Securities Law Commons^™

From Basic To Halliburton, M. Todd Henderson, Adam C. Pritchard

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Securities fraud class actions are big business for lawyers. Since 1996, nearly 4,000 suits have been filed, with the majority resulting in companies paying substantial settlements. The top 10 settlements alone totaled about $35 billion; plaintiffs' lawyers took home billions in fees. Companies paid their own lawyers similar sums for defending them. If spending these gigantic sums on lawyers deterred corporate fraud (that is, if they helped sort cases of actual fraud from mere business reverses), then that might be money well spent. But if lawyers are paid billions without reducing the probability or magnitude of corporate fraud, then from …

Market Efficiency And The Problem Of Retail Flight, Alicia J. Davis

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In 1950, 91 % of common stock in the U.S. was owned directly by individual inves­ tors. Today, that percentage stands at only 23%. The mass exodus of retail investors and their investment dollars has negative implications not only for capital formation and investor protection, but also for market efficiency. Individual investors are often assumed to be noise traders who distort stock prices and harm market functioning. Therefore, some argue that their withdrawal from the market should be of little concern; indeed, it should be celebrated. Recent empirical evidence calls this assertion of retail noise trading into doubt, and this …

Reverse Cross-Listings - The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya Khanna

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Studies have found that when a U.S. issuer lists abroad on a foreign exchange, its shares exhibit negative abnormal returns. This negative movement may be because the market expects that the foreign listing will facilitate undetectable insider trading on the foreign exchange or other conduct impermissible in the United States.

The Influence Of Arbitrator Background And Representation On Arbitration Outcomes, Adam C. Pritchard, Stephen J. Choi, Jill E. Fisch

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We study the role of arbitrator background in securities arbitration. We find that several aspects of arbitrator background are correlated with arbitration outcomes. Specifically, industry experience, prior experience as a regulator, and status as a professional or retired arbitrator are correlated with statistically significant differences in arbitration awards. The impact of these characteristics is affected by whether the arbitrator in question serves as the panel chair and by whether the parties to the arbitration are represented by counsel. Our findings offer some preliminary insights into the debate over possible arbitrator bias. On the one hand, they suggest that the party …

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

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No abstract provided.

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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No abstract provided.

Securities Regulation Of Alternative Litigation Finance, Wendy Gerwick Couture

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No abstract provided.

Crowdfunding's Impact On Start-Up Ip Strategy, Sean M. O'Connor

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This Paper proceeds in Part I by reviewing the crowdfunding landscape and its potential benefits for start-ups, especially with regard to IP strategies. Part II examines the provisions of the JOBS Act and argues that the disclosure requirements of the CROWDFUND Act title will make the latter less attractive than other start-up financing options and may negatively affect start-ups’ IP strategies, in part by risking the disclosure of enabling aspects of patentable inventions.

Part III explores issues arising from the widespread involvement of many potentially unsophisticated investors who have no connection to the start-up. This contrasts with current unsophisticated investors …

Opening The Floodgates Of Small Customer Claims In Finra Arbitration: Finra V. Charles Schwab & Co., Inc., Teresa J. Verges

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No abstract provided.

Downstream Securities Regulation, Anita K. Krug

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Securities regulation wears two hats. Its “upstream” side governs firms in connection with their obtaining financing in the securities markets. That is, it *1590 regulates firms' and issuers' offers and sales of securities, whether in public offerings to retail investors or in private offerings to institutional investors. Its “downstream” side, by contrast, governs financial services providers, who assist with investors' activities in those markets. Their services include providing advice regarding securities investments, as investment advisers do; aggregating investors' assets for purposes of enabling those investors to invest their assets collectively, as mutual funds do; and acting as “middlemen” between buyers …

'Quack Corporate Governance' As Traditional Chinese Medicine – The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against Party State Political Economic Power, Nicholas C. Howson

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From the start of the People’s Republic of China’s (PRC) “corporatization ” project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the China Securities Regulatory Commission (CSRC). Indeed, the Chinese corporate law system has been cannibalized by all - encompassing securities regulation directed at corporate governance, at least for companies with listed stock. This Article traces the path of that sustained intervention and makes a case — wholly contrary to the “quack corporate governance” critique much aired in the United States …

A Return To Old-Time Religion? The Glass-Steagall Act, The Volcker Rule, Limits On Proprietary Trading, And Sustainability, Douglas M. Branson

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Pursuant to directions contained in the Dodd-Frank Act (2010), five federal agencies collaborated to produce a 983 page rule limiting proprietary trading by financial institutions (the Volcker Rule, which becomes effective in summer, 2015). The Volcker Rule limits proprietary trading to no more than 3 percent of “Tier One” assets. The hoped for effects are that financial institutions will be strictly limited in trading for their own accounts. Some say, propelled by unbridled greed, U.S. financial institutions borrowed excessive amounts of money, inflating leverage ratios as high as 36 or 40 to 1, using the borrowed funds to engage in …