surprisingly, Pyrenee refrains from arguing jurisdiction based on conduct, and does not urge us to find the effects test met through bucketing’s adverse effects on the United States market. Instead, Pyrenee claims that Wocom’s bucketing passes the effects test because it harmed a domestic investor—namely, Pyrenee, which became “the equivalent of’ a domestic investor by virtue of Mak’s six-month stint in California directing trading “from Pyrenee’s California headquarters.” See Tamari 547 F.Supp. at 311 (effects test satisfied when “there is a substantial impact on domestic investors or on the domestic market”).

This contention is meritless. Pyrenee cites no authority for the proposition that conducting trades from the United States for six months transforms a foreign citizen or his foreign corporation into a domestic investor. Instead, Pyrenee relies on a section of the diversity jurisdiction statute providing that “a corporation shall be deemed to be a citizen of any State by which it has been incorporat *1156 ed and of the State where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). Presumably Pyrenee means to tie this to Mak’s assertion that California has always been Pyrenee’s principal place of business, and from that to argue that Pyrenee is a domestic investor. But this bare assertion in Mak’s affidavit is unsupported by the record. See Slowiak v. Land O’Lakes, 987 F.2d 1293, 1295 (7th Cir.1993) (“Self-serving affidavits without factual support in the record will not defeat a motion for summary judgment.”); First Commodity Traders v. Heinold Commodities, Inc., 766 F.2d 1007, 1011 (7th Cir. 1985) (“Conelusory statements in affidavits opposing a motion for summary judgment are not sufficient to raise a genuine issue of material fact.”). 6 Evidence of a singular real estate transaction conducted six years before the trading at issue in this case is not sufficient to establish California as Pyrenee’s principal place of business.

Moreover, Wocom supplies authority that rejects a corporate agent’s short-term United States residence as the basis for jurisdiction over his foreign corporation’s claims. In Europe & Overseas Commodity Traders v. Banque Paribas London, 940 F.Supp. 528 (S.D.N.Y.1996), the court held that a foreign corporate investor whose sole shareholder lived in Florida “for most of the time of the investment at issue” could not establish jurisdiction over the foreign defendant’s alleged securities fraud. Id. at 535. Among the points the court emphasized were the shareholder’s foreign citizenship and the fact that he opened the company’s trading account and initially placed orders in London. Id. While the court primarily addressed the plaintiffs argument under the conduct test, it pointed out that “[ejven applying a mixture of the conduct and effects test,” the alleged fraud “had no effect at all in the United States or on an American investor.” Id. Similarly, Mak’s foreign citizenship, Pyrenee’s registration as a foreign corporation, its paltry evidence of California business activity, and the fact Mak instituted Pyrenee’s account in Hong Kong, traded there for over a year and then continued trading in Hong Kong after he returned from California counsel heavily against finding that Mak’s six-month United States trading bout rendered Pyrenee a domestic investor for purposes of the effects test. Because Pyrenee’s bucketing claims meet neither jurisdictional standard, we must address whether his tick stealing allegations secure our jurisdiction.

C. Pyrenee’s Tick Stealing Claim Establishes Jurisdiction Under the Conduct Test

Pyrenee argues that its tick stealing claim provides a basis for subject matter jurisdiction by way of the conduct test. It emphasizes that in contrast to Mak, which involved bucketing only, 7 this case includes allegations that Wocom engaged in United States activity—placing trades on the CME—that was material to its allegedly fraudulent tick stealing scheme. While the caselaw presents no identical factual situation, we agree that the alleged facts here fit within Tamari’s definition of material conduct and find jurisdiction under the conduct test.

1. The Conduct Test Defined

The Seventh Circuit’s rendering of the conduct test is best elaborated in the district court’s Tamari opinion, whose analysis the Seventh Circuit expressly adopted on appeal. See Tamari, 730 F.2d at 1108. The district court explained that the conduct test does not focus on the parties’ residence and citizenship or on whether the dispute involves domestic or foreign securities; rather, courts consider “the relative importance of activities within the United States to the success of the alleged scheme to defraud.” 547 F.Supp. at 313-14. “If the conduct is substantial rather than merely preparatory, *1157 incidental or fortuitous, the courts are more likely to find jurisdiction. Id. at 314. Likewise, jurisdiction cannot be premised on “[cjonduct that occurs within the United States by chance or merely for convenience.” Id. at 315. As the appellate court summed up, the United States conduct must be “material to the successful completion of the alleged scheme.” 730 F.2d at 1108.

The difficulty lies in ascertaining the strength of the relational link needed between domestic conduct and the fraudulent scheme. The Seventh Circuit has not answered this question beyond requiring that the conduct be “material” to the fraud, but nearly all the other circuits hold that the domestic act must “directly cause” the claimed loss in order to be material. See Itoba Ltd. v. Lep Group PLG, 54 F.3d 118, 121 (2d Cir.1995); Zoelsch v. Arthur Andersen & Co., 824 F.2d 27, 31 (D.C.Cir.1987); Grunenthal GmbH v. Hotz, 712 F.2d 421, 424 (9th Cir.1983); Continental Grain (Australia) Pty. Ltd. v. Pacific Oilseeds, Inc., 592 F.2d 409, 418-20 (8th Cir.1979); SEC v. Kasser, 548 F.2d 109, 115 (3d Cir.1977). From there, the circuits depart, dividing on the meaning of “directly caused.” The Second and D.C. Circuits generally apply a more restrictive standard: they often require the domestic conduct to establish all the elements of the alleged fraud. See Zoelsch, 824 F.2d at 31, 33 (domestic conduct must comprise all elements of SEC Rule 10b—5); IIT v. Vencap, Ltd., 519 F.2d 1001, 1018 (2d Cir.1975) (jurisdiction limited to the “perpetration of fraudulent acts themselves”; language interpreted as mandating that domestic conduct establish all elements of claim). The Third, Eighth and Ninth Circuits appear to be more lenient, finding jurisdiction where the domestic conduct is “significant with respect to the alleged violation.” Grunenthal, 712 F.2d at 421; Continental Grain, 592 F.2d at 420; Kasser, 548 F.2d at 114 (jurisdiction proper where “at least some activity designed to further the fraudulent scheme occurs within this country”). A closer examination of Tamari reveals the Seventh Circuit leans toward the more permissive view.

2. The Tamari Decision

The Tamari plaintiffs were Lebanese citizens and residents who sued a Lebanese corporation that placed commodity futures trades for them on the CME through a United States agent. The plaintiffs alleged that the defendant misrepresented its expertise, gave false advice on market conditions, transmitted false reports and false statements to the Tamaris, and mismanaged their account. All communications regarding the Tamaris’ account took place in Lebanon, all of the allegedly fraudulent representations were made in Lebanon, and all of the CME trades were wired from Lebanon. Despite all the Lebanese connections, both the district court and the Seventh Circuit found jurisdiction under the conduct test. The Seventh Circuit adopted the district court’s analysis and simply ruled that “[t]he transmission of commodity futures orders to the United States would be an essential step in the consummation of any scheme to defraud through futures trading on United States exchanges.” 730 F.2d at 1108.

The district court was more specific. Citing the Eighth Circuit’s decision in Continental Grain, the court noted that several decisions find that a foreign defendant’s phone calls or mail to the United States constitutes “conduct” in the United States. 547 F.Supp. at 315. The defendant’s act of wiring orders to the CME therefore supplied the requisite United States conduct, and the court held this conduct was “substantial or significant when viewed in relation to its importance” to the alleged fraud because executing the orders was the “final step[]” in the scheme. Id. The court rejected the defendant’s argument that the CME trades were not material because they had been ruled lawful in prior arbitration between the parties:

[T]he “lawfulness” of Bache Delaware’s execution of the orders, as found by the arbitrators, does not cure any prior fraud in Bache Lebanon’s solicitations from the Tamaris, nor does it prevent the execution of the orders from being a necessary and foreseeable step in a scheme to defraud, and thus substantial conduct within the United States.

Id. This determination belies any requirement, such as frequently imposed by the Second and D.C. Circuits, that jurisdiction be limited to cases in which the domestic con *1158 duct constitutes the entire fraud or satisfies all statutory elements.

3. The Alleged Tick Stealing Directly Caused Pyrenee’s Losses

Comparing the importance of the conduct abroad to the domestic conduct in this case, and keeping in mind the Tamari facts and analysis, we conclude that Wocom’s act of placing trades on the CME through its United States agent satisfies the conduct test. First, our conclusion is supported by the Seventh Circuit’s broad observation that “[t]he transmission of commodity futures orders to the United States would be an essential step in the consummation of any scheme to defraud through futures trading on United States exchanges.” 730 F.2d at 1108 (emphasis added). Second, placing the CME trades was in fact a substantial or significant step in Wocom’s alleged tick stealing scheme: Wocom had to place the trades in order to reap the profits from the gap between the actual trading price and the price as represented to Pyrenee. In other words, without the trade, there would have been no ticks to steal. See also Psimenos v. E.F. Hutton & Co., 722 F.2d 1041, 1044 (2d Cir.1983) (“The trades Hutton executed on American markets constituted the final act in Hutton’s alleged fraud on Psimenos, without which Hutton’s employees could not have generated commissions for themselves.”). As such, trading on the CME was not merely a preparatory activity or something that occurred after the fraud was completed; it was a “material act[] that directly caused [the plaintiffs] claimed losses.” Id. at 1044.

Wocom insists that the relative importance of United States activities to the alleged tick stealing scheme is slight, and urges that the lawfulness of its CME trades precludes finding them significant to the fraudulent scheme. It is true that Wocom’s alleged price misrepresentations occurred in Hong Kong, that Wocom conducted the trades from Hong Kong, and that most, if not all, of the parties’ other contacts took place in Hong Kong. Yet these very same foreign contacts were held insufficient to preclude jurisdiction in Tamari. Furthermore, Tamari squarely rejected the contention that the domestic conduct be unlawful in order to constitute a significant step in the fraudulent scheme. 547 F.Supp. at 315; see also Psimenos, 722 F.2d at 1046 (holding that the lawfulness of the domestic transactions does not prevent them from being material to the fraud’s completion). Just as the CME trades in Tamari were material to the completion of an allegedly fraudulent scheme that included rendering false advice on market conditions, transmitting false reports and false statements, and mismanaging the Tamaris’ account, Wo-com’s CME trades were material to the completion of its alleged scheme to report false trading prices and steal the difference from Pyrenee’s account.

Wocom parades before us a number of cases in support of dismissal, all of which are distinguishable on their facts-—because the domestic conduct was merely preparatory or incidental to the fraud—or because they apply a different legal standard than the Seventh Circuit. For example, North South Finance Corp. v. Al-Turki, 100 F.3d 1046 (2d Cir.1996), was a RICO case involving fraud in connection with the sale of a foreign bank. Every step necessary to the fraud was executed in France and depended on the French defendants’ success in corrupting the bank’s French manager. Id. at 1053. Under these circumstances, the fact that some information used in the fraud was obtained from the bank’s New York office was immaterial to the scheme’s success. Id. In Bersch v. Drex-el Firestone, Inc., 519 F.2d 974 (2d Cir.1975), several foreign entities committed fraud by distributing a foreign company’s false and misleading prospectus to foreign investors. In contrast to the plethora of key fraudulent activity abroad, the preliminary meetings and the preparation of draft prospectuses in New York merely constituted “preparatory activity.” Id. at 985 n. 24, 987. The scheme in Societe Nationale d’Exploitation Industrielle des Tabacs et Allumettes v. Salomon Bros. Intt, Ltd., 928 F.Supp. 398 (S.D.N.Y.1996), is wholly inapposite because it involved a British defendant fraudulently securing a French investor’s agreement to participate in risky financial transactions through misrepresentations made in France and England. The fraud abroad was therefore complete before the defendant conducted any transactions in the United States. Id. at 403. Mormels v. Girofinance, S.A., 544 F.Supp. 815 (S.D.N.Y. *1159 1982), can similarly be distinguished because “every fact essential to plaintiffs’ charge of fraudulent conduct was committed or occurred in Costa Rica.” Id. at 817-18. In contrast to all these cases, Wocom’s placing commodity trades in the United States was a step “essential” to “[its] scheme to defraud through futures trading on United States exchanges.” Tamari, 730 F.2d at 1108. Finally, Zoelsch v. Arthur Andersen & Co., 824 F.2d 27 (D.C.Cir.1987), is inapplicable because it required that the defendants domestic conduct satisfy every element of a securities fraud claim, a much tougher conduct test than the Seventh Circuit applied in Tamari.

Because we conclude that Pyrenee’s tick stealing claim establishes subject matter jurisdiction under the conduct test, we have no occasion to consider whether it satisfies the effects test. 8 Now secure that we have jurisdiction to hear this case, the next step is to determine whether we may assert personal jurisdiction over Woeom.

II. Personal Jurisdiction

A. Legal Standards Governing Personal Jurisdiction

As is the case with subject matter jurisdiction, the plaintiff bears the burden of establishing personal jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir.1997). The court must assume the plaintiffs jurisdictional allegations are true unless controverted by the defendant’s affidavits. Vlasak v. Rapid Collection Sys., Inc., 962 F.Supp. 1096, 1098 (N.D.Ill.1997); Lifeway Foods, Inc. v. Fresh Made, Inc.,