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Articles 1 - 30 of 342

Full-Text Articles in Securities Law

Single-Firm Event Studies, Securities Fraud, And Financial Crisis: Problems Of Inference, Andrew Baker May 2016

Single-Firm Event Studies, Securities Fraud, And Financial Crisis: Problems Of Inference, Andrew Baker

Andrew Baker

Lawsuits brought pursuant to section 10(b) of the Securities and Exchange Actdepend on the reliability of a statistical tool called an event study to adjudicate issues ofreliance, materiality, loss causation, and damages. Although judicial acceptance of theevent study technique is pervasive, there has been little empirical analysis of the ability ofevent studies to produce reliable results when applied to a single company’s security.
Using data from the recent financial crisis, this Note demonstrates that the standardmodelevent study used in most court proceedings can lead to biased inferences sanctionedthrough the Daubert standard of admissibility for expert testimony. In particular ...


New Kids On The Blockchain: How Bitcoin's Technology Could Reinvent The Stock Market, Larissa Lee Jan 2016

New Kids On The Blockchain: How Bitcoin's Technology Could Reinvent The Stock Market, Larissa Lee

Larissa Lee

Bitcoin is the first and most successful digital currency in the world. It is polarized in the news almost daily, with either glowing reviews of the many benefits of an alternative and international currency, or doomsday predictions of anarchy, deflation, and another tulip bubble.This Article focuses on the truly innovative aspect of Bitcoin—and that which has gone mostly unnoticed since its inception—the technological platform used to transfer Bitcoin from one party to another. This technology is called the Blockchain. The Blockchain eschews a bank or other middleman and allows parties to transfer funds directly to one another ...


Is Moderation The Highest Virtue? A Comparative Study Of A Middle Way Of Control Transaction Regimes, Yueh-Ping Yang, Pin-Hsien Lee Oct 2015

Is Moderation The Highest Virtue? A Comparative Study Of A Middle Way Of Control Transaction Regimes, Yueh-Ping Yang, Pin-Hsien Lee

Yueh-Ping Yang

Comparative studies of control transaction regimes mostly compare between the Market Rule as adopted in the U.S. and the General Offer Rule ad adopted in European Union, while paying less attention to the Partial Offer Rule, a middle way model adopted in many East Asian countries such as Japan, South Korea, China, Taiwan, etc. In this paper, we attempt to fill this gap by highlighting the Partial Offer Rule adopted in these countries, analyzing this rule’s theoretical foundation and observing its implementation in practice. Our theoretical analyses of the Partial Offer Rule are comprised of two parts. First ...


Tax Treatment Of Derivative Instruments, Oluwaseun Viyon Ojo Oct 2015

Tax Treatment Of Derivative Instruments, Oluwaseun Viyon Ojo

Oluwaseun Viyon Ojo

The article provides an analysis of the various types of derivative instruments traded on the capital markets. As derivative instruments become frequently tradable in the Nigerian Financial market in the near projected future, it is expedient that the concerned companies plan adequately for the tax implications of such transactions and the appropriate tax authorities know how to treat the instrument of derivatives for the purpose of imposition of relevant taxes. This paper therefore dealt with the treatment of these instruments under the Capital Gains Tax Act (CGTA) and Companies Income Tax Act (CITA), though there are no specific rules for ...


Article Iii And Seventh Amendment Challenges To Sec Administrative Proceedings After Dodd-Frank, Daniel P. Dwyer Esquire Sep 2015

Article Iii And Seventh Amendment Challenges To Sec Administrative Proceedings After Dodd-Frank, Daniel P. Dwyer Esquire

Daniel P. Dwyer Esquire

This article is a discussion of the evolution of enforcement remedies available to the United States Securities & Exchange Commission and the possibility that, with the enactment of the 2010 Dodd-Frank amendments to the securities laws, Congress encroached on Article III of and the Seventh Amendment to the Constitution. Section of 929P of Dodd-Frank, which allows the SEC to pursue monetary penalties and other forms of relief against unregulated persons in administrative proceedings, is a particular focus. The article relies on a chronological analysis of these areas of law and close case reading to reconcile the disparate and sometimes seemingly contradictory ...


E-Commerce, Cyber, And Electronic Payment System Risks: Lessons From Paypal, Lawrence J. Trautman Aug 2015

E-Commerce, Cyber, And Electronic Payment System Risks: Lessons From Paypal, Lawrence J. Trautman

Lawrence J. Trautman Sr.

By now, almost without exception, every business has an internet presence, and is likely engaged in e-commerce. What are the major risks perceived by those engaged in e-commerce and electronic payment systems? What potential risks, if they become reality, may cause substantial increases in operating costs or threaten the very survival of the enterprise? This article utilizes the relevant annual report disclosures from eBay (parent of PayPal), along with other eBay and PayPal documents, as a potentially powerful teaching device. Most of the descriptive language to follow is excerpted directly from eBay’s regulatory filings. My additions include weaving these ...


Law And Finance: The Case Of Stock Market Development In China, Zhong Zhang Dr Aug 2015

Law And Finance: The Case Of Stock Market Development In China, Zhong Zhang Dr

Zhong Zhang Dr

Having grown to one of the largest in the world in just over two decades, the stock market of China is cited as a counterexample to the significance of law for financial market development. A thorough examination of the development of China’s stock market however finds that law is actually critical to sustaining market growth and law did play a role in the growth of the market. On the other hand, the trajectory of development in China is growth first followed by law, and the improvement of law is caused by market growth. The experience of China hence suggests ...


Puzzles In Controlling Shareholder Regimes And China: Shareholder Primacy And (Quasi) Monopoly, Sang Yop Kang Aug 2015

Puzzles In Controlling Shareholder Regimes And China: Shareholder Primacy And (Quasi) Monopoly, Sang Yop Kang

Sang Yop Kang

Professor Mark Roe explained that the shareholder wealth maximization norm (“the norm”) is not fit for a country with a (quasi) monopoly, because the norm encourages managers to maximize monopoly rents, to the detriment of the national economy. This Article provides new findings and counter-intuitive arguments as to the tension created by the norm and (quasi) monopoly by exploring three key corporate governance concepts that Roe did not examine—(1) “controlling minority structure” (CMS), where dominant shareholders hold a fractional ownership in their controlled-corporations, (2) “tunneling” (i.e., illicit transfer of corporate wealth to controlling shareholders), and (3) Chinese state-owned ...


Conflicted Counselors: Retaliation Protections For Attorney-Whistleblowers In An Inconsistent Regulatory Regime, Jennifer M. Pacella Aug 2015

Conflicted Counselors: Retaliation Protections For Attorney-Whistleblowers In An Inconsistent Regulatory Regime, Jennifer M. Pacella

Jennifer M. Pacella, Esq.

Attorneys, especially in-house counsel, are subject to retaliation by employers in much the same way as traditional whistleblowers, often experiencing retaliation and loss of livelihood for reporting instances of wrongdoing about their clients. Although attorney-whistleblowing undoubtedly invokes ethical concerns, attorneys who “appear and practice” before the Securities and Exchange Commission (“SEC”) are required by federal law to act as internal whistleblowers under the Sarbanes-Oxley Act (“SOX”) and report evidence of material violations of the law within the organizations that they represent. An attorney’s failure to comply with these obligations will result in SEC-imposed civil penalties and disciplinary action. Recent ...


Democratizing Startups, Seth C. Oranburg Aug 2015

Democratizing Startups, Seth C. Oranburg

Seth C Oranburg

The Jumpstart Our Business Startups Act of 2012 intends to “help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last.” The goal is to “democratize startups” by making capital available to diverse entrepreneurs in new geographies. Yet the net effect of securities regulations and market conditions is the opposite. Startup companies are encouraged to stay private so capital is consolidating in large, mature firms instead of recycling into new startups. Evidence of consolidation is that once-rare “Unicorns” (billion-dollar startups) now number over 111. More money is going into ...


Limiting Leukophobia: Looking Beyond Lockup. Debunking The Strategy Of Turning White Collars Orange, Jared J. Hight Jul 2015

Limiting Leukophobia: Looking Beyond Lockup. Debunking The Strategy Of Turning White Collars Orange, Jared J. Hight

Jared J Hight

The legal and political landscape of the past 30 years has resulted in the abandonment of the utilitarian principle of parsimony as applied to white collar criminals. In response to preceding decades of minor punishments meted out for serious white collar crimes, the Federal Sentencing Commission abandoned the typical past practices of sentencing judges and instead formulated Guidelines that are wildly excessive and no longer balance the need for community safety with the need for that same community to remain economically efficient. The guiding principles of deterrence, rehabilitation, and incapacitation have been deemphasized in a new model that focuses primarily ...


Cybercrime: A Saudi And American Perspective, Hussam M. Alkanbashi May 2015

Cybercrime: A Saudi And American Perspective, Hussam M. Alkanbashi

Hussam M. Alkanbashi

Cybercrime is one of the greatest threats facing the International community. Defined as criminal activity perpetrated using computers and the internet, cybercrime has developed into a trillion dollar a year industry, affecting millions of people around the world, as well as countless businesses and the governments of every nation. With nearly 431 million victims projected in 2015, cyber related crime is one of if not the most frequent, costly and pervasive crimes worldwide. This article examines and assesses the effectiveness of Saudi and American Cyber Laws in deterring the growing global threats posed by cybercrime. The article studies cyber identity ...


The Moral Undercurrent Beneath The Regulatory Regime Of Investor Protection, Huhnkie Lee May 2015

The Moral Undercurrent Beneath The Regulatory Regime Of Investor Protection, Huhnkie Lee

Huhnkie Lee

No abstract provided.


Plausible Cause: Exploring The Limits Of Loss Causation In Pleading And Proving Market Fraud Claims Under Securities Exchange Act Section 10(B) And Sec Rule 10b-5, Robert N. Rapp May 2015

Plausible Cause: Exploring The Limits Of Loss Causation In Pleading And Proving Market Fraud Claims Under Securities Exchange Act Section 10(B) And Sec Rule 10b-5, Robert N. Rapp

Robert N Rapp

This article explores the critical role of loss causation in pleading and proving fraud-on-the-market claims in private actions under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 thereunder. Loss causation is a separate, essential, element of any private action under these provisions, and weighs heavily on securities fraud class actions brought under the fraud-on-the-market theory. Claims in these cases are based on a security market price said to be made artificial by reason of materially false or misleading information disseminated into an efficient market, and which resets to a correct level when a disclosure ...


Of Truth, Pragmatism, And Sour Grapes: The Second Circuit's Decision In Sec V. Citigroup Global Markets, Theodore D. Edwards Mar 2015

Of Truth, Pragmatism, And Sour Grapes: The Second Circuit's Decision In Sec V. Citigroup Global Markets, Theodore D. Edwards

Theodore D. Edwards

See manuscript


Of Truth, Pragmatism, And Sour Grapes: The Second Circuit’S Decision In Sec V. Citigroup Global Markets, Theodore D. Edwards Mar 2015

Of Truth, Pragmatism, And Sour Grapes: The Second Circuit’S Decision In Sec V. Citigroup Global Markets, Theodore D. Edwards

Theodore D. Edwards

No abstract provided.


The Law And Ethics Of High-Frequency Trading, Steven R. Mcnamara Mar 2015

The Law And Ethics Of High-Frequency Trading, Steven R. Mcnamara

Steven R. McNamara

Michael Lewis’s recent book Flash Boys has resurrected the controversy concerning “high-frequency trading” (HFT) in the stock markets. While HFT has been important in the stock markets for about a decade, and may have already peaked in terms of its economic significance, it touched a nerve with a public suspicious of financial institutions in the wake of the financial crisis of 2008-2009. In reality, HFT is not one thing, but a wide array of practices conducted by technologically adept electronic traders. Some of these practices are benign, and some even bring benefits such as liquidity and improved price discovery ...


Broker-Dealer: A Fiduciary By Any Other Name?, William Alan Nelson Ii Mar 2015

Broker-Dealer: A Fiduciary By Any Other Name?, William Alan Nelson Ii

William Alan Nelson II

Broker-dealers, unlike investment advisers, are not regulated as fiduciaries when providing investment advice, even though broker-dealers are holding themselves out as financial advisors and offering virtually identical services to investors. The lack of consistent regulation of financial service providers arises from the structure in which advice historically has been delivered. Financial services regulation since the Great Depression has developed along roughly dual tracks: laws governing the sale of financial products, which may or may not require that the products be suitable for the customer, and laws governing investment advice, which impose a fiduciary requirement on the adviser to act solely ...


Bridgefunding Is Crowdfunding For Startups Across The Private Equity Gap, Seth C. Oranburg Feb 2015

Bridgefunding Is Crowdfunding For Startups Across The Private Equity Gap, Seth C. Oranburg

Seth C Oranburg

Title III of the JOBS Act of 2012, which attempts to encourage entrepreneurship by allowing startups and small business to sell stock to the general public over the Internet through “crowdfunding,” is completely backwards. Its ceiling should be a floor—the $1 million limit should be inverted. By capping startups at raising $1 million from crowdfunding, the JOBS Act does not address the private equity gap, a fundamental problem in startup markets, and exposes unsophisticated investors to risk and fraud. This Article presents a regulatory framework premised on “bridgefunding,” an approach that this article develops to protect new investors by ...


Examining Success, Jonathan C. Lipson Feb 2015

Examining Success, Jonathan C. Lipson

Jonathan C. Lipson

Chapter 11 of the Bankruptcy Code presumes that managers will remain in possession and control of a corporate debtor. This presents an obvious agency problem: these same managers may have gotten the company into trouble in the first place. The Bankruptcy Code thus includes checks and balances in the reorganization process, one of which is supposed to be an “examiner,” a private individual appointed to investigate and report on the debtor’s collapse.

We study their use in practice. Extending prior research, we find that examiners are exceedingly rare, despite the fact that they should be “mandatory” in large cases ...


Buying Voice: Financial Rewards For Whistleblowing Lawyers, Nancy J. Moore, Kathleen Clark Feb 2015

Buying Voice: Financial Rewards For Whistleblowing Lawyers, Nancy J. Moore, Kathleen Clark

Nancy J Moore

“Buying Voice: Financial Incentives for Whistleblowing Lawyers”

Kathleen Clark and Nancy J. Moore

Abstract

The federal government relies increasingly on whistleblowers to ferret out fraud, and has awarded whistleblowers over $4 billion under the False Claims Act and the Dodd-Frank Wall Street reform and Consumer Protection Act. May lawyers ethically seek whistleblower rewards under these federal statutes? A handful of lawyers have tried to do so as FCA qui tam relators. They have not yet succeeded, but several court decisions suggest that they might be able to do so under confidentiality exceptions to state ethics law, which several courts have ...


Securities Fraud Damages Under The Pslra, Mohammed A. Misbah Feb 2015

Securities Fraud Damages Under The Pslra, Mohammed A. Misbah

Mohammed A Misbah

The United States Private Securities Litigation Reform Act ("PSLRA") implemented several substantive changes affecting certain cases brought under the federal securities laws. It was designed to reduce the number of “frivolous” securities lawsuits filed in federal courts. Prior to the PSLRA, a securities fraud case could proceed with minimal evidence and use pre-trial discovery to search for more evidence that strongly suggested a deliberate fraud. Under the PSLRA plaintiffs need such evidence simply in order to commence an action. This article seeks to explain what evidence is required of a plaintiff in a security fraud case, in order to defeat ...


The Vanishing Supervisor, James A. Fanto Feb 2015

The Vanishing Supervisor, James A. Fanto

James A. Fanto

This Article begins with two stories that are emblematic of related trends in broker-dealers: the importance of compliance officers and the significance of technology for the oversight of brokers and their activities. The stories also point to the lessening role of the supervisor who is “on the ground” in the branches of these firms. The diminished position of the mid-level supervisor is surprising, even shocking, in the federal regulation of broker-dealers. The history of this regulation reveals that Congress, the Securities and Exchange Commission (“SEC”) and self-regulatory organizations (“SROs”) like the Financial Industry Regulatory Authority (“FINRA”) sought to prevent broker ...


Take It Or Leave It: Unconscionability Of Mandatory Pre-Dispute Arbitration Agreements In The Securities Industry, William Alan Nelson Ii Feb 2015

Take It Or Leave It: Unconscionability Of Mandatory Pre-Dispute Arbitration Agreements In The Securities Industry, William Alan Nelson Ii

William Alan Nelson II

The pervasive use of mandatory pre-dispute arbitration agreements in the securities industry is a relatively new phenomenon. However, research reflects that an overwhelming majority of retail brokerage and investment advisory agreements include language requiring that all disputes between the customer and the broker-dealer / investment adviser be resolved through arbitration – most often with Financial Industry Regulatory Authority (FINRA) Dispute Resolution. Thus, only in rare instances can an investor open either a brokerage or investment advisory account without agreeing to submit to mandatory pre-dispute arbitration.

The enclosed article is the first to focus on the fairness of mandatory pre-dispute arbitration agreements through ...


Definitions, Religion, And Free Exercise Guarantees, Mark Strasser Jan 2015

Definitions, Religion, And Free Exercise Guarantees, Mark Strasser

Mark Strasser

The First Amendment to the United States Constitution protects the free exercise of religion. Non-religious practices do not receive those same protections, which makes the ability to distinguish between religious and non-religious practices important. Regrettably, members of the Court have been unable to agree about how to distinguish the religious from the non-religious—sometimes, the implicit criteria focus on the sincerity of the beliefs, sometimes the strength of the beliefs or the role that they play in an individual’s life, and sometimes the kind of beliefs. In short, the Court has virtually guaranteed an incoherent jurisprudence by sending contradictory ...


Managing Cyberthreat, Lawrence J. Trautman Jan 2015

Managing Cyberthreat, Lawrence J. Trautman

Lawrence J. Trautman Sr.

Cyber security is an important strategic and governance issue. However, because most corporate CEOs and directors have no formal engineering or information technology training, it is understandable that their lack of actual cybersecurity knowledge is problematic. Particularly among smaller companies having limited resources, knowledge regarding what their enterprise should actually be doing about cybersecurity can’t be all that good. My goal in this article is to explore the unusually complex subject of cybersecurity in a highly readable manner. First, an examination of recent threats is provided. Next, governmental policy initiatives are discussed. Third, some basic tools that can be ...


The Case For The Regulation Of Bitcoin Mining As A Security, Benjamin W. Akins, Jason M. Gordon, Jennifer L. Chapman Jan 2015

The Case For The Regulation Of Bitcoin Mining As A Security, Benjamin W. Akins, Jason M. Gordon, Jennifer L. Chapman

Benjamin W. Akins

Bitcoin is rapidly increasing in use throughout the world. Instrumental to the Bitcoin system, the process for introducing new bitcoin into the system is known as “mining.” Mining involves the use of powerful computer systems and complex, computational algorithms to verify or validate prior bitcoin transactions. The reward for successfully undertaking this process is the creation and award of new bitcoin to the miner. Bitcoin mining has become a tedious and difficult process. The race to verify transactions, and thereby earn bitcoin, necessitates more sophisticated processes for verification and greater computational power.

Many bitcoin miners band together in groups called ...


The Alternative Investment Market: Helping Small Enterprises Grow Public, Jonathan R. Hornok Jan 2015

The Alternative Investment Market: Helping Small Enterprises Grow Public, Jonathan R. Hornok

Jonathan R. Hornok

The Alternative Investment Market (“AIM”) of the London Stock Exchange is a twenty-year experiment in light securities regulation for small companies. The empirical literature shows that the AIM underperforms premier exchanges; however, this literature should not be taken as evidence that the AIM experiment is a failure, rather that the AIM serves a unique niche. In contrast to companies listing on premier exchange, those listing on the AIM do not undergo significant changes in ownership, control, and leverage after an initial public offering (“IPO”). Instead, these changes occur over time, if the company grows. This Article argues, based on the ...


The Bankruptcy Of The Securities Market Paradigm, Stephen P. Wink Jan 2015

The Bankruptcy Of The Securities Market Paradigm, Stephen P. Wink

Stephen P Wink

The current paradigm of securities market regulation in the United States rests on the Efficient Market Hypothesis, a theory that has been largely discredited by modern economics and behavioral finance. The Efficient Market Hypothesis assumes that the price of securities in the market accurately incorporates and reflects all available material information. Building on this notion, regulators have assumed that better information leads to healthier markets—and therefore regulation that enhances disclosure and transparency leads to healthier markets. Over time, this reasoning has elevated these tools, disclosure and transparency, to ends in themselves, despite the flaws in the Efficient Market Hypothesis ...


Are Investors’ Gains And Losses From Securities Fraud Equal Over Time?, Alicia J. Davis Jan 2015

Are Investors’ Gains And Losses From Securities Fraud Equal Over Time?, Alicia J. Davis

Alicia Davis

Leading securities regulation scholars argue that compensating securities fraud victims is inefficient because diversified investors that trade frequently (generally, institutional investors) are as likely to gain from trading in fraud-tainted stocks as they are to suffer harm from doing so. In other words, institutional investors have no expected net losses from fraud over the long term and are effectively hedged against fraud risk. Moreover, individual investors can protect themselves from fraud, as well, by investing through diversified institutional intermediaries. In this Article, I demonstrate, using both probability theory and observational and computer-simulated trading data, that the argument of the compensation ...