Securities Law Commons^™

Duties, Disclosure, And Discord: Necessity To Resolve Circuit Split And Certainty Leidos Could Have Clarified For Litigation Strategy And Risk Allocation, Damian P. Gallagher

William & Mary Business Law Review

Securities litigation is a complex, specialized, and detailed practice of the law that depends on the expertise of courts and the Securities and Exchange Commission. From its inception, the securities laws, namely the Securities Act of 1933 and the Securities Exchange Act of 1934, provided a baseline expectation and prescription for the Securities and Exchange Commission to promulgate rules to fulfill the organic statute’s demands. Through time, technology, and the law generally, the securities laws have expanded significantly, not only asking, but also requiring, the courts to answer questions never contemplated by the original drafters of the laws to guide …

Information Asymmetry And The Protection Of Ordinary Investors, Kevin S. Haeberle

Faculty Publications

To some, the reductions in information asymmetry provided by the main securities-specific disclosure, fraud, and insider-trading laws help ordinary investors in meaningful ways. To others, whatever their larger social value, such reductions do little, if anything for these investors. For decades, these two sides of this investor-protection divide have mostly talked past each other.

This Article builds on economic theory to reveal something striking: The reductions in information asymmetry provided by the core securities laws likely impose a long-overlooked cost on buy-and-hold ordinary investors. More specifically, I explain why there is much reason to believe that the reductions take away …

A New Market-Based Approach To Securities Law, Kevin S. Haeberle

Faculty Publications

Modern securities regulation has three main areas, each of which is plagued by a core problem. Mandatory disclosure law leaves society with suboptimal disclosure, as the government calls for too little of some information (for example, management analysis of company prospects) and too much of other information (for example, data about trivial executive perks). Securities fraud law (specifically, its central fraud-on-the-market theory of reliance) yields damages at odds with any reasonable theory of compensation and deterrence. And insider trading law fails to achieve its ends because incentives to police illegal trading and tipping by executives are currently weak.

In this …

Making A Market For Corporate Disclosure, Kevin S. Haeberle, M. Todd Henderson

Faculty Publications

It has long been said that market forces alone will result in a problematic under-sharing of information by public companies. Since the 1930s, the main regulatory response to this market failure has come in the form of the massive mandatory-disclosure regime that sits at the foundation of modern securities law. But this regime—especially when viewed along with its speech-chilling antifraud overlay—no doubt leaves society without all the corporate information from which it would benefit. The typical fix offered to the problem has been more of the same: add to the 100-plus-page list of what firms must disclose, often based on …

Evaluating Stock-Trading Practices And Their Regulation, Merritt B. Fox, Kevin S. Haeberle

Faculty Publications

High-frequency trading, dark pools, and the practices associated with them have come under tremendous scrutiny lately, giving rise to much hot rhetoric. Missing from the discussion, however, is a principled, comprehensive standard for evaluating such practices and the law that governs them. This Article fills that gap by providing a general framework for making serious normative judgments about stock-trading behavior and its regulation. In particular, we argue that such practices and laws should be evaluated with an eye to the secondary trading market's impact on four main aspects of our economy: the use of existing productive capacity, the allocation of …

Much Ado About Nothing: The Limits Of Liability For Item 303 Omissions And The Circuit Split That Never Was, Brian Currie

William & Mary Business Law Review

The implied private action for violations of SEC Rule 10b-5 has a contentious history. When plaintiffs base such actions on representations of forward-looking information, however, the stakes are even higher. Recently, the federal circuit courts revisited this divisive issue while deciding whether an omission from required disclosure of Management’s Discussion and Analysis (MD&A) of financial conditions and results of operations. The apparent disparity between the federal circuit courts has caused great consternation and uncertainty in the corporate legal sphere.

This Note will examine the origins and controversial history of Rule 10b-5 private actions, discuss the treatment of MD&A omissions throughout …

Outside A Black Box: Court And Regulatory Review Of Investment Valuations Of Hard-To-Value Securities, Salvatore Massa

William & Mary Business Law Review

Valuation is a critical function of investment advisers that has significant implications for both clients and advisers. One potential risk associated with valuation is that an investment adviser may abuse its position in valuing portfolio assets to accrue higher management and incentive fees to the detriment of clients. Although the valuation function may be viewed as an objective exercise, adviser valuations become subject to greater levels of discretion for hard-to-value securities, making determinations of adviser abuse less clear. Depending on the transparency of the adviser, the valuation process itself may become a black box to the client. Securities and Exchange …

Information-Dissemination Law: The Regulation Of How Market-Moving Information Is Revealed, Kevin S. Haeberle, M. Todd Henderson

Faculty Publications

No abstract provided.

Chinese Regulation Of Issuer Earnings Forecasts: Recommendations For An Ex Ante Legal Framework, Chengxi Yao

William & Mary Business Law Review

No abstract provided.

Stock-Market Law And The Accuracy Of Public Companies’ Stock Prices, Kevin S. Haeberle

Faculty Publications

The social benefits of more accurate stock prices—that is, stock-market prices that more accurately reflect the future cash flows that companies are likely to produce—are well established. But it is also thought that market forces alone will lead to only a sub-optimal level of stock-price accuracy—a level that fails to obtain the maximum net social benefits, or wealth, that would result from a higher level. One of the principal aims of federal securities law has therefore been to increase the extent to which the stock prices of the most important companies in our economy (public companies) contain information about firms’ …

The Cost Of Securities Fraud, Urska Velikonja

William & Mary Law Review

Under the dominant account, fraudulent financial reporting by public firms harms the firms' shareholders and, more generally, capital markets. This Article contends that the account is incomplete. In addition to undermining investor confidence, misreporting distorts economic decision making by all firms, both those committing fraud and those not. False information impairs risk assessment by those who provide human or financial capital to fraudulent firms, the firms' suppliers and customers, and thus misdirects capital and labor to subpar projects. Efforts to hide fraud and avoid detection further distort fraudulent firms' business decisions, as well as decisions by their rivals, who mimic …

Insider Trading, Informed Trading, And Market Making: Liquidity Of Securities Markets In The Zero-Sum Game, Stanislav Dolgopolov

William & Mary Business Law Review

This Article reexamines the nexus of relationships among informed transactions, information asymmetry, and liquidity of securities markets in the context of public policy debates about insider trading and its regulation.The Article analyzes this nexus, with the emphasis on recent empirical studies and developments in the securities industry, from a variety of perspectives and considers the validity of the alleged link between insider trading—as opposed to other forms of informed trading—and market liquidity as a justification for the existence of regulation.

Betting The Farm: The Tic Turf War And Why Tics Constitute Investment Contracts Under Federal Securities Laws, David Rich

William & Mary Business Law Review

No abstract provided.

No Good Deed Goes Unpunished? Establishing A Self-Evaluating Privilege For Corporate Internal Investigations, Theodore R. Lotchin

William & Mary Law Review

No abstract provided.

Technological Evolution And The Devolution Of Corporate Financial Reporting, Donald C. Langevoort

William & Mary Law Review

No abstract provided.

An Economic Analysis Of The Private Securities Litigation Reform Act: Auctions As An Efficient Alternative To Judicial Intervention, Charles H. Gray

William & Mary Law Review

No abstract provided.

The Sec's Suspension And Bar Powers In Perspective, Jayne W. Barnard

Faculty Publications

Enron has brought about demands from many quarters to grant the Securities and Exchange Commission (SEC) new powers. Among the powers the SEC now seeks is the power to bar or suspend securities law violators from serving as an oflicer or director of any public company. Currently, the law assigns this power only to federal district courts. In this Essay, Professor Barnard traces the history of the current law; examining why Congress has expressly withheld suspension and bar powers from the SEC. She then argues that the courts have exercised their suspension and bar powers wisely, and that recent developments …

From Horse Trading To Insider Trading: The Historical Antecedents Of The Insider Trading Debate, Paula J. Dalley

William & Mary Law Review

No abstract provided.

The Employee As Investor: The Case For Universal Application Of The Federal Securities Laws To Employee Stock Ownership Plans, Sean S. Hogle

William & Mary Law Review

No abstract provided.

When Is A Corporate Executive "Substantially Unfit To Serve"?, Jayne W. Barnard

Faculty Publications

The recently enacted Securities Enforcement Remedies and Penny Stock Reform Act of 1990 provides that, in an SEC enforcement action, a federal court may enjoin or "disbar" the defendant from serving in the future as an officer or director of a public company. A court may enter such an order if it finds that the defendant is "substantially unfit" to serve as a corporate executive; the Act, however, does not define "substantial unfitness." In this Article Professor Jayne Barnard provides a framework for defining this term and identifying the defendants to which the Remedies Act should apply. Professor Barnard begins …

Materiality And The Efficient Capital Market Model: A Recipe From The Total Mix, Roger J. Dennis

William & Mary Law Review

No abstract provided.

Loan Participation Agreements As Securities: Judicial Interpretations Of The Securities Act Of 1933 And The Securities Exchange Act Of 1934, J. Thomas Cookson

William & Mary Law Review

No abstract provided.

Regulation D: Coherent Exemptions For Small Businesses Under The Securities Act Of 1933, Marvin R. Mohney

William & Mary Law Review

No abstract provided.

Fairness Requirement In Section 3(A)(10) Of The Securities Act Of 1933, Bruce H. Matson

William & Mary Law Review

No abstract provided.

Rule 242 And Section 4(6) Securities Registration Exemptions: Recent Attempts To Aid Small Businesses, Susan E. Satkowski

William & Mary Law Review

No abstract provided.

Federal Legislation To Enhance Competition In The Securities Industry

William & Mary Law Review

No abstract provided.

Vicarious Liability For Securities Law Violations: Respondeat Superior And The Controlling Person Sections

William & Mary Law Review

No abstract provided.

Private Enforcement Of The Federal Proxy Rules: Remedial Alternatives

William & Mary Law Review

No abstract provided.

Regulation Of Pyramid Sales Ventures

William & Mary Law Review

No abstract provided.