Securities Law Commons^™

Voluntary Recapitalization, Fairness, And Rule 10b-5: Life Along The Trail Of Santa Fe, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

In corporate recapitalizations, the board of directors will sometimes propose a recapitalization plan which substantially alters the “bundle of rights” represented by preferred shares. Although these plans cannot usually be completed without the approval of a majority of the preferred shareholders, the preferred shareholders are at a disadvantage to protect their interests for several reasons. Thus preferred shareholders who are dissatisfied with the change in their rights will sometimes call upon state courts to enjoin the recapitalization on the grounds that it is unfair or fraudulent; state courts, however, have provided only slight protection for preferred shareholders. In this article, …

The Plight Of Small Issuers Under The Securities Act Of 1933: Practical Foreclosure From The Capital Market, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

The thesis of this Article is simple: the Securities Act of 1933 does not work very well for small issuers, a premise which the Securities and Exchange Commission appeared to tacitly recognize in a series of announcements released early this year. Because of a combination of exorbitant costs, unmanageable levels of ambiguity, unworkable resale provisions and contamination caused by prior illegal sales of stock, a small issuer often is unable to comply with the 1933 Act. As a result it may be difficult or even impossible for a small issuer to raise capital by selling stock.

There are obvious pernicious …

Definition Of Control In Secondary Distributions, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

Section 2(11) of the Securities Act of 1933 (Act) generally subjects the sale of securities by a person "controlling an issuer" to the same rules that govern the sale of securities by an issuer. Accordingly, before a "control" person may sell the securities he holds in the controlled corporation he must either register them with the Securities and Exchange Commission (Commission) or qualify for an exemption from the registration requirement. While the Act clearly requires that a "control" person either register or qualify for an exemption, it fails to define "control." Thus, the task of defining has fallen to the …

Elements Of Recovery Under Rule 10b 5: Scienter, Reliance, And Plaintiff's Reasonable Conduct Requirement, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

A comparison of the commentaries on rule 10b-5 indicates that uncertainty is widespread in this area of securities law. One area that is needlessly confused is the proper selection and definition of those elements necessary for recovery in a 10b-5 action. The purpose of this article is to consider four distinct elements that continue to be the source of constant litigation and comment and to suggest an approach that clarifies their meaning and use. The four elements are: (1) scienter (the defendant's state of mind), (2) reliance, (3) justifiable reliance, and (4) materiality. This article will analyze the use of …