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Full-Text Articles in Securities Law

Law, Share Price Accuracy, And Economic Performance: The New Evidence, Merritt B. Fox, Randall Morck, Bernard Yeung, Artyom Durnev Dec 2003

Law, Share Price Accuracy, And Economic Performance: The New Evidence, Merritt B. Fox, Randall Morck, Bernard Yeung, Artyom Durnev

Michigan Law Review

Mandatory disclosure has been at the core of U.S. securities regulation since its adoption in the early 1930s. For many decades, this fixture of our financial system was accepted with little examination. Over the last twenty years, however, mandatory disclosure has been subject to intensifying intellectual crosscurrents. Some commentators hold out the U.S. system as the standard for the world. They argue that adoption by other countries of a U.S.-styled system, with its greater corporate transparency, would enhance their economic performance. Other commentators, in contrast, insist that the U.S. mandatory disclosure regime represents a mistake, not a model. These crosscurrents …


Internalizing Outsider Trading, Ian Ayres, Stephen Choi Nov 2002

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 …


The Political Economy Of Statutory Reach: U.S. Disclosure Rules In A Globalizing Market For Securities, Merritt B. Fox Dec 1998

The Political Economy Of Statutory Reach: U.S. Disclosure Rules In A Globalizing Market For Securities, Merritt B. Fox

Michigan Law Review

This Article addresses the appropriate reach of the U.S. mandatory securities disclosure regime. While disclosure obligations are imposed on issuers, they are triggered by transactions:- the public offering of, or public trading in, the issuers' shares. Share transactions are taking o n an increasingly transnational character. The barriers to a truly global market for equities continue to lessen: financial information is becoming increasingly globalized and it is becoming increasingly inexpensive and easy to effect share transactions abroad. There are approximately 41,000 issuers of publicly traded shares in the world. For an ever larger portion of these issuers, there will be …


The Obsolescence Of Wall Street: A Contextual Approach To The Evolving Structure Of Federal Securities Regulation, Joel Seligman Feb 1995

The Obsolescence Of Wall Street: A Contextual Approach To The Evolving Structure Of Federal Securities Regulation, Joel Seligman

Michigan Law Review

As a matter of analytical style, this article illustrates a contextualist approach. For a considerable period of time, the dominant analytical style in corporate and securities .law has been a variant of economic, or law and economics, analysis. The virtue of this type of analysis is that it focuses on what its authors deem to be crucial variables and reaches conclusions derived from the core of a specific legal problem. The defect of this type of analysis is that so much is assumed or often assumed away.


Insider Trading Deterrence Versus Managerial Incentives: A Unified Theory Of Section 16(B), Merritt B. Fox Jun 1994

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 …


Looking A Gift Of Stock In The Mouth: Donative Transfers And Rule 10b-5, Carol J. Sulcoski Dec 1989

Looking A Gift Of Stock In The Mouth: Donative Transfers And Rule 10b-5, Carol J. Sulcoski

Michigan Law Review

This Note explores whether a gift of stock can constitute a "sale" for the purposes of section lO(b) of the 1934 Act and rule lOb-5 promulgated thereunder. Part I reviews the relevant 1934 Act provisions, and concludes that although the statute's language and legislative history do not mention gifts of stock as such, they support the inclusion of gifts within the statute's scope. Part II examines a limited line of cases holding that a bona fide charitable gift is not a sale under section 16(b) of the 1934 Act. This Part concludes that section 16(b) cases are not dispositive of …


Foreign Bribes And The Securities Acts' Disclosure Requirements, Michigan Law Review May 1976

Foreign Bribes And The Securities Acts' Disclosure Requirements, Michigan Law Review

Michigan Law Review

The Securities Act of 1933 and the Securities Exchange Act of 1934 require most major corporations to disclose to investors all material information concerning company operations. Although they were not intended to regulate the conduct of business, these disclosure obligations can have a deterrent effect upon improper corporate activities. The recent revelation that a significant number of corporations have been making bribes and similar payments abroad has created interest in the feasibility of employing the disclosure requirements to curtail this practice. This Note will show that, despite recent pressures for change, the Securities and Exchange Commission has continued to view …


Insider Liability For Short-Swing Profits: The Substance And Function Of The Pragmatic Approach, Michigan Law Review Jan 1974

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.


Investment Advice And The Fraud Rules, Robert N. Leavell Jun 1967

Investment Advice And The Fraud Rules, Robert N. Leavell

Michigan Law Review

Every day thousands of Americans are assaulted by mail, telephone, and personal contact with advice on how to invest their money for capital gains, often with dazzling reminders of the opportunity for great profits. If the advice is good, they may indeed one day have their treasure ship which will send their children to college or provide a round-the-world trip after retirement. If the advice is bad, they will of course learn by experience. But many of them will have to apply their lesson to a second inheritance or twenty years' savings. The quality of investment advice is therefore a …


Securities Regulation-Applicability Of Exchange Act Section 10(B) To Transaction Effected By Means Of Intrastate Telephone Call, Michael A. Warner Apr 1964

Securities Regulation-Applicability Of Exchange Act Section 10(B) To Transaction Effected By Means Of Intrastate Telephone Call, Michael A. Warner

Michigan Law Review

Plaintiff alleged that he had been defrauded in a sale of securities to the defendant. Plaintiff attempted to invoke section 10(b) of the Securities Exchange Act of 1984, which prohibits various fraudulent practices in securities trading. In order to state a cause of action under 10(b), it was necessary for plaintiff to allege that a means or instrumentality of interstate commerce had been used directly or indirectly in connection with the sale. The sale in this case had been effected through telephone conversations over wires located within the city of Philadelphia. However, the wires carrying the calls could be used …


A Reappraisal Of The Role Of Disclosure, Robert L. Knauss Feb 1964

A Reappraisal Of The Role Of Disclosure, Robert L. Knauss

Michigan Law Review

The objective of this paper is to assess the current role of disclosure in its various aspects in security regulation. Following a brief description of the current uses of disclosure in securities regulation, there are separate sections describing and evaluating (1) the obligation of disclosure imposed on issuers at the initial sale of securities, (2) the obligation of disclosure resting on issuers if they have securities which are traded, and (3) obligations of disclosure imposed on parties in the securities business other than issuers. This last section includes obligations of insiders, broker-dealers, and investment advisers, as well as duties of …


The Special Study Of Securities Markets Of The Securities And Exchange Commission, William L. Cary Feb 1964

The Special Study Of Securities Markets Of The Securities And Exchange Commission, William L. Cary

Michigan Law Review

Moved perhaps by a certain institutional egoism, the Securities and Exchange Commission welcomes this thorough symposium upon the Report of Special Study of Securities Markets. Although the product of a separate study group, this report has nevertheless been the focal point of debate throughout the Commission during the past eighteen months. Representing both an intensive and extensive inquiry into the securities markets, it is unquestionably the most ambitious and comprehensive study since the passage of the securities acts thirty years ago. It is not a sensational document-quite consciously. In our opinion, raising standards in the securities industry could best …


Current Problems In Securities Regulation, Robert N. Dorosin, Ira J. Jaffe, Rolfe A. Worden, James C. Lockwood, Willoughby C. Johnson Feb 1964

Current Problems In Securities Regulation, Robert N. Dorosin, Ira J. Jaffe, Rolfe A. Worden, James C. Lockwood, Willoughby C. Johnson

Michigan Law Review

This comment analyzes four areas of central significance to adequate protection for the investor: (1) qualifications of those in the securities industry who deal with the public; (2) dissemination of corporate publicity; (3) dissemination of investment advice; and (4) selling practices in the securities industry. The findings and recommendations of the Special Study are given special attention insofar as they bear upon the problems covered. In certain areas, however, recent developments in court and Commission decisions have brought about changes equally as significant as the findings and recommendations of the Special Study. Thus each section covers the background and recent …


Rule 10b-6: The Special Study's Rediscovered Rule, Jack M. Whitney Ii Feb 1964

Rule 10b-6: The Special Study's Rediscovered Rule, Jack M. Whitney Ii

Michigan Law Review

An attempt either to assign responsibility for the breakdown in communication or to secure a quantitative measure of the consequences of that breakdown would be bootless. I attempt here only to pinpoint some of the areas of seeming ambiguity within the rule, and to consider them in light of a variety of situations wherein, it is hoped, the problems will become clearer and more precise, thus facilitating the consideration of whether solutions are needed and what form they should take.


The Evolving Role Of Section 16(B), William H. Painter Feb 1964

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 …


Securities Regulation-Sec Rule 10b-5-Recovery By Corporation Induced By Fraud Of Insider To Issue Shares, Charles K. Dayton Dec 1963

Securities Regulation-Sec Rule 10b-5-Recovery By Corporation Induced By Fraud Of Insider To Issue Shares, Charles K. Dayton

Michigan Law Review

Trustees in reorganization of a corporation brought suit on its behalf to recover damages under section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 of the Securities and Exchange Commission, alleging that the corporation had been fraudulently induced by defendant, its comptroller, to issue stock for inadequate consideration. Also named as defendants were the American Stock Exchange and several banks and brokers, whose alleged complicity in the improper public distribution of the shares made them parties to the scheme to defraud the corporation. On a motion by all defendants but the comptroller to dismiss the complaint for …


Securities-Investment Advisers Act Of 1940-Antifraud Provisions Interpreted, Byron Bronston S.Ed. Apr 1963

Securities-Investment Advisers Act Of 1940-Antifraud Provisions Interpreted, Byron Bronston S.Ed.

Michigan Law Review

Defendant, Capital Gains Research Bureau, Inc., an investment advisory service, published a bulletin entitled "A Capital Gains Report," each issue of which advised approximately 5,000 subscribers as to the investment potential of a particular corporation's stock. On at least five occasions Capital Gains, and its president and sole stockholder, also a defendant, acquired some shares of a stock and, without revealing their interest therein, recommended its purchase in the bulletin. Following each recommendation, trading in the stock increased, the price rose, and, within a few days, defendants sold their shares at a profit. The Securities and Exchange Commission, alleging that …


Securities Exchange Act Of 1934--Cml Remedies Based Upon Illegal Extension Of Credit In Violation Of Regulation T, Robert G. Lane Mar 1963

Securities Exchange Act Of 1934--Cml Remedies Based Upon Illegal Extension Of Credit In Violation Of Regulation T, Robert G. Lane

Michigan Law Review

Following the stock market crash of 1929, there was considerable agitation for the regulation, and even the elimination, of the purchasing of securities on credit. Indeed, the extension of credit for the purchasing of securities became an issue in the 1932 presidential campaign and finally, in 1934, came under direct federal control. Although the federal regulations were intended to eliminate the hazards associated with the extension of credit for the purchasing of securities, all the available evidence indicates that the substantial amount of credit in the stock market was a significant factor in pushing up prices during the bull market, …


Antiturst Law-Exemptions For Regulated Industries - Applicability Of The Antitrust Laws To Stock Exchanges, Peter D. Byrnes S.Ed. Dec 1961

Antiturst Law-Exemptions For Regulated Industries - Applicability Of The Antitrust Laws To Stock Exchanges, Peter D. Byrnes S.Ed.

Michigan Law Review

Defendant, the New York Stock Exchange, directed its members to discontinue their direct private wire connections with plaintiffs who were non-member brokers. These private wire connections were utilized primarily for facilitating transactions in the over-the-counter market. Repeated requests by plaintiffs for reinstatement were ignored, and the defendant refused to apprise the plaintiffs of the reasons for its action. Plaintiffs then brought suit, seeking damages and injunctive relief pursuant to sections 4 and 16 of the Clayton Act. Maintaining that defendant's conduct violated section 1 of the Sherman Act, plaintiffs moved for summary judgment. Held, motion granted.6 Defendant does not …


Executive Compensation And Federal Securities Legislation, Myer Feldman, V. Henry Rothschild Jun 1957

Executive Compensation And Federal Securities Legislation, Myer Feldman, V. Henry Rothschild

Michigan Law Review

In this article we first consider the type of compensation plan or arrangement which must be registered with the Securities and Exchange Commission. We shall then outline the requirements for disclosing the plan and its terms, as imposed by federal securities legislation and administrative regulation thereunder.


Federal Jurisdiction - Securities And Exchange Commission - Application Of Rule X - 10b-5 To Transactions Involving Non-Securities, Richard Singer May 1957

Federal Jurisdiction - Securities And Exchange Commission - Application Of Rule X - 10b-5 To Transactions Involving Non-Securities, Richard Singer

Michigan Law Review

Plaintiff brought an action for damages and the cancellation of certain instruments under section 10 (b) of the Securities Exchange Act of 1934 and rule X-10B-5 promulgated thereunder by the Securities and Exchange Commission. She proved a series of interrelated acts which took place over a period of months by which the defendants fraudulently deprived her of both securities and other property. The defendants objected to the jurisdiction of the district court on the ground that rule X-10B-5 was not applicable to transactions involving non-securities. The district court retained jurisdiction on the theory that all of the acts complained of …


Securities Regulation-Civil Liability Under Rule X-10b-5 For Fraud In The Purchase Or Sale Of Securities, J. David Voss S.Ed. Apr 1956

Securities Regulation-Civil Liability Under Rule X-10b-5 For Fraud In The Purchase Or Sale Of Securities, J. David Voss S.Ed.

Michigan Law Review

On May 21, 1942 the Securities and Exchange Commission, pursuant to section 10(b) of the Securities Exchange Act of 1934, promulgated rule X-10B-5.2 The purpose of the new rule was apparently to close a loophole in the then existing pattern of regulation of the purchase and sale of securities. The loophole resulted from a gap between section 17(a) of the Securities Act of 1933, which prohibits the use of fraud in the sale of securities by any person, and section 15(c)(1) of the Securities Exchange Act of 1934, which prohibits the use of fraud in the sale or purchase of …


Corporations-Officers And Directors-Stock Option Incentive Employment Contracts For Corporation Executives, A. B. Perlin, Jr. S.Ed. Jun 1949

Corporations-Officers And Directors-Stock Option Incentive Employment Contracts For Corporation Executives, A. B. Perlin, Jr. S.Ed.

Michigan Law Review

In the past few decades considerable attention has been directed toward "piecework payment" for corporate executives; that is, compensation based largely upon results rather than upon past or expected performance. The stock option incentive employment contract' is one of the means utilized to achieve that desired objective.


Corporations -Liability Of Broker On Misleading Circulars Apr 1935

Corporations -Liability Of Broker On Misleading Circulars

Michigan Law Review

The possibilities of civil and criminal liability under the recent Securities Act of 1933 and the Securities Exchange Act of 1934 have caused considerable fear to those business groups which take part in the business of issuing and transferring corporate securities. The federal acts do subject the vendor of securities who induces sales by means of false or misleading prospectuses and circulars to a possibility of civil liability which was not present under the common law. In a recent Michigan case, the court reached substantially the objectives sought by these acts by applying the existing rules of common law in …