Securities Law Commons^™

Supreme Risk, Benjamin P. Edwards

Scholarly Works

While many have discussed the social issues that might arise because of a majority-conservative Supreme Court, one critical consequence of the current Court has been overlooked: the role of the Court in generating or avoiding systemic risk. For some time, systemic financial risk has been regulated by a mix of self-regulatory organizations (SROs), such as the Depository Trust Corporation, and federal regulators such as the Financial Stability Oversight Council (FSOC). However, the Court's recent jurisprudence now creates real risk that federal courts will declare keystone SROs unconstitutional because they do not fit neatly into an eighteenth-century constitutional framework.

SROs are …

The Fate Of State Investor Protection, Benjamin P. Edwards

Scholarly Works

In June 2019, the Securities & Exchange Commission made significant changes to the regulation of investment advice, issuing regulations and new interpretations of the Investment Advisers Act of 1940. Industry advocates have argued that states lack power to enact their own regulations on the theory that various federal statutes and regulations combine to preempt and sharply limit state authority. This article examines the current state of reforms around the country and the policy and legal arguments for and against limiting state efforts to raise the standards for investment advice.

Adversarial Failure, Benjamin P. Edwards

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Investors, industry firms, and regulators all rely on vital public records to assess risk and evaluate securities industry personnel. Despite the information's importance, an arbitration-facilitated expungement process now regularly deletes these public records. Often, these arbitrations recommend that public information be deleted without any true adversary ever providing any critical scrutiny to the requests. In essence, poorly informed arbitrators facilitate removing public information out of public databases. Interventions aimed at surfacing information may yield better informed decisions. Although similar problems have emerged in other contexts when adversarial systems break down, the expungement process to purge information about financial professionals provides …

Uncovering The Hidden Conflicts In Securities Class Action Litigation: Lessons From The State Street Case, Benjamin P. Edwards, Anthony Rickey

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Courts, Congress, and commentators have long worried that stockholder plaintiffs in securities and M&A litigation and their counsel may pursue suits that benefit themselves rather than absent stockholders or the corporations in which they invest. Following congressional reforms that encouraged the appointment of institutional stockholders as lead plaintiffs in securities actions, significant academic commentary has focused on the problem of “pay to play”—the possibility that class action law firms encourage litigation by making donations to politicians with influence over institutional stockholders, particularly public sector pension funds.

A recent federal securities class action in the District of Massachusetts, however, suggests that …

Conflicts & Capital Allocation, Benjamin P. Edwards

Scholarly Works

The regulatory structure for financial advice now tolerates incentives motivating financial advisors to manipulate and deceive retail investors. While scholars thus far have argued for ways to improve investor protections, the literature has largely ignored how these flawed incentives affect the economy.

This Article contends that these flawed incentives cause financial advisors to negatively affect capital allocation throughout the overall economy.

This Article draws on literature about manipulation and deception in principal-agent relationships to show how conflicts of interest cause the market for financial advisor services to generate excessive intermediation, driving harms to the real economy. This Article uses case …

Civil Liability And Remedies In Ohio Securities Transactions, Keith A. Rowley

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The Ohio Securities Act (“OSA”) was enacted in 1913 to “guard [ ] investors against fraudulent enterprises, to prevent sales of securities based only on schemes purely speculative in character, and to protect the public from swindling peddlers of worthless stocks in mere paper corporations.” The OSA, which is administered by the Ohio Division of Securities (“Division”) and enforced by both the Division and private litigants, regulates the sale and purchase of securities in Ohio. The OSA and the rules and regulations promulgated pursuant to it by the Division are designed both to encourage compliance by those who might otherwise …

They Toil Not, Neither Do They Spin: Civil Liability Under The Oregon Securities Law, Keith A. Rowley

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Under Oregon law, persons who sell securities in violation of statutory registration requirements, or by means of some misrepresentation or omission of material fact, may be liable to any person or entity who buys securities from or through them. Likewise, persons who buy securities by means of some misrepresentation or omission of material fact may be liable to any person or entity who sells securities to or through them. In addition to, or in lieu of, suing the person who committed the material misrepresentation or omission, a plaintiff may sue one or more persons or entities who might be vicariously …

Muddy Waters, Blue Skies: Civil Liability Under The Mississippi Securities Act, Keith A. Rowley

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The decade of the 1990s produced a series of actions by the United States Supreme Court and by Congress that, collectively, reduced the number of avenues by which plaintiffs relying on federal law may pursue alleged wrongdoers for securities fraud; imposed significant additional requirements on plaintiffs suing under federal securities law; preempted state registration requirements for several classes of securities; and curbed the availability of state courts as an alternative forum in which plaintiffs may pursue securities fraud claims. And yet, in spite of these changes, “Congress, the courts, and the SEC have made explicit that federal regulation was not …

Remarks, Golden Pen Award, Mary Beth Beazley

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Professor Beazley, then President of the Legal Writing Institute, joins her colleagues in presenting the inaugural Golden Pen Award to Arthur Levitt, Chairman of the United States Securities Exchange Commission, for his leadership in requiring plain language in financial disclosure documents, in this transcript of the presentation of the award at the National Press Club, Washington, D.C.

The Sky Is Still Blue In Texas: State Law Alternatives To Federal Securities Remedies, Keith A. Rowley

Scholarly Works

Recent actions by the United States Supreme Court and by Congress have reduced the number of avenues by which plaintiffs relying on federal law may pursue alleged wrongdoers for securities fraud and have imposed significant additional requirements on plaintiffs suing in federal court to recover from securities fraud. As a consequence, persons who claim injury from some material misrepresentation or omission in the purchase, sale, offer for purchase, or offer for sale securities, or who have suffered as a consequence of some other impropriety relating to such transactions, may find better options available in state court or under state law …