Law Commons^™

Rethinking U.S. Investment Adviser Regulation, Anita K. Krug

Articles

Although the U.S. Investment Advisers Act of 1940 (the “Advisers Act”) was not at the center of the post-financial crisis regulatory reform that culminated in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or “Dodd-Frank Act”), it was certainly part of the reform effort. In particular, Dodd-Frank amended the Advisers Act--the federal statute that regulates investment advisers and their activities--in a manner intended to address the ways in which privately-offered funds, particularly hedge funds, may have exacerbated the financial crisis. The primary regulatory concern, whether valid or not, was that, given the magnitude of assets invested in hedge …

Opinions Actionable As Securities Fraud, Wendy Gerwick Couture

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This Article proposes a new analytical framework to apply to statements of opinion in securities fraud cases. Although statements of opinion form the basis of some of the most cutting edge securities fraud claims-such as those asserted against securities analysts and credit rating agencies-statements of opinion do not fit squarely within the elements of securities fraud. In particular, three issues arise: (1) When is a statement of opinion false so as to qualify as a misrepresentation? (2) When is a statement of opinion material? (3) And, for that matter, what is the distinction between a statement of fact and a …

Criminal Securities Fraud And The Lower Materiality Standard, Wendy Gerwick Couture

Articles

No abstract provided.

Investment Company As Instrument: The Limitations Of The Corporate Governance Regulatory Paradigm, Anita K. Krug

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U.S. regulation of public investment companies (such as mutual funds) is based on a notion that, from a governance perspective, investment companies are simply another type of business enterprise, not substantially different from companies that produce goods or provide (noninvestment) services. In other words, investment company regulation is founded on what this Article calls a “corporate governance paradigm,” in that it provides a significant regulatory role for boards of directors, as the traditional governance mechanism in business enterprises, and is “entity centric,” focusing on intraentity relationships to the exclusion of super-entity ones.

This Article argues that corporate governance norms, which …

Securities Regulation As Gap-Filler: The Example Of Hydraulic Fracturing, Wendy Gerwick Couture

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No abstract provided.

Escaping Entity-Centrism In Financial Services Regulation, Anita K. Krug

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In the ongoing discussions about financial services regulation, one critically important topic has not been recognized, let alone addressed. That topic is what this Article calls the “entity-centrism” of financial services regulation. Laws and rules are entity-centric when they assume that a financial services firm is a stand-alone entity, operating separately from and independently of any other entity. They are entity-centric, therefore, when the specific requirements and obligations they comprise are addressed only to an abstract and solitary “firm,” with little or no contemplation of affiliates, parent companies, subsidiaries, or multi-entity enterprises. Regulatory entity-centrism is not an isolated phenomenon, as …

A Changing Mosaic In Sec Regulation And Enforcement: Broker-Dealers And Investment Advisers, Douglas M. Branson

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The 2010 Dodd-Frank Act directed the SEC to study the issue of whether the Commission should, by regulation, decree broker-dealers (“registered representatives”) subject to the same fiduciary standards applicable to investment advisers, applicable at least since SEC v. Capital Gains Research Bureau, 385 U.S. 180 (1963). The SEC completed such a study in 2011, predictably recommending that the Commission exercise the authority Dodd-Frank had given it, namely, waving its wand, declaring brokers fiduciaries. Many able academics and regulators have adumbrated the pros and the cons of such a regulatory step. To date, however, the SEC has done nothing, undoubtedly …

Critique Of Money Judgment Part Three: Restraining Notices, David G. Carlson

Articles

New York is virtually unique in permitting lawyers to issue court orders restraining debtors and third parties from conveying away any assets that could be used to satisfy a money judgment. In effect, these orders command the recipient to do nothing, whereas a turnover or garnishment orders the recipient to do something — pay the creditor or sheriff or surrender illiquid property to the sheriff. The weakness and strength of this debt collection tool is assessed at length. The Article also analyzes in detail New York’s Exempt Income Protection Act, enacted in 2008 to force banks to protect the exempt …

Revisiting 'Truth In Securities Revisited': Abolishing Ipos And Harnessing Private Markets In The Public Good, Adam C. Pritchard

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My thesis is that the transition between private- and public-company status could be less bumpy if we unify the public-private dividing line under the Securities Act and Exchange Act. The insight builds on Cohen's thought experiment where Congress first enacted the Exchange Act. My proposed public-private standard would take the company-registration model to its logical conclusion. The customary path to public-company status is through an IPO, typically with simultaneous listing of the shares on an exchange. There is nothing about public offerings, however, that makes them inherently antecedent to public-company status. What if companies became public, with required periodic disclosures …

Private Regulation Of Insider Trading In The Shadow Of Lax Public Enforcement: Evidence From Canadian Firms, Laura Nyantung Beny, Anita Anand

Articles

Like firms in the United States, many Canadian firms voluntarily restrict trading by corporate insiders beyond the requirements of insider trading laws (i.e., super-compliance). Thus, we aim to understand the determinants of firms’ private insider trading policies (ITPs), which are quasi-contractual devices. Based on the assumption that firms that face greater costs from insider trading (or greater benefits from restricting insider trading) ought to be more inclined than other firms to adopt more stringent ITPs, we develop several testable hypotheses. We test our hypotheses using data from a sample of firms included in the Toronto Stock Exchange/Standard and Poor’s (TSX/S&P) …