Securities Law Commons^™

In Search Of Safe Harbor: Suggestions For The New Rule 506(C), Usha Rodrigues

Scholarly Works

I devote most of this essay to exploring how, exactly, the Securities and Exchange Commission (“SEC”) should go about providing guidelines to implement the statutory requirement that issuers have a reasonable belief that a purchaser is accredited. The SEC has proposed rules, but these rules merely restate what Congress has already required, thus sidestepping Congress’s direction that the agency itself articulate some verification methods. Taking the SEC’s decidedly amorphous proposal to task, I recommend that the SEC offer two nonexclusive safe harbors for issuers to guide them in determining whether a natural person is an accredited investor. The paragraphs below …

Curbing Broker-Dealers' Abusive Sales Practices: Does Professor Jensen's Integrity Framework Offer A Better Approach?, Barbara Black

Faculty Articles and Other Publications

Retail investors, particularly senior citizens, need competent and careful investment advice more than ever before. Many must rely on the services provided by investment advice providers, including broker-dealers. Regulators have sounded the alarm about sales of risky, complex products to retail customers in search of better returns, especially senior citizens and retirees. Both the SEC and FINRA have identified abusive broker-dealer sales practices as priorities in their examinations of broker-dealers and have brought numerous enforcement actions against broker-dealers for sales practices that harm retail investors. These enforcement actions frequently allege both failures of the firms’ due diligence processes to assure …

Crowdfunding Securities, Andrew A. Schwartz

Publications

A new federal statute authorizes the online "crowdfunding" of securities, a new idea based on the concept of "reward" crowdfunding practiced on Kickstarter and other websites. This method of selling securities had previously been banned by federal securities law but the new CROWDFUND Act overturns that prohibition.

This Article introduces the CROWDFUND Act and explains that it can be expected to have two primary effects on securities law and capital markets. First, it will liberate startup companies to use peer networks and the Internet to obtain modest amounts of capital at low cost. Second, it will help democratize the market …

Keep It Light, Chairman White: Sec Rulemaking Under The Crowdfund Act, Andrew A. Schwartz

Publications

Title III of the JOBS Act, known as the CROWDFUND Act, authorizes the “crowdfunding” of securities, defined as raising capital online from many investors, each of whom contributes only a small amount. The Act was signed into law in April 2012, and will go into effect once the Securities and Exchange Commission (“SEC”) promulgates rules and regulations to govern the new marketplace for crowdfunded securities. This Essay offers friendly advice to the SEC as to how to exercise its rulemaking authority in a manner that will enable the Act to achieve its goals of creating an ultralow-cost method for raising …

The Long Road Back: Business Roundtable And The Future Of Sec Rulemaking, Jill E. Fisch

All Faculty Scholarship

The Securities and Exchange Commission has suffered a number of recent setbacks in areas ranging from enforcement policy to rulemaking. The DC Circuit’s 2011 Business Roundtable decision is one of the most serious, particularly in light of the heavy rulemaking obligations imposed on the SEC by Dodd-Frank and the JOBS Act. The effectiveness of the SEC in future rulemaking and the ability of its rules to survive legal challenge are currently under scrutiny.

This article critically evaluates the Business Roundtable decision in the context of the applicable statutory and structural constraints on SEC rulemaking. Toward that end, the essay questions …