Securities Law Commons^™

The Sec's Fight To Stop District Courts From Declaring Its Hearings Unconstiutional, Linda Jellum

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Can the Securities and Exchange Commission (SEC) unilaterally deny a United States citizen the right to challenge the constitutionality of the agency's administrative hearings in district court? The SEC thinks so, but it makes no sense for these constitutional challenges to be brought in the very proceeding that allegedly, and likely, violates the U.S. Constitution. The appellate courts mostly agreed with the SEC, until recently when the Fifth Circuit held that the district courts should hear these claims. Given this circuit split, this issue will soon reach the Supreme Court, making this Article extremely timely. The Securities Exchange Act of …

Shapeshifting Securities, Wendy Gerwick Couture

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Principles For State Prosecution Of Securities Crime In A Dual-Regulatory, Multi-Enforcer Regime, Wendy Gerwick Couture

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This article proposes principles for the exercise of prosecutorial discretion when prosecuting securities crime under state law. Securities transactions in the United States are subject to a dual-regulatory, multi-enforcer regime. Securities are dually regulated by the federal government and the states, with each regulatory scheme including both civil and criminal enforcement provisions. Those laws are multi-enforced at each level by a regulator, private parties, and prosecutors. And yet, the role of state prosecution of securities crime within this regime is undertheorized, and there is little guidance for state prosecutors about how their prosecutorial decisions affect this regime. This article, drawing …

Cyan, Reverse-Erie, And The Pslra Discovery Stay In State Court, Wendy Gerwick Couture

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Prosecuting Securities Fraud Under Section 17(A)(2), Wendy Gerwick Couture

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Citing Counsel's Opinion About The Merits Of Legal Proceedings In Sec Filings, Wendy Gerwick Couture

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Texas Gulf Sulphur: A Case Study On Responding To Market Rumors, Wendy Gerwick Couture

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This essay uses Texas Gulf Sulphur as a case study on an issue that companies continue to face today: whether, and how, to respond to market rumors. This essay analyzes the countervailing incentives that influence whether companies respond to market rumors, applies those pressures to the facts of Texas Gulf Sulphur, and concludes that counsel today would likely advise similarly situated companies to remain silent rather than respond to market rumors. Drawing therefrom, this essay argues that silence is not the socially optimal response and that the dueling pressures on companies should be adjusted to incentivize companies to respond to …

Optimal Issuer Disclosure Of Opinions, Wendy Gerwick Couture

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This Article adds to the scholarly literature about the optimal level of disclosure by issuers of securities by proposing a new theoretical framework that encompasses not only the choice between silence and disclosure, which has been widely discussed, but also the subsidiary decision between disclosure as an opinion and as a statement of fact, which has been ignored. This framework informs the Securities and Exchange Commission’s ongoing review of mandatory disclosure rules and contextualizes the potential impacts of the Supreme Court’s recent decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund,1 which clarified that differential liability standards …

Rest In Peace, Rule 505, Wendy Gerwick Couture

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After 37 years in existence,1 the Rule 505 exemption from registration has been repealed, effective May 22, 2017. This essay reviews the evolution of Rule 505 over its lifetime; examines Rule 505’s role within Regulation D and analyzes why that role eventually became obsolete; and argues that Rule 505 leaves behind a legacy that should continue to inform policy discussions about exemptions from registration.

The Shadow Of Free Enterprise: The Unconstitutionality Of The Securities & Exchange Commission's Administrative Law Judges, Linda Jellum

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Six years ago, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), for the first time giving the Securities and Exchange Commission (SEC) the power to seek monetary penalties through its in-house adjudication. The SEC already had the power to seek such penalties in federal court. With the Dodd-Frank Act, the SEC's enforcement division could now choose between an adjudication before an SEC Administrative Law Judge (ALJ) or a civil action before an Article III judge. With this new choice, the SEC realized a significant home-court advantage. For example, in 2014, the SEC's enforcement division prevailed …

Glass Half-Empty Approach To Securities Regulation, Wendy Gerwick Couture

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In this Article, I propose a novel approach, which I call the “glass-half-empty” approach, to analyze the appropriate boundaries of securities regulation. This approach assumes a baseline of “full” regulation and then analyzes which regulations should be stripped away because the costs exceed the benefits. This is the opposite of the traditional approach, which assumes a baseline of zero regulation, identifies a market failure, and then weighs the costs and benefits of regulatory intervention.

Although, in theory, the two approaches should reach the same conclusions about the appropriate bounds of securities regulation, the glass-half-empty approach yields new insights because it …

Risk Of Regulatory Arbitrage: A Response To "Securities Regulation In Virtual Space", Wendy Gerwick Couture

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In Securities Regulation in Virtual Space, Eric C. Chaffee explores the potential applicability of the securities laws to virtual transactions based on virtual activity and argues that, although many of these transactions likely qualify as “investment contracts” under S.E.C. v. W.J. Howey Co., they should be excluded under the context clause because, among other reasons, application of the securities laws would stifle creativity within this innovative space. This Response proposes a reframing of the Howey test as a response to the risk of regulatory arbitrage, argues that the context clause should only exclude transactions that do not pose such …

Price Impact Possibilities, Wendy Gerwick Couture

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Answering Halliburton Ii's Unanswered Question: Burdens Of Production And Persuasion On Price Impact At Class Certification, Wendy Gerwick Couture

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Professor Alan R. Bromberg And The Scholarly Role Of The Treatise, Wendy Gerwick Couture

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Class-Action Tolling, Federal Common Law, And Securities Statutes Of Repose: A Recommendation, Wendy Gerwick Couture

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This Essay focuses on a narrow, but potentially outcome determinative, question: Does the filing of a securities class action toll the three-year outer time limit applicable to claims under sections 11 and 12(a)(2) of the Securities Act and the five-year outer time limit applicable to claims under section 10(b) of the Securities Exchange Act, such that potential class members-after a decision on class certification-can assert an individual federal action, even if those outer time limits would have elapsed absent tolling? There is currently a circuit split on this issue, with the Tenth Circuit answering "yes" and the Second Circuit answering …

Materiality And A Theory Of Legal Circularity, Wendy Gerwick Couture

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This Article argues that the materiality doctrine, which lies at the heart of securities fraud, has the potential to operate as a self-fulfilling prophecy. This Article labels this phenomenon "legal circularity." In order to place the potential legal circularity of materiality in context among the various other legal doctrines that share this potential, this Article proposes a two part Theory of Legal Circularity. First, this Article proposes the following Legal Circularity Test to identify potentially circular doctrines: A legal doctrine is potentially circular if: (1) the legal doctrine incorporates the behavior or attitude of a population or person, either hypothetical …

False Statements Of Belief As Securities Fraud, Wendy Gerwick Couture

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Around The World Of Securities Fraud In Eighty Motions To Dismiss, Wendy Gerwick Couture

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The Collision Between The First Amendment And Securities Fraud, Wendy Gerwick Couture

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This Article seeks to correct the imbalance that occurs when the First Amendment and securities fraud collide. Under current precedent, securities analysts, credit rating agencies, and financial journalists are subject to differing liability standards depending on whether they are sued for defamation or for securities fraud. Under New York Times Co. v. Sullivan, First Amendment protections apply in the defamation context in order to prevent the chilling of valuable speech, yet courts have declined to extend these protections to the securities fraud context. This imbalance threatens to chill valuable speech about public companies. To prevent the dangerous chilling effect of …

The Pslra Discovery Stay Meets Complex Litigation: Five Questions Answered, Wendy Gerwick Couture

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Securities Regulation Of Alternative Litigation Finance, Wendy Gerwick Couture

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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

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

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The Falsity-Scienter Inference, Wendy Gerwick Couture

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Warning: Your Lcc Interest Might Be A Security, Wendy Gerwick Couture

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Price Fraud, Wendy Gerwick Couture

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Mixed Statements: The Safe Harbor's Rocky Shore, Wendy Gerwick Couture

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The Bank Bailout: A License For Sovereign Securities Fraud, Wendy Gerwick Couture

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