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Securities Law Commons

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Washington University in St. Louis

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Full-Text Articles in Securities Law

Why China Had To “Ban” Cryptocurrency But The U.S. Did Not: A Comparative Analysis Of Regulations On Crypto-Markets Between The U.S. And China, Rain Xie Jan 2019

Why China Had To “Ban” Cryptocurrency But The U.S. Did Not: A Comparative Analysis Of Regulations On Crypto-Markets Between The U.S. And China, Rain Xie

Washington University Global Studies Law Review

The cryptocurrency market grew from a $1.5 billion market capitalization in early 2013 to over $795 billion in January 2018. Bitcoin, an exemplar cryptocurrency, gained value from $0.08 before 2010 to over $17,000 per bitcoin in December 2017. While cryptocurrencies have campaigned for revolutionizing financial transactions, the crypto-market is plagued by nefarious minds, fleecing investors in frauds and Ponzi schemes. This crypto-mania therefore presents numerous legal and regulatory challenges that demand prompt and efficient responses. Nevertheless, the decentralized, anonymous nature of cryptocurrencies magnifies these challenges and has constantly outpaced the law’s ability to respond. To understand ...


Examining The Jpmorgan “Princeling” Settlement: Insight Into Current Foreign Corrupt Practices Act (Fcpa) Interpretation And Enforcement, Beverley Earle, Anita Cava Jan 2018

Examining The Jpmorgan “Princeling” Settlement: Insight Into Current Foreign Corrupt Practices Act (Fcpa) Interpretation And Enforcement, Beverley Earle, Anita Cava

Washington University Global Studies Law Review

Shortly after the November 2016 U.S. Presidential election, JP Morgan Chase and JP Morgan Securities (Asia Pacific) settled and signed a non-prosecution agreement (NPA) in which they agreed to pay over $264 million to the DOJ, SEC and the Federal Reserve. The entities acknowledged that they had engaged in quid pro quo arrangements with Chinese officials for a number of years, employing relatives deemed “princelings” in return for favored treatment. Although JP Morgan Chase had ended the program in 2013, evidence of willful and widespread violations of the FCPA resulted in little prosecutorial credit. We examine this and other ...


The Dragon And The Eagle: Reforming China’S Securities Ipo Laws In The U.S. Model, Pros And Cons, Stuart R. Cohn, Miao Yinzhi Jan 2018

The Dragon And The Eagle: Reforming China’S Securities Ipo Laws In The U.S. Model, Pros And Cons, Stuart R. Cohn, Miao Yinzhi

Washington University Global Studies Law Review

China is about to undergo a major reform of its securities offering and listing processes. Since the inception of China’s securities market in the early 1990s, the government has exercised tight control to determine which companies will be allowed to engage in initial public offerings and become listed on a national exchange. The system has led to both corruption and favoritism and has blocked numerable companies from access to capital markets. With the ascension in 2013 of Xi Jinping and Li Keqiang as the heads of the Chinese Communist Party and Premier, the government adopted reform of the market ...


Decentralized Public Ledger Systems And Securities Law: New Applications Of Blockchain Technology And The Revitalization Of Sections 11 And 12(A)(2) Of The Securities Act Of 1933, Kelsey Bolin Jan 2018

Decentralized Public Ledger Systems And Securities Law: New Applications Of Blockchain Technology And The Revitalization Of Sections 11 And 12(A)(2) Of The Securities Act Of 1933, Kelsey Bolin

Washington University Law Review

When Bitcoin launched in 2009, it was the first virtual cryptocurrency to gain popularity and attain widespread use. Much attention has been paid to Bitcoin’s well-publicized advances and setbacks as the world’s foremost virtual currency. Less attention has been paid, however, to the decentralized public ledger technology that enables Bitcoin to function. That technology is just as innovative as Bitcoin itself. Decentralized public ledgers are a revolution in digital data storage and have the “potential to fundamentally shift the way in which society operates.”

This Note will examine one such societal shift—a change in how shareholders access ...


Corporate Short-Termism And Intertemporal Choice, Robert J. Rhee Jan 2018

Corporate Short-Termism And Intertemporal Choice, Robert J. Rhee

Washington University Law Review

This paper presents an intertemporal model of short-termism. Critics have portrayed short-termism in broad brushstrokes as the bane of corporate governance. But short-termism does not have a self-evident, efficiency-based normative value. A simple application of a well-accepted asset valuation theory shows that short-termism is not per se inefficient. If profitable enough, a short-term strategy would be better than a long-term strategy. This intuition is a mathematical and financial fact. The model presented here is tested in a case study of Air Products and Chemicals, Inc. v. Airgas, Inc., a prominent and legally significant Delaware hostile takeover battle. Short-termism was a ...


Incentive For Sale: § 503(C) And Asset Sales Within The Southern District Of New York, Christopher Scavone Jan 2016

Incentive For Sale: § 503(C) And Asset Sales Within The Southern District Of New York, Christopher Scavone

Washington University Journal of Law & Policy

This Note examines the recent shift towards rejecting proposed Key Employee Incentive Plans within the Southern District of New York as highlighted by the Hawker and Residential Capital decisions, and why the current standard is inadequate to address the special concerns that arose in those two cases. Scavone first examines the historical basis for executive compensation in bankruptcy, the formulation of the 2005 BAPCPA amendments, and the cases that followed. Scavone then presents the Hawker and Residential Capital cases, followed by an analysis of why the application of § 503(c) as it currently stands was inadequate for the proposed asset ...


Why Firrea And Civil Enforcement Cannot Replace Individual Criminal Liability, Timothy Ly Jan 2016

Why Firrea And Civil Enforcement Cannot Replace Individual Criminal Liability, Timothy Ly

Washington University Journal of Law & Policy

This Note addresses the high burden of proving specific criminal intent within the context of the 2008 financial crisis. Ly analyzes the Department of Justice’s use of civil penalties under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and addresses their impact on deterring illegal behavior. Ly argues that FIRREA has failed to adequately deter illegal behavior and proposes a financial mismanagement law that would lower the criminal burden from specific intent to recklessness.


Abandoning The ‘Mosaic Theory’: Why The ‘Mosaic Theory’ Of Securities Analysis Constitutes Illegal Insider Trading And What To Do About It, Aaron S. Davidowitz Jan 2015

Abandoning The ‘Mosaic Theory’: Why The ‘Mosaic Theory’ Of Securities Analysis Constitutes Illegal Insider Trading And What To Do About It, Aaron S. Davidowitz

Washington University Journal of Law & Policy

This Note proposes that the mosaic theory is an unlawful method of securities analysis constituting illegal insider trading based on the tipper/tippee theory of liability established in Dirks v. SEC. This Note addresses the meaning and history of the mosaic theory as it has evolved over time and discusses the history of insider trading law in the United States in an effort to understand why the mosaic theory violates those laws. It analyzes the confluence of insider trading law and the mosaic theory, showing why the mosaic theory violates insider trading law. Finally, this Note identifies the costs and ...


Distortion Other Than Price Distortion, Urska Velikonja Jan 2015

Distortion Other Than Price Distortion, Urska Velikonja

Washington University Law Review

The fraud-on-the-market doctrine adopted in Basic Inc. v. Levinson (“Basic”) allows the plaintiff suing under Rule 10b-5 to satisfy the reliance requirement by showing that the market in which the security was traded was efficient and that she purchased the security at the market price during the period of the misrepresentation. If she succeeds, the plaintiff is entitled to two presumptions: first, that the misrepresentation distorted the price of that security, and second, that she purchased the security in reliance on that misrepresentation.

In Halliburton Co. v. Erica P. John Fund, Inc. (“Halliburton II”), the Supreme Court considered a direct ...


Slouching Towards Monell: The Disappearance Of Vicarious Liability Under Section 10(B), Ann M. Lipton Jan 2015

Slouching Towards Monell: The Disappearance Of Vicarious Liability Under Section 10(B), Ann M. Lipton

Washington University Law Review

Liability under section 10(b) of the Securities Exchange Act is one of the primary mechanisms for enforcing the federal securities laws. Section 10(b), however, prohibits only intentional or reckless deception, and there has never been consensus as to how to determine whether an organization, rather than a natural person, harbors the relevant mens rea. Traditionally, organizational liability under federal law is determined according to agency principles, and most courts pay lip service to the notion that agency principles govern under section 10(b). As this Article demonstrates, they do not.

Many section 10(b) actions involve “open-market” frauds ...


The Intersection Of Fee-Shifting Bylaws And Securities Fraud Litigation, William K. Sjostrom Jr. Jan 2015

The Intersection Of Fee-Shifting Bylaws And Securities Fraud Litigation, William K. Sjostrom Jr.

Washington University Law Review

This Article examines the intersection of fee-shifting bylaws and federal private securities fraud suits. Specifically, this Article hypothesizes about the effects fee-shifting bylaws would have, if enforceable, on private securities fraud litigation. It then turns to the validity of fee-shifting bylaws under federal law and concludes that they are invalid as applied to securities fraud claims. In light of this conclusion, this Article considers whether Congress should pass legislation to validate fee-shifting bylaws and determines that it should not.


Event Studies In Securities Litigation: Low Power, Confounding Effects, And Bias, Alon Brav, J. B. Heaton Jan 2015

Event Studies In Securities Litigation: Low Power, Confounding Effects, And Bias, Alon Brav, J. B. Heaton

Washington University Law Review

An event study is a statistical method for determining whether some event—such as the announcement of earnings or the announcement of a proposed merger—is associated with a statistically significant change in the price of a company’s stock. The main inputs to an event study are historical stock returns for the companies under study, benchmark returns like the return to the broader stock market, and standard statistical tests like t-tests that are used to test for statistical significance. In securities litigation and regulation, event studies are used primarily to detect the impact of disclosures of alleged fraud on ...


Federal Securities Fraud Litigation As A Lawmaking Partnership, Jill E. Fisch Jan 2015

Federal Securities Fraud Litigation As A Lawmaking Partnership, Jill E. Fisch

Washington University Law Review

In its most recent Halliburton II decision, the Supreme Court rejected an effort to overrule its prior decision in Basic Inc. v. Levinson. The Court reasoned that adherence to Basic was warranted by principles of stare decisis that operate with “special force” in the context of statutory interpretation. This Article offers an alternative justification for adhering to Basic—the collaboration between the Court and Congress that has led to the development of the private class action for federal securities fraud. The Article characterizes this collaboration as a lawmaking partnership and argues that such a partnership offers distinctive lawmaking advantages.

Halliburton ...


Market Intermediation, Publicness, And Securities Class Actions, Hillary A. Sale, Robert B. Thompson Jan 2015

Market Intermediation, Publicness, And Securities Class Actions, Hillary A. Sale, Robert B. Thompson

Washington University Law Review

Securities class actions play a crucial, if contested, role in the policing of securities fraud and the protection of securities markets. The theoretical understanding of these private enforcement claims needs to evolve to encompass the broader set of goals that underlie the securities regulatory impulse and the publicness of those goals. Further, a clear grasp of the modern securities class action also requires an updated understanding of how the role of market intermediation in securities transactions has reshaped the realities of securities litigation in public companies and the evolution of the fraud cause of action in the context of open-market ...


Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honigsberg, Robert J. Jackson Jr., Yu-Ting Forester Wong Jan 2015

Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honigsberg, Robert J. Jackson Jr., Yu-Ting Forester Wong

Washington University Law Review

One prominent justification for the mandatory disclosure rules that define modern securities law is that these rules encourage individual investors to participate in stock markets. Mandatory disclosure, the theory goes, gives individual investors access to information that puts them on a more equal playing field with sophisticated institutional shareholders. Although this reasoning has long been cited by regulators and commentators as a basis for mandating disclosure, recent work has questioned its validity. In particular, recent studies contend that individual investors are overwhelmed by the amount of information required to be disclosed under current law, and thus they cannot—and do ...


Price Impact, Materiality, And Halliburton Ii, Allen Ferrell, Andrew Roper Jan 2015

Price Impact, Materiality, And Halliburton Ii, Allen Ferrell, Andrew Roper

Washington University Law Review

The Supreme Court decision in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014), reaffirmed the availability of the fraud-on-the-market presumption of “reliance” for purposes of a Rule 10b-5 class certification. At the same time, the Court held that defendants could rebut the presumption if they could provide “direct evidence” that the alleged misrepresentations did not in fact impact the price of the security (i.e., a lack of price impact). In this Article we discuss various issues that have arisen in lower court rulings that have addressed Halliburton price impact arguments. These issues include the ...


Lies Without Liars? Janus Capital And Conservative Securities Jurisprudence, Donald C. Langevoort Jan 2013

Lies Without Liars? Janus Capital And Conservative Securities Jurisprudence, Donald C. Langevoort

Washington University Law Review

In Janus Capital Group, Inc. v. First Derivative Traders, the Supreme Court held that even if a mutual fund advisory firm had caused a lie about its late trading and market timing policies to appear in a prospectus issued by a mutual fund that it managed, it did not make a misrepresentation within the meaning of Rule 10b-5 because the prospectus in which the lie appeared was filed by and in the name of the mutual fund, not the adviser. According to the Court, the word “make” in Rule 10b-5 refers only to a statement by the person with ultimate ...


The Trouble With Basic: Price Distortion After Halliburton, Jill E. Fisch Jan 2013

The Trouble With Basic: Price Distortion After Halliburton, Jill E. Fisch

Washington University Law Review

Many commentators credit the Supreme Court’s decision in Basic, Inc. v. Levinson, which allowed courts to presume reliance rather than requiring individualized proof, with spawning a vast industry of private securities fraud litigation. Today, the validity of Basic’s holding has come under attack as scholars have raised questions about the extent to which the capital markets are efficient. In truth, both these views are overstated. Basic’s adoption of the fraud on the market presumption reflected a retreat from prevailing lower court recognition that the application of a reliance requirement was inappropriate in the context of impersonal public ...


Key Implications Of The Dodd-Frank Act For Independent Regulatory Agencies, Joel Seligman Jan 2011

Key Implications Of The Dodd-Frank Act For Independent Regulatory Agencies, Joel Seligman

Washington University Law Review

The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act both transcends and transforms financial regulation. The immediate setting of the law is by now a familiar one. By 2008, there was an urgent need for a fundamental restructuring of federal financial regulation, primarily based on three overlapping causes. First, an ongoing economic emergency initially rooted in our housing and credit markets, which has been succeeded by the collapse of several leading investment and commercial banks and insurance companies, dramatic deterioration of our stock market indices, and a rapidly deepening recession. Second, serious breakdowns in the enforcement and ...


Amputating The Long Arm Of The Law: An Analysis Of The U.S. Supreme Court's Decision In Morrison And Why § 10(B) Still Reaches Issuers Of Adrs, Paul B. Maslo Jan 2011

Amputating The Long Arm Of The Law: An Analysis Of The U.S. Supreme Court's Decision In Morrison And Why § 10(B) Still Reaches Issuers Of Adrs, Paul B. Maslo

Washington University Law Review

This Article reviews the conduct and effects tests and the Supreme Court‘s decision in Morrison. It then addresses the new transactional rule‘s impact on the application of the Exchange Act‘s antifraud provisions in several situations where courts before Morrison routinely allowed § 10(b) claims to proceed: (1) foreign-cubed actions (i.e., claims involving a foreign citizen‘s purchase of a foreign issuer‘s ordinary shares on a foreign exchange) where the fraud impacts U.S. investors or is executed in the U.S.; (2) cases involving a U.S. citizen‘s purchase of a foreign issuer‘s ...


A Proposed Fat-Tail Risk Metric: Disclosures, Derivatives, And The Measurement Of Financial Risk, Peter Conti-Brown Jan 2010

A Proposed Fat-Tail Risk Metric: Disclosures, Derivatives, And The Measurement Of Financial Risk, Peter Conti-Brown

Washington University Law Review

Accurately and precisely modeling financial risk is somewhat of a Holy Grail for financial theorists, regulators, and market participants. But like the Holy Grail, the location of a comprehensive model of risk remains unknown; some have even suggested that such a model is a figment of financial theorists’ imaginations. Nowhere has that disaster been more fully evident than in the recent failure of risk models to adequately prepare the marketplace for the collapse of the market for mortgage-backed securities and credit derivatives, and the financial crisis that followed. Because of the mistaken assumptions associated with some risk models, otherwise vigilant ...


Less Can Be More: Recent Examples Of Cooperation Between The United States And European Union On Securities Regulation, Dania S. Becker Jan 2009

Less Can Be More: Recent Examples Of Cooperation Between The United States And European Union On Securities Regulation, Dania S. Becker

Washington University Global Studies Law Review

No abstract provided.


Unsophisticated Wealth: Reconsidering The Sec's “Accredited Investor” Definition Under The 1933 Act, Wallis K. Finger Jan 2009

Unsophisticated Wealth: Reconsidering The Sec's “Accredited Investor” Definition Under The 1933 Act, Wallis K. Finger

Washington University Law Review

No abstract provided.


Legitimacy And Corporate Law: The Case For Regulatory Redundancy, Renee M. Jones Jan 2009

Legitimacy And Corporate Law: The Case For Regulatory Redundancy, Renee M. Jones

Washington University Law Review

This Article provides a democratic assessment of the corporate lawmaking structure in the United States. It draws upon the basic democratic principle that those affected by legal rules should have a voice in determining the substance of those rules. Although other commentators have noted certain undemocratic aspects of corporate law, this Article aims to present a more comprehensive assessment of the corporate regulatory regime. It departs from prior accounts by looking past the states' role to consider the ways that federal regulation shores up the legitimacy of the overarching structure. This focus on the federal role provides some comfort on ...


Special Purpose Acquisition Companies: Spac And Span, Or Blank Check Redux?, Daniel S. Riemer Jan 2007

Special Purpose Acquisition Companies: Spac And Span, Or Blank Check Redux?, Daniel S. Riemer

Washington University Law Review

No abstract provided.


Mutual Fund Expense Disclosures: A Behavioral Perspective, James D. Cox, John W. Payne Jan 2005

Mutual Fund Expense Disclosures: A Behavioral Perspective, James D. Cox, John W. Payne

Washington University Law Review

The last few years have not been kind to the mutual fund industry. To be sure, financial indices have improved with the collateral benefit of boosting investor optimism so that the net gain in assets under management by registered investment companies rose by more than ten percent in 2004 to reach $8.6 trillion at the end of the year. But the mutual fund scandals that were first unearthed in fall 2003, with the accusations of late trading involving the Canary Fund, have been compounded by further allegations of late trading involving other funds. These scandals have been joined by ...


A New Arrow In The Quiver Of Federal Securities Fraud Prosecutors: Section 807 Of The Sarbanes-Oxley Act Of 2002 (18 U.S.C. § 1348), Luke A. E. Pazicky Jan 2003

A New Arrow In The Quiver Of Federal Securities Fraud Prosecutors: Section 807 Of The Sarbanes-Oxley Act Of 2002 (18 U.S.C. § 1348), Luke A. E. Pazicky

Washington University Law Review

No abstract provided.


The New Uniform Securities Act, Joel Seligman Jan 2003

The New Uniform Securities Act, Joel Seligman

Washington University Law Review

This is a new Uniform Securities Act. Amendment of the earlier 1956 Act or RUSA would not have been wise given the different versions of the 1956 Act enacted by the States and given the Committee’s goal to seek adoption of the new Uniform Securities Act in all state jurisdictions.


Choice Of Regulatory Regimes And Related Issues Of Corporate Governance, Murray Weidenbaum Jan 2003

Choice Of Regulatory Regimes And Related Issues Of Corporate Governance, Murray Weidenbaum

Washington University Law Review

No abstract provided.


Foreword, Troy A. Paredes Jan 2003

Foreword, Troy A. Paredes

Washington University Law Review

No abstract provided.