Digital Commons Network^™

Securities Law: Overview And Contemporary Issues, Neal Newman, Lawrence J. Trautman

Faculty Scholarship

This is not your grandfather’s SEC anymore. Rapid technological change has resulted in novel regulatory issues and challenges, as law and policy struggles to keep pace. The U.S. Securities and Exchange Commission (SEC) reports that “the U.S. capital markets are the deepest, most dynamic, and most liquid in the world. They also have evolved to become increasingly fast and extraordinarily complex. It is our job to be responsive and innovative in the face of significant market developments and trends.” With global markets increasingly interdependent and interconnected and, “as technological advancements and commercial developments have changed how our securities markets operate, …

Enhancing Efficiency At Nonprofits With Analysis And Disclosure, David M. Schizer

Faculty Scholarship

The U.S. nonprofit sector spends $2.54 trillion each year. If the sector were a country, it would have the eighth largest economy in the world, ahead of Brazil, Italy, Canada, and Russia. The government provides nonprofits with billions in tax subsidies, but instead of evaluating the quality of their work, it leaves this responsibility to nonprofit managers, boards, and donors. The best nonprofits are laboratories of innovation, but unfortunately some are stagnant backwaters, which waste money on out-of-date missions and inefficient programs. To promote more innovation and less stagnation, this Article makes two contributions to the literature.

First, this Article …

Berle And Corporation Finance: Everything Old Is New Again, Frank Partnoy

Seattle University Law Review

In this essay, I want to illustrate how Adolf A. Berle Jr.’s Studies in the Law of Corporation Finance1 was prescient about the kinds of financial innovation that are central to today’s markets. For scholars who are not familiar with this publication, Corporation Finance is a compilation of edited versions of several of Berle’s articles, along with some new material, most of which is focused on 1920s corporate practice. My primary goal here is simply to shine a light on this work and to memorialize for scholars the key passages that echo many of today’s challenges. The punch line of …

Crowdfunding Capital In The Age Of Blockchain Based Tokens, Patricia H. Lee

All Faculty Scholarship

Less than three years ago, the Securities and Exchange Commission (“SEC”) adopted investment crowdfunding regulations (“Reg. CF”) to facilitate small companies’ efforts to raise capital and jumpstart employment, providing companies potentially one of the most disruptive transformations in capital markets.

As the lion share of securities are offered under public offerings or Reg. D safe harbor exemptions, outcomes and impacts of Reg. CF offerings are not studied or monitored to the same extent. One line of inquiry is the scope of Reg. CF, including questions about the level of company participation, the types of businesses seeking capital formation, and the …

Startup Governance, Elizabeth Pollman

All Faculty Scholarship

Although previously considered rare, over three hundred startups have reached valuations over a billion dollars. Thousands of smaller startups aim to follow in their paths. Despite the enormous social and economic impact of venture-backed startups, their internal governance receives scant scholarly attention. Longstanding theories of corporate ownership and governance do not capture the special features of startups. They can grow large with ownership shared by diverse participants, and they face issues that do not fit the dominant principal-agent paradigm of public corporations or the classic narrative of controlling shareholders in closely held corporations.

This Article offers an original, comprehensive framework …

The Evolution Of Entrepreneurial Finance: A New Typology, J. Brad Bernthal

Publications

There has been an explosion in new types of startup finance instruments. Whereas twenty years ago preferred stock dominated the field, startup companies and investors now use at least eight different instruments—six of which have only become widely used in the last decade. Legal scholars have yet to reflect upon the proliferation of instrument types in the aggregate. Notably missing is a way to organize instruments into a common framework that highlights their similarities and differences.

This Article makes four contributions. First, it catalogues the variety of startup investment forms. I describe novel instruments, such as revenue-based financing, which remain …

Stock Market Futurism, Merritt Fox, Gabriel Rauterberg

Articles

The U.S. stock market is undergoing extraordinary upheaval. The approval of the application of the Investors Exchange (IEX) to become the nation's newest stock exchange, including its famous "speed bump," was one of the SEC's most controversial decisions in decades. Other exchanges have proposed a raft of new innovations in its wake. This evolving equity market is a critical piece of national infrastructure, but the regulatory scheme for its institutions is increasingly frayed. In particular, current regulation draws sharp distinctions among different kinds of markets for trading stocks, treating stock exchanges as self-regulatory organizations immune from private civil litigation, while …

Standing Voting Instructions: Empowering The Excluded Retail Investor, Jill E. Fisch

All Faculty Scholarship

Despite the increasing importance of shareholder voting, regulators have paid little attention to the rights of retail investors who own approximately 30% of publicly traded companies but who vote less than 30% of their shares. A substantial factor contributing to this low turnout is the antiquated mechanism by which retail investors vote. The federal proxy voting rules place primary responsibility for facilitating retail voting in the hands of custodial brokers who have limited incentives to develop workable procedures, and current regulatory restrictions impede market-based innovation that incorporate technological innovations.

One of the most promising such innovations is standing voting instructions …

Space For Local Content Policies And Strategies, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

This paper explores both the role that local content measures can play in advancing sustainable development, and the impact that trade and investment treaties concluded over the past 20 years have had and will continue to have on the ability of governments to employ those tools. Certain local content measures had been restricted under the WTO due to wide agreement by negotiating parties that their costs outweigh their benefits. But the WTO also left a number of local content measures in governments’ policy toolboxes. As is discussed in this paper, however, that is changing, with the range of permissible actions …

An Fda For Financial Innovation: Applying The Insurable Interest Doctrine To Twenty-First-Century Financial Markets, Eric A. Posner, E. Glen Weyl

Northwestern University Law Review

The financial crisis of 2008 was caused in part by speculative investment in complex derivatives. In enacting the Dodd–Frank Act, Congress sought to address the problem of speculative investment, but it merely transferred that authority to various agencies, which have not yet found a solution. We propose that when firms invent new financial products, they be forbidden to sell them until they receive approval from a government agency designed along the lines of the FDA, which screens pharmaceutical innovations. The agency would approve financial products if they satisfy a test for social utility that focuses on whether the product will …

Competition Law And Sector Regulation In The European Energy Market After The Third Energy Package: Hierarchy And Efficiency, Michael Diathesopoulos

Michael Diathesopoulos

The aim of this research is to provide the basic parameters for a model for the definition of the relation between the general competition and sector specific frameworks and rules regarding the regulation of the Internal Energy Market, especially after the Third Energy Package. The research considers the recent sector specific framework in relation to a series of recent competition law cases of the Energy Market where structural remedies were applied under the commitments procedure. Essential facilities doctrine and generally competition law tools do not seem to provide a suitable framework for effectively addressing the dynamic competition concept, treating the …

Third Party Access And Refusal To Deal In European Energy Networks: How Sector Regulation And Competition Law Meet Each Other, Michael Diathesopoulos

Michael Diathesopoulos

In this paper, we will analyse the issue of concurrence between competition and sector rules and the relation between parallel concepts within the two different legal frameworks. We will firstly examine Third Party Access in relation to essential facilities doctrine and refusal of access and we will identify the common points and objectives of these concepts and the extent to which they provide a context to each other’s implementation. Second, we will focus on how Commission uses sector regulation and objectives as a context within the process of implementation of competition law in the energy sector and third, we will …

Securities Class Actions As Pragmatic Ex Post Regulation, Elizabeth Chamblee Burch

Scholarly Works

Securities class actions are on the chopping block-again. Traditional commentators continue to view class actions with suspicion; they see class suits as nonmeritorious byproducts of self-interest and the attorneys who bring them as rent-seekers. Their conventional approach has popularized securities class actions' negative effects. High-profile commissions capitalizing on this rhetoric, such as the Committee on Capital Markets Regulation, have recently recommended eliminating or severely curtailing securities class actions. But this approach misses the point: in the ongoing push and pull of securities regulation, corporations are winning the battle.

Thus, understanding the full picture and texture of securities class actions necessitates …