For nearly a century, Manhattan’s courthouse steps have been the epicenter of America’s highest-profile securities fraud prosecutions. From Michael Milken to Bernie Madoff, from Martha Stewart to Raj Rajaratnam, the Southern District of New York has prosecuted more insider trading and securities fraud cases than any other federal judicial district in the nation. This dominance has stemmed not merely from prosecutorial expertise or judicial familiarity with complex financial instruments, but from a simple geographic fact: The major U.S. securities exchanges — the New York Stock Exchange and the Nasdaq — have been headquartered in Manhattan, providing SDNY with nearly automatic venue for securities fraud cases.
That geographic monopoly may be about to end. In a development that could fundamentally reshape the landscape of federal securities enforcement, three major stock exchanges are establishing operations in Dallas within the Northern District of Texas. On Sept. 30, the Securities and Exchange Commission formally approved the Texas Stock Exchange to operate as a national securities exchange — the first fully integrated national exchange approved by the SEC in over a decade. Trading is set to commence in early 2026. Meanwhile, the New York Stock Exchange launched NYSE Texas, a fully electronic equities exchange based in Dallas, and in November, Nasdaq announced plans for Nasdaq Texas, a new dual-listing venue slated to begin operations in 2026.
This geographic diversification of America’s securities exchange infrastructure represents more than mere business expansion — it signals a potential seismic shift in federal criminal and civil securities enforcement. Cases that historically could only be prosecuted in Manhattan may soon find their way to Dallas courtrooms, bringing with them the possibility of different judicial approaches, jury pools and enforcement priorities.
The SDNY’s Historical Dominance in Securities Enforcement
The Geography of Venue in Securities Cases
The Sixth Amendment to the U.S. Constitution requires that criminal defendants be tried “in the district wherein the crime shall have been committed.” For civil enforcement actions, federal securities laws provide that venue lies “in the district wherein the defendant is found or is an inhabitant or transacts business,” or “in the district wherein any act or transaction constituting the violation occurred.”
These seemingly straightforward requirements have helped to create SDNY’s decadeslong dominance in securities enforcement. When securities trade on exchanges located in Manhattan, courts have consistently found that the “act or transaction constituting the violation” occurs in the Southern District of New York, regardless of where the defendant actually engaged in the fraudulent conduct. This principle has allowed prosecutors to bring cases in SDNY even when defendants never set foot in New York.
The Broad Reach of SDNY Venue
The Second Circuit’s expansive approach to venue in securities cases was crystallized in United States v. Chow, decided in April 2021. In that case, the court held that where “the defendant is charged with an offense involving the trading of securities on a stock exchange located in the [Southern District of New York],” venue in that district is appropriate. Notably, the court reached this conclusion even though Nasdaq is an electronic exchange without a physical trading floor, and witnesses could not definitively establish whether the servers executing trades were located in New York or New Jersey.
The Chow decision exemplifies how exchange location has served as a venue magnet, drawing securities cases to SDNY regardless of the defendants’ actual geographic connections to New York. This has allowed SDNY to develop unparalleled expertise in prosecuting complex securities fraud cases, creating a self-reinforcing cycle of specialization and case volume.
Recent Challenges to Venue Assumptions
However, 2025 brought a significant challenge to this expansive venue approach. In the Mango Markets case, United States v. Eisenberg, a federal judge in SDNY vacated Avraham Eisenberg’s criminal convictions for commodities fraud and manipulation, finding that venue was improper. The court emphasized that Eisenberg “didn’t make trades in New York, call or email anyone in New York, or go to New York in connection with his scheme. … There is no allegation that the Mango Markets platform had ties to New York.”
This decision, while involving a decentralized finance platform rather than traditional securities exchanges, signals growing judicial scrutiny of venue determinations in financial fraud cases. It suggests that courts may be less willing to accept tenuous geographic connections as sufficient for venue, particularly as financial markets become increasingly electronic and geographically dispersed.
The Dallas Exchange Trinity: TXSE, NYSE Texas and Nasdaq Texas
The Texas Stock Exchange: A New National Player
The Texas Stock Exchange represents the most significant development in U.S. exchange infrastructure in over a decade. Founded with backing exceeding $250 million, TXSE received SEC approval Sept. 30 to operate as a fully integrated national securities exchange. The exchange officially opened its Dallas headquarters in spring 2025 and plans to begin trading operations in early 2026.
TXSE’s physical presence will be located in the heart of Dallas at the Texas Market Center, where the company expects to employ more than 100 people. Energy Transfer Partners CEO Kelcy Warren serves as the majority owner of TXSE Group Inc., reflecting the exchange’s deep ties to Texas’s energy sector and broader business community.
The exchange aims to reverse the trend of diminishing numbers of public companies by offering what its founders describe as a more business-friendly regulatory environment. This positioning could attract companies seeking alternatives to traditional New York-based exchanges, particularly those in energy, technology and other sectors with significant Texas presence.
NYSE Texas: Wall Street Comes to Dallas
In February 2025, the New York Stock Exchange announced the launch of NYSE Texas, described as a “fully electronic equities exchange” based in Dallas. This development followed the recognition that Texas hosts more NYSE-listed companies than any other state, potentially representing over $3.7 trillion in market value.
NYSE Texas operates alongside the traditional New York-based NYSE but maintains independent operations in Dallas. This structure creates an interesting venue question: While NYSE has historically been synonymous with its Manhattan location for venue purposes, NYSE Texas’ operations in Dallas could provide venue basis for cases involving securities traded on this Texas-based platform.
Nasdaq Texas: Completing the Trifecta
On November 12, 2025, Gov. Greg Abbott announced that the Nasdaq would launch Nasdaq Texas, a new dual-listing venue expected to become operational in 2026, pending regulatory approvals. This announcement came after the Nasdaq had already established a regional headquarters in Dallas, further cementing the company’s Texas presence.
Nasdaq Texas will function as a dual-listing venue designed to expand the Nasdaq’s services for companies across Texas while providing new growth and investment opportunities for investors. The timing of this announcement, following closely after TXSE’s approval and NYSE Texas’s launch, suggests coordinated efforts to establish Dallas as a serious competitor to New York’s financial infrastructure.
Legal Framework: How Venue Rules Could Shift Enforcement Geography
Constitutional and Statutory Venue Requirements
Federal venue rules in securities cases operate under both constitutional and statutory frameworks. The Sixth Amendment’s “vicinage” requirement mandates trial in the district where the crime was committed. Where criminal conduct spans multiple districts, according to 18 U.S.C. § 3237(a), venue is proper “in any district in which such offense was begun, continued, or completed.”
For SEC civil enforcement actions, venue lies under 15 U.S.C. § 78aa “in the district wherein the defendant is found or is an inhabitant or transacts business” or, critically, “in the district wherein any act or transaction constituting the violation occurred.” This latter provision has contributed to the SDNY’s dominance in securities enforcement, as securities transactions on New York-based exchanges have been deemed to “occur” in the SDNY.
The Fifth Circuit’s Likely Approach
While Fifth Circuit precedent on securities fraud venue is relatively sparse — perhaps due to the historical absence of major exchanges in the circuit — the circuit has generally taken approaches consistent with other circuits in analogous contexts. The Fifth Circuit has not demonstrated the same expansive approach to venue that has characterized some Second Circuit decisions, but neither has it adopted particularly restrictive interpretations.
Given the Chow precedent and the well-established principle that securities transactions “occur” where exchanges are located, the Fifth Circuit would likely find that transactions on the TXSE, the NYSE Texas or the Nasdaq Texas establish venue in the Northern District of Texas. This would mirror the approach that has made the SDNY a magnet for venue for securities cases.
Practical Venue Considerations
The establishment of Dallas-based exchanges creates several venue scenarios that could shift cases from the SDNY to the NDTX:
First, cases involving securities exclusively traded on Dallas-based exchanges may, depending on the facts, require prosecution in the NDTX rather than the SDNY, absent other venue-establishing factors. Second, cases involving dual-listed securities might provide prosecutors with venue choices between districts. Third, cases involving manipulation of markets or schemes affecting multiple exchanges could potentially be brought in either district.
The decision in United States v. Eisenberg — the Mango Markets case — adds complexity to this analysis by suggesting that courts may require more substantial connections to a district than mere exchange location, particularly for electronic or decentralized trading platforms. However, the physical presence of exchange operations and headquarters in Dallas should provide stronger venue foundations than purely electronic platforms.
Case Studies: Historic SDNY Cases That Could Now Be Brought in the NDTX
The Galleon Group Insider Trading Conspiracy: Raj Rajaratnam
One of SDNY’s most celebrated insider trading prosecutions involved Raj Rajaratnam, the billionaire founder of Galleon Group hedge funds. In May 2011, after a closely watched trial, Rajaratnam was convicted on all 14 counts of conspiracy and securities fraud for his role in a massive insider trading scheme. The case, United States v. Rajaratnam, resulted in an 11-year prison sentence and represented profits of approximately $72 million from illegal trades.
The Rajaratnam prosecution relied heavily on trading in securities listed on the Nasdaq and the New York Stock Exchange. The government’s case included insider trading in companies such as Intel, Google, IBM and numerous other technology and pharmaceutical companies whose securities traded on these New York-based exchanges. Venue in the SDNY was established, in part, through the location of these exchanges in Manhattan.
Had companies like those involved in the Galleon scheme been listed exclusively on the TXSE or traded through the NYSE Texas or the Nasdaq Texas, the identical criminal conduct could now be prosecuted in the NDTX. The scheme’s elements — receipt of material nonpublic information, trading based on that information and the securities fraud itself — would remain unchanged, but the venue would shift from Manhattan federal court to Dallas federal court.
The SAC Capital Case: Mathew Martoma
Another landmark SDNY prosecution involved Mathew Martoma, a former portfolio manager at SAC Capital Advisors. In February 2014, Martoma was convicted of securities fraud and conspiracy in connection with what prosecutors in a press release called the “most lucrative insider trading scheme ever charged.” The case involved $275 million in illegal profits and losses avoided through insider trading in pharmaceutical stocks Elan Corporation and Wyeth.
Martoma received confidential information from doctors involved in clinical trials of an Alzheimer’s drug being developed by Elan and Wyeth. Based on this inside information about disappointing trial results, Martoma caused SAC Capital to reverse its position in these stocks, selling long positions and establishing short positions worth hundreds of millions of dollars. The trades occurred just days before the public announcement of the negative trial results.
Venue in the SDNY was established, in part, because the Elan and Wyeth securities traded on the Nasdaq, which was headquartered in New York. The court found that the securities fraud “occurred” in the SDNY when the trades were executed on the New York-based exchange, regardless of where Martoma physically placed the orders or received the inside information.
Under the new Dallas exchange landscape, if pharmaceutical companies involved in similar insider trading schemes were listed on the TXSE or traded through the Dallas-based NYSE Texas or the Nasdaq Texas platforms, identical criminal conduct could be prosecuted in the NDTX. The government would need to prove the same elements — receipt of material nonpublic information, breach of duty and trading based on that information — but the case would unfold in a dramatically different legal and cultural environment.
The potential for such cases to shift to Texas raises intriguing questions about enforcement priorities and outcomes. Texas’ traditionally business-friendly legal environment and cultural attitudes toward financial regulation could influence both prosecutorial charging decisions and jury verdicts in ways that might favor defendants compared to the more regulation-friendly environment typically found in Manhattan federal court.
Practical Implications of the Enforcement Geography Shift
Prosecutorial Resources and Expertise
The potential shift of securities cases to the NDTX raises immediate questions about prosecutorial resources and expertise. The SDNY has developed specialized units with decades of experience prosecuting complex securities fraud cases, supported by agents from the FBI’s securities fraud units and regulatory expertise from the SEC’s New York regional office.
By contrast, while the NDTX has capable prosecutors, the district has not historically handled the volume or complexity of securities cases typical in the SDNY. The U.S. attorney’s office for the NDTX will likely need to develop specialized securities fraud expertise, potentially recruiting prosecutors with securities law backgrounds or providing intensive training to existing staff.
The SEC’s Fort Worth regional office provides some infrastructure for this transition. Notably, the Fort Worth office receives more tips, complaints and referrals than any other SEC regional office, including the Washington, D.C., headquarters, suggesting robust enforcement activity in the region. However, civil SEC enforcement expertise does not automatically translate to the complexities of criminal prosecution.
Judicial Experience and Case Management
Federal judges in the NDTX traditionally have not handled a large volume of securities fraud cases, potentially opening the door to new approaches, including different approaches to evidentiary rulings on expert testimony, varying perspectives on appropriate sentences for securities fraud offenses and potentially longer case timelines as judges navigate unfamiliar legal terrain.
This lack of entrenched precedent and practice could benefit defendants. SDNY judges’ established practices and precedents in securities cases have generally resulted in prosecution-friendly rulings on recurring legal issues. NDTX judges might be more receptive to novel defense arguments or more skeptical of prosecutorial theories that have become routine in the SDNY.
Jury Pool Considerations
Perhaps the most significant practical implication involves jury pool differences. Manhattan juries commonly include individuals with extensive exposure to financial markets, either through employment in the financial services industry or general familiarity with Wall Street culture. This familiarity can be double-edged. While Manhattan jurors may better understand complex financial transactions, they may also be more sympathetic to prosecution arguments about market manipulation and insider trading.
Dallas jury pools, by contrast, may include fewer individuals with direct financial services experience but more individuals from energy, technology and traditional business backgrounds. Texas’s cultural emphasis on free market principles and skepticism of regulatory overreach could translate into jury attitudes more favorable to defense arguments, particularly in cases involving novel legal theories or aggressive prosecutorial positions.
Defense Strategy Implications
The potential venue shift creates new strategic considerations for white-collar defense attorneys. Cases that might be extremely difficult to defend in SDNY due to prosecutorial expertise and jury composition could become more manageable in NDTX. This could influence settlement negotiations in SEC enforcement actions, plea bargaining in criminal cases and decisions about whether to proceed to trial.
Defense counsel may also need to adjust their strategies for Texas venues. Arguments that resonate with Manhattan juries — such as appeals to regulatory compliance and market fairness — might be less effective with Texas juries more skeptical of government regulation. Conversely, themes emphasizing individual initiative, business freedom and prosecutorial overreach might prove more persuasive in Dallas courtrooms.
The Transformation Ahead: Policy and Strategic Considerations
The Department of Justice’s approach to this geographic shift will significantly influence its impact. If the DOJ maintains centralized securities fraud prosecution in SDNY regardless of venue options, the practical effect of Dallas-based exchanges might be minimal. However, if the DOJ embraces geographic diversification and builds securities fraud expertise in NDTX, it could fundamentally alter enforcement patterns.
Several factors will influence this decision: resource allocation between districts, political priorities of appointed U.S. attorneys, the current administration’s broader enforcement philosophy and practical considerations such as agent and prosecutor expertise. The Trump administration’s emphasis on reducing regulatory burdens could influence whether the DOJ aggressively builds securities fraud prosecution capabilities in traditionally business-friendly jurisdictions like Texas.
Conclusion: A New Era in Securities Enforcement Geography
The establishment of three major securities exchanges in Dallas represents more than a business development — it signals a potential transformation in the geographic landscape of federal securities enforcement. For the first time in decades, prosecutors and civil enforcement agencies will have meaningful venue alternatives to the Southern District of New York for major securities fraud cases.
This shift carries both opportunities and risks. On the positive side, geographic diversification could lead to more competitive and innovative approaches to securities regulation and enforcement. Different judicial perspectives might produce valuable legal developments, while varied jury pools could ensure that securities laws reflect broader American values rather than just Manhattan sensibilities.
However, the transition also poses challenges. Uneven enforcement expertise across jurisdictions could create inequities in how similar conduct is prosecuted and punished. Market participants might engage in forum shopping that undermines regulatory effectiveness. The development of parallel enforcement centers could lead to inconsistent legal standards and precedents.
The ultimate impact will depend largely on how legal institutions adapt to these changes. If the NDTX develops robust securities fraud prosecution capabilities while maintaining appropriate enforcement standards, the geographic diversification could strengthen overall market integrity. If, however, the shift results in weakened enforcement or regulatory arbitrage, it could undermine investor protection and market confidence.
As Dallas’ “Y’all Street” prepares to challenge Wall Street’s dominance, the legal profession must prepare for a new era in securities enforcement geography. The cases that defined SDNY’s reputation — from Rajaratnam to Martoma — may soon have their Dallas counterparts. Whether this represents progress or peril for securities law enforcement remains to be written in the courtrooms of the NDTX.
What seems likely is that the monopoly of Manhattan federal court over high-stakes securities enforcement is ending. The next chapter of American securities law may be written not just in the shadow of the Statue of Liberty but under the wide skies of Texas — with all the legal, cultural and practical implications that geographic shift entails.
Elisha Kobre is a former federal prosecutor and a a partner in the Governmental Practice at Sheppard Mullin.