Securities Law Commons^™

The Tax Treatment Of Tokens: What Does It Betoken?, David J. Shakow

All Faculty Scholarship

Digital tokens have been used to raise substantial amounts of money. But little attention has been paid to the tax consequences surrounding their issuance and sale. There are significant potential tax liabilities lurking in the use of digital tokens. But, because of the anonymity inherent in the blockchain structures used for the issuance of tokens and payments for them, there is a significant question as to whether those tax liabilities will ever be collected.

The Case For Federal Preemption Of State Blue Sky Laws, Rutheford B. Campbell Jr.

Law Faculty Popular Media

In our market economy, imposing rules on capital formation makes economic sense. Well-constructed rules regarding capital formation can promote the efficient flow of capital to its highest and best use and prevent or ameliorate fraud or unfairness to investors. These rules, however, generate additional offering costs that may retard or in some cases completely choke off the flow of capital from investors to businesses. The problem with state blue sky laws is their registration requirements, which significantly impede efficient capital formation and provide no material economic or societal benefits, such as protection of investors from fraud.

The Case For Federal Pre-Emption Of State Blue Sky Laws, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

State blue sky laws—state laws that regulate a company’s offer and sale of securities—are a substantial barrier to businesses’ efficient access to external capital. The registration provisions in state blue sky laws have been especially harmful to small businesses, a vital component of our economy that may account for 30% of the nation’s employment. The costs associated with complying with more than fifty separate and independent obligations to register securities often exceed what small businesses can pay and thus may foreclose small businesses from the capital market. At the same time, requiring small businesses to comply with multiple registration regimes …

The Deregulation Of Private Capital And The Decline Of The Public Company, Elisabeth De Fontenay

Faculty Scholarship

From its inception, the federal securities law regime created and enforced a major divide between public and private capital raising. Firms that chose to “go public” took on substantial disclosure burdens, but in exchange were given the exclusive right to raise capital from the general public. Over time, however, the disclosure quid pro quo has been subverted: Public companies are still asked to disclose, yet capital is flooding into private companies with regulators’ blessing.

This Article provides a critique of the new public-private divide centered on its information effects. While regulators may have hoped for both the private and public …

Distributed Governance, Carla L. Reyes, Nizan Geslevich Packin, Bejamin Edwards

Faculty Journal Articles and Book Chapters

Distributed ledger technology enables disruption of traditional business organizations by introducing new business entities without the directors and officers of traditional corporate entities. Although these emerging entities offer intriguing possibilities, distributed entities may suffer significant collective action problems and expose investors to catastrophic regulatory and governance risks. Our essay examines key considerations for stakeholders and argues that distributed entities must be carefully structured to function effectively.

This essay breaks new ground by critically examining distributed entities. We argue that a distributed model is most appropriate when DLT solves a unique corporate governance problem. We caution against ignoring the lessons painstakingly …

Risk Of Regulatory Arbitrage: A Response To "Securities Regulation In Virtual Space", Wendy Gerwick Couture

Articles

In Securities Regulation in Virtual Space, Eric C. Chaffee explores the potential applicability of the securities laws to virtual transactions based on virtual activity and argues that, although many of these transactions likely qualify as “investment contracts” under S.E.C. v. W.J. Howey Co., they should be excluded under the context clause because, among other reasons, application of the securities laws would stifle creativity within this innovative space. This Response proposes a reframing of the Howey test as a response to the risk of regulatory arbitrage, argues that the context clause should only exclude transactions that do not pose such …

Deterring Holdout Creditors In A Restructuring Of Pdvsa Bonds And Promissory Notes (¿Cómo Disuadir A Acreedores 'Holdout' En Una Restructuración De Bonos Y Pagarés De Pdvsa?), Lee C. Buchheit, Mitu Gulati

Faculty Scholarship

The prospect of the potential mischief that may be caused by holdout creditors in a Venezuelan sovereign debt restructuring is probably the main reason why the Maduro administration has not attempted such an exercise. The next administration in Venezuela — whenever and however it may arrive — will not want for suggestions about how to minimize or neutralize this holdout creditor threat. This short article is another contribution to that growing literature. Were the Republic of Venezuela to acknowledge that there really is only one public sector credit risk in the country, and that the distinction between Republic bonds and …

Constraining Monitors, Veronica Root

Journal Articles

Monitors oversee remediation efforts at dozens, if not hundreds, of institutions that are guilty of misconduct. The remediation efforts that the monitors of today engage in are, in many instances, quite similar to activities that were once subject to formal court oversight. But as the importance and power of monitors has increased, the court’s oversight of monitors and the agreements that most often result in monitorships has, at best, been severely diminished and, at worst, vanished altogether.

The lack of regulation governing monitors is well documented; yet, the academic literature on monitorships to date has largely taken the state of …