Law Commons^™

Securities Regulation And Social Media, Seth C. Oranburg

Law Faculty Scholarship

Federal securities regulation originally divided corporate finance into two neat categories, public and private. In 1933, private financing was limited to “sophisticated” investors but otherwise lightly regulated. Public financing became heavily regulated. In 1982, the SEC introduced Reg D, which introduced the concept of “general solicitation” to clarify the distinction between public and private offerings. Reg D is well understood to prohibit newspaper advertisements and permit direct solicitations to venture capital investors. This enabled great wealth consolidation in regions like Silicon Valley while effectively banning general solicitations in private offerings.

Now, social media communication challenges the definition of “general solicitation.” …

Valuing Young Startups Is Unavoidably Difficult: Using (And Misusing) Deferred-Equity Instruments For Seed Investing, John L. Orcutt

Law Faculty Scholarship

In a well-functioning market, reasonable investors are less likely to invest in companies when they cannot confidently value the opportunity. This presents a serious problem for young startups because they are unavoidably difficult to value. Partly in response to the valuation challenge, specialized startup investors evolved how they contract for young-startup investments. Around 2005 they began using deferred-equity instruments (first convertible notes, and later safes and the KISS). Deferred-equity instruments offer a partial solution to the valuation challenge by allowing specialized startup investors to thoughtfully invest in venture capital-eligible young startups without valuing them at the time of investment. Deferred-equity …

A Place Of Their Own Crowds In The New Market For Equit Crowdfunding, Seth C. Oranburg

Law Faculty Scholarship

[Excerpt] "Is small better than large? When it comes to normative business law policy, many seem to think so. Many scholars attribute the 2007–08 financial crisis to mis-regulation of large banks. Many others attribute the subsequent economic recovery to jobs created by small businesses. While the “99%” protested big banks on Wall Street, the “Startup America” grassroots campaign for small business garnered political support for corporate-finance legislation. Within a two-year period, Congress passed the JOBS Act—which tripled private company shareholder limits, authorized federal equity crowdfunding, and created the “mini-IPO” Regulation A+— and the Dodd-Frank Act—which seeks to end “too big …

Is Canada The New Shangri-La Of Global Securities Class Actions?, Tanya Monestier

Law Faculty Scholarship

There has been significant academic buzz about Silver v. Imax, an Ontario case certifying a global class of shareholders alleging statutory and common law misrepresentation in connection with a secondary market distribution of shares. Although global class actions on a more limited scale have been certified in Canada prior to Imax, it can now be said that global classes have "officially" arrived in Canada. Many predict that the Imax decision means that Ontario will become the new center for the resolution of global securities disputes. This is particularly so after the United States largely relinquished this role in Morrison v. …

Money As Simulacrum: The Legal Nature And Reality Of Money, John J. Chung

Law Faculty Scholarship

No abstract provided.

Investor Skepticism V. Investor Confidence: Why The New Research Analyst Reforms Will Harm Investors, John L. Orcutt

Law Faculty Scholarship

Part I of this Article provides an overview of research analysts and their basic functions, including a discussion of sell-side analysts' role in the market's recent boom and bust. Part II examines the conflicts of interest that have plagued sell-side research, and Part III reviews the Regulatory Actions that are meant to address these conflicts. In Part IV, the author will make the case for encouraging, rather than lessening, investor skepticism in sell-side research and will explain why the Regulatory Actions are not likely to improve the performance of sell-side analysts. Finally, Part V will offer a simpler proposal to …