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Full-Text Articles in Securities Law
Insider Trading Law And The Ambiguous Quest For Edge, A. C. Pritchard
Insider Trading Law And The Ambiguous Quest For Edge, A. C. Pritchard
Michigan Law Review
A review of Sheelah Kolhatkar, Black Edge.
Getting The Word Out About Fraud: A Theoretical Analysis Of Whistleblowing And Insider Trading, Jonathan Macey
Getting The Word Out About Fraud: A Theoretical Analysis Of Whistleblowing And Insider Trading, Jonathan Macey
Michigan Law Review
The purpose of this Article is to show that corporate whistleblowing is not analytically or functionally distinguishable from insider trading when such trading is based on "whistleblower information," that is, the information a whistleblower might disclose to the authorities. In certain contexts, both insider trading and whistleblowing, if incentivized, would reduce the incidence of corporate pathologies such as fraud and corruption. In light of this analysis, it is peculiar that whistleblowing is encouraged and protected, while insider trading on whistleblower information is not only discouraged but criminalized. Often, insider trading will be far more effective than whistleblowing at bringing fraud …
Internalizing Outsider Trading, Ian Ayres, Stephen Choi
Internalizing Outsider Trading, Ian Ayres, Stephen Choi
Michigan Law Review
Investing in the United States has become a hobby for many. Individual ownership of equity, moreover, has increased over the past decade due in part to the introduction of internet-based trading. While providing the possibility for greater returns compared with bank savings accounts, among other investment alternatives, the public capital markets also pose greater risks for investors. Many individual investors lack both the resources and the incentive to analyze the value of any particular security in the market. Such investors thus trade at a systematic disadvantage relative to more informed parties. In response, regulators have asserted that certain informational disparities …
Insider Trading Deterrence Versus Managerial Incentives: A Unified Theory Of Section 16(B), Merritt B. Fox
Insider Trading Deterrence Versus Managerial Incentives: A Unified Theory Of Section 16(B), Merritt B. Fox
Michigan Law Review
Part I of this article assesses the social costs of a crude rule of thumb. Because section 16(b) applies to a given class of paired transactions, it deters both transactions based on inside information and transactions not so based. Each time section 16(b) is stretched to include a class of paired transactions, it deters some additional innocent transactions. This side effect will take the form of officers' and directors' purchasing fewer shares in their own companies and refusing to accept as large a portion of their compensation in a form based on share price. There are strong theoretical and empirical …
The Effect Of Insider Trading Rules On The Internal Efficiency Of The Large Corporation, Robert J. Haft
The Effect Of Insider Trading Rules On The Internal Efficiency Of The Large Corporation, Robert J. Haft
Michigan Law Review
Academics have hotly debated these justifications for years, and none of the three has achieved universal acclaim. This Article suggests another perspective: Prohibiting insider trading may enhance business decision-making in large corporations. With the exception of proponents of the Business Property view, analysts have focused on how an insider trading rule affects the national securities markets and traders in those markets. The internal governance of the large corporation is a different matter, one deserving separate consideration.
A Framework For The Allocation Of Prevention Resources With A Specific Application To Insider Trading, Michigan Law Review
A Framework For The Allocation Of Prevention Resources With A Specific Application To Insider Trading, Michigan Law Review
Michigan Law Review
This Note enumerates and analyzes the three principal forces that induce individuals to abide by societal laws. These forces, or elements of effective prevention, are then combined to form a framework of general deterrence that both identifies the areas in which society can introduce resources into the prevention plan and explains in a general manner what the effect of particular expenditures will be. In the final section of the Note, the framework is applied to a specific prohibited activity-insider trading in securities-to exemplify its utility in determining more effective applications of prevention resources.
Insider Liability For Short-Swing Profits: The Substance And Function Of The Pragmatic Approach, Michigan Law Review
Insider Liability For Short-Swing Profits: The Substance And Function Of The Pragmatic Approach, Michigan Law Review
Michigan Law Review
This Note will discuss the inquiries encompassed by the "possibility of abuse" test. It will also evaluate whether the test is properly employed only in determining that an unorthodox transaction is or is not a "purchase" or "sale" or whether the test could better be used as a threshold inquiry in all cases.
Manne: Insider Trading And The Stock Market, Harold Marsh Jr.
Manne: Insider Trading And The Stock Market, Harold Marsh Jr.
Michigan Law Review
A Review of Insider Trading and the Stock Market by Henry G. Manne
Sec Enforcement Of The Rule I0b-5 Duty To Disclose Material Information-Remedies And The Texas Gulf Sulphur Case, Edmund B. Frost
Sec Enforcement Of The Rule I0b-5 Duty To Disclose Material Information-Remedies And The Texas Gulf Sulphur Case, Edmund B. Frost
Michigan Law Review
On April 16, 1964, the Texas Gulf Sulphur Company announced one of the most significant mineral discoveries of the twentieth century-a major copper and zinc deposit near Timmins, Ontario, found by means of geophysical exploration and exploratory drilling. Unusual market activity prior to this announcement prompted a Securities Exchange Commission (SEC) investigation of insider stock transactions. In April 1965, the SEC brought suit against a group of Texas Gulf insiders, alleging that their purchase of stock on national exchanges before the disclosure of the information concerning the Timmins strike constituted a violation of section 10(b) of the Securities Exchange Act …
Convertible Securities And Section 16(B): The Persistent Problems Of Purchase, Sale, And Debts Previously Contracted, W. Richard Keller
Convertible Securities And Section 16(B): The Persistent Problems Of Purchase, Sale, And Debts Previously Contracted, W. Richard Keller
Michigan Law Review
In 1934, Congress enacted section 16(b) of the Securities Exchange Act in an effort to counteract the evils flowing from speculation in corporate securities by certain persons having information regarding the corporation's affairs or occupying positions of trust which permit manipulation of corporate policies. In general, section 16(b) permits the issuer, or one or more stockholders acting in its behalf, to recover any "short-swing" profit realized from purchases and sales (or sales and purchases) of the issuer's equity securities within a six-month period by directors, officers, or beneficial owners of more than ten per cent of any class of equity …
The Evolving Role Of Section 16(B), William H. Painter
The Evolving Role Of Section 16(B), William H. Painter
Michigan Law Review
The evils which section 16(b) of the Securities Exchange Act of 1934 was enacted to prevent are well known. As expressed in one of the committee reports, this so-called "shortswing trading" provision was intended "to protect the interests of the public against the predatory operations of directors, officers, and principal stockholders of corporations by preventing them from speculating in the stock of the corporations to which they owe a fiduciary duty." To curb such speculation, section 16(b) provides for recovery by the corporation, or by one or more stockholders acting in its behalf, of any "profit realized" from purchases and …
Insider Securities Dealings During Corporate Crises, Victor Brudney
Insider Securities Dealings During Corporate Crises, Victor Brudney
Michigan Law Review
The problem of assuring the fidelity of corporate insiders to the public investors in their enterprises figured prominently in legal literature and law reform proposals twenty-five or thirty years ago. In recent years, that question has attracted relatively less attention-in part because of the appearance or recognition of more significant problems in the relationship of publicly-held corporate enterprise to the national well-being, but in part also because of the development by courts, legislatures and administrative agencies-and to some extent by the insiders' community itself-of more exacting standards of loyalty. Recognition of broader obligations to their corporations and to public investors …
Corporations-Securities Exchange Act Of 1934-Equitable Principles As A Bar To Short Swing Recovery Under Section 16(B), Edward D. Goldstein S. Ed.
Corporations-Securities Exchange Act Of 1934-Equitable Principles As A Bar To Short Swing Recovery Under Section 16(B), Edward D. Goldstein S. Ed.
Michigan Law Review
Plaintiff corporation, after receiving authority from the Corporation Commissioner of California, gave to its key employees including defendants ( who were officers of the corporation) options to purchase certain stock of the plaintiff. The plan originated with the president of the corporation and the agreement took place at a time when the stock was unlisted. At no time subsequent to the stock being listed on a stock exchange did the plaintiff advise defendants of the short swing-requirements that arose from listing. Plaintiff's purpose in granting the option was to retain the services of its key employees and to induce these …