Securities Law Commons^™

Trust, Guilt, And Securities Regulation, Peter H. Huang

Publications

This Article analyzes the importance of trust in securities investing and how guilt about breaching such trust has implications for securities regulation. Both U.S. federal securities laws and the regulations of the National Association of Securities Dealers impose high standards of professional conduct upon securities professionals. But exactly what are and should be the legal responsibilities of securities professionals remain the subject of much debate. In particular, courts disagree over when broker-dealers are fiduciaries of their clients. A legal consequence of a fiduciary relationship is a duty of fair dealing. This Article is the first to analyze the emotional, moral, …

Recent Cases, Law Review Editor

Vanderbilt Journal of Transnational Law

Remedies--Fair Labor Standards Act--Private Damage Suit Unavailable to Redress Violations of Child Labor Provisions of the Fair Labor Standards Act

Securities Regulation--Commercial Paper--Promissory Notes with Maturity Not Exceeding Nine Months but Offered to Public as Investment Are "Securities" Within Section 3(a)(10) of the 1934 Act.

Securities Regulation--Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5--A Reorganization in the Form of a Tripartite Merger in Which There Is No Change in the Total Assets Represented by a Share of Stock Does Not Involve a "Purchase or Sale" Within the Meaning of Section 10(b) of The Securities Exchange Act …

Economic Suicide: The Collision Of Ethics And Risk In Securities Law, Barbara Black, Jill I. Gross

Elisabeth Haub School of Law Faculty Publications

The first part of this article looks at whether there are any legal principles derived from regulation or the case law to support an “economic suicide” claim. The second part of the article reviews arbitrators' awards to determine whether arbitrators do, in fact, decide favorably on economic suicide claims. The article also looks at some arbitrators' awards that appear to recognize an economic suicide claim to identify any factors that may lead arbitrators to award damages to the claimant. Finally, in the third part, we address whether policy considerations support an extension of recognized brokers' duties to include a duty …

Flaw In The Sarbanes-Oxley Reform: Can Diversity In The Boardroom Quell Corporate Corruption?, Steven A. Ramirez

Faculty Publications & Other Works

No abstract provided.

The Qualified Legal Compliance Committee: Using The Attorney Conduct Rules To Restructure The Board Of Directors, Jill E. Fisch, Caroline M. Gentile

All Faculty Scholarship

The Securities and Exchange Commission introduced a new corporate governance structure, the qualified legal compliance committee, as part of the professional standards of conduct for attorneys mandated by the Sarbanes-Oxley Act of 2002. QLCCs are consistent with the Commission’s general approach to improving corporate governance through specialized committees of independent directors. This Article suggests, however, that assessing the benefits and costs of creating QLCCs may be more complex than is initially apparent. Importantly, QLCCs are unlikely to be effective in the absence of incentives for active director monitoring. This Article concludes by considering three ways of increasing these incentives.

Petrochina Syndrome: Regulating Capital Markets In The Anti-Globalization Era, Stephen F. Diamond

Faculty Publications

To explore this new social fracture and its challenge to the legitimacy of Anglo-American capitalism, this Article presents a case study of the attempt by the Chinese government and major Wall Street investment banks to complete an initial public offering by a major Chinese corporation. Their efforts represented a classic example of the effort to build a new global capitalist order from above without significant concern for the legitimation question. And, as we shall see, the effort was met from below with a vigorous social response. Thus, I suggest that a kind of syndrome, the PetroChina Syndrome if you will, …

Reforming Securities Class Actions From The Bench: Judging Fiduciaries And Fiduciary Judging, Lisa L. Casey

Journal Articles

The attorneys' fees awarded to plaintiffs’ counsel in securities fraud class actions have generated controversy for years. Critics have claimed that enormous fee awards come at the expense of defrauded investors and simply spur extortionate lawsuits against issuers and other potential deep pocket defendants. Commentators also have raised concerns that plaintiffs' class action lawyers manipulated class representatives, persons who had little incentive to monitor class counsel’s activities.

To address these concerns, Congress enacted the Private Securities Litigation Reform Act ("PSLRA"). Among other things, the statute sought to protect absent class members by giving control of the litigation to lead plaintiffs …

Investor Skepticism V. Investor Confidence: Why The New Research Analyst Reforms Will Harm Investors, John L. Orcutt

Law Faculty Scholarship

Part I of this Article provides an overview of research analysts and their basic functions, including a discussion of sell-side analysts' role in the market's recent boom and bust. Part II examines the conflicts of interest that have plagued sell-side research, and Part III reviews the Regulatory Actions that are meant to address these conflicts. In Part IV, the author will make the case for encouraging, rather than lessening, investor skepticism in sell-side research and will explain why the Regulatory Actions are not likely to improve the performance of sell-side analysts. Finally, Part V will offer a simpler proposal to …

Sec Enforcement Heuristics: An Empirical Inquiry, Randall Thomas, James D. Cox

Vanderbilt Law School Faculty Publications

This Article examines the overlap between SEC securities enforcement actions and private securities fraud class actions. We begin with an overview of data concerning all SEC enforcement actions from 1997 to 2002. We find that the volume of SEC enforcement proceedings is relatively modest. We next examine the scope of the recently enacted "Fair Fund" provision that authorizes the SEC to designate civil penalties it recovers from defendants to benefit defrauded private investors. We conclude that this provision offers only limited potential relief for private investors. We complete this Part of the Article with an analysis of the serious resource …

The Securities Acts' Treatment Of Notes Maturing In Less Than Nine Months: A Solution To The Enigma, Wendy Gerwick Couture

Articles

No abstract provided.

Who "Caused" The Enron Debacle?, David K. Millon

Washington and Lee Law Review

No abstract provided.

Liability For "Causing" Violations Of The Federal Securities Laws: Defining The Sec's Next Counterattack In The Battle Of Central Bank, Gregory E. Van Hoey

Washington and Lee Law Review

No abstract provided.

"Up The Ladder" And Over: Regulating Securities Lawyers-Past, Present & Future, Theodore Sonde, F. Ryan Keith

Washington and Lee Law Review

No abstract provided.

Keeping The Wheels On The Wagon: Observations On Issues Of Legal Ethics For Lawyers Representing Business Organizations, Irma S. Russell

Faculty Works

No abstract provided.

Making Markets: Network Effects And The Role Of Law In The Creation Of Strong Securities Markets, Robert B. Ahdieh

Faculty Scholarship

As Russia and other formerly socialist states construct market economies, the appearance of strong securities markets remains an unfulfilled expectation. Notwithstanding broad privatization of state-owned enterprises and the elimination of industrial subsidies - essential precursors to demand for capital-raising securities markets - stock markets in Central and Eastern Europe remain illiquid, inefficient, and unreliable.

Strong securities markets do not, it seems, neatly follow from the welfare-maximizing behavior of individuals and institutions. Nor can the appearance of securities markets be effectively dictated by government decree. Post-communist securities market transition therefore presents a puzzle: Do markets emerge, or must they be created? …

Double Dipping: The Cross-Border Taxation Of Stock Options, Jeffrey M. Colon

Faculty Scholarship

Once awarded exclusively to upper management, stock options are now granted increasingly to rank-and-file employees and are becoming a greater component of employee compensation. The expanding use of stock options is undoubtedly due in part to the large increase in equity prices over the last twenty years. Further fueling the demand was the Internet start-up boom of the late 1990s, the spectacular financial success of many technology and computer companies, notably Microsoft and Oracle, and the well- publicized lucre acquired by their employees. The collapse of the initial public offerings market for Internet start-up companies at the dawn of the …

Securities Law: Section 307 Of The Sarbanes-Oxley Act: Irreconcilable Conflict With The Aba's Model Rules And The Oklahoma Rules Of Professional Conduct?, Jennifer Wheeler

Oklahoma Law Review

No abstract provided.

Takeover Defense When Financial Markets Are (Only) Relatively Efficient, Michael L. Wachter

All Faculty Scholarship

This paper evaluates the impact of developments in the understanding of asset value pricing for alternative legal standards for takeover defenses: the management discretion and the shareholder rights positions. Both sides place considerable, albeit implicit, reliance on alternative views of the efficiency of financial markets. Developments in finance theory show that when financial markets are only "relatively efficient," stock prices can incorrectly value the corporation at any point in time, at the same time as investors cannot outperform the market on an ongoing basis. I focus on financial market anomalies arising from the failure of the capital asset pricing model …

Defeating Class Certification In Securities Fraud Actions, Kermit Roosevelt Iii

All Faculty Scholarship

No abstract provided.

Is There A Role For Lawyers In Preventing Future Enrons?, Jill E. Fisch, Kenneth M. Rosen

All Faculty Scholarship

Following the collapse of the Enron Corporation, the ethical obligations of corporate attorneys have received increased scrutiny. The Sarbanes-Oxley Act of 2002, enacted in response to calls for corporate reform, specifically requires the Securities and Exchange Commission to address the lawyer’s role by requiring covered attorneys to “report up” evidence of corporate wrongdoing to key corporate officers, and, in some circumstances, to the board of directors. Failure to “report up” subjects a lawyer to liability under federal law.

This Article argues that the reporting up requirement reflects a second-best approach to corporate governance reform. Rather than focusing on the actors …

How To Fix Wall Street: A Voucher Financing Proposal For Securities Intermediaries, Stephen Choi, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

Accounting Firm Or Guarantor - The Third Circuit's Answer To Rule 10b-5'S Scienter Requirement In Accountant Liability Cases, Julie A. Boncarosky

Villanova Law Review

No abstract provided.

Enron, Sarbanes-Oxley And Accounting: Rules Versus Principles Versus Rents, William W. Bratton

Villanova Law Review

No abstract provided.

Misleading Employer Communications And The Securities Fraud Implications Of The Employee As Investor, Jennifer O'Hare

Villanova Law Review

No abstract provided.

Enron - When All Systems Fail: Creative Destruction Or Roadmap To Corporate Governance Reform?, Douglas M. Branson

Articles

This article raises the unthinkable proposition (for academics at least) that Enron may have been an aberration. The Enron debacle may have been the rare case in which nine, ten or more sets of monitors and gatekeepers failed. Alternatively, as with Tyco, WorldCom, Adelphia, Rite Aid or other celebrated corporate "busts," Enron may be the handiwork of one or two well placed wrongdoers, in this case, CFO Andrew Fastow. Enron then may not be the pathway to meaningful reform at all.

The article next proceeds to a critical review of Sarbanes-Oxley's principal provisions. The conclusion reached is that by and …

Spinning And Underpricing: A Legal And Economic Analysis Of The Preferential Allocation Of Shares In Initial Public Offerings , Sean J. Griffith

Faculty Scholarship

This Article investigates the preferential allocation, or “spinning,” of shares in initial public offerings. It begins by examining the offering process and the incentives of underwriters, issuers, and investors. Through this examination of the participants and the process, it locates the harm of spinning in the underpricing of initial public offerings. The Article then seeks to identify precisely which participants in the offering process are harmed by the practice and finally evaluates the most appropriate means of addressing this harm.

Corporate Control Transactions: Introduction, Edward B. Rock, Michael L. Wachter

All Faculty Scholarship

No abstract provided.

Enron, Sarbanes-Oxley And Accounting: Rules Versus Principles Versus Rents, William W. Bratton

All Faculty Scholarship

No abstract provided.

Aligning Incentives With Equity: Employee Stock Options And Rule 10b-5, Matthew T. Bodie

All Faculty Scholarship

When the Internet boom was in full swing and the stock markets skyrocketed to new levels, companies new and old used stock options to attract and retain employees. Implicit in those options was the promise that employees could participate in the growth of a company's value. However, as the scandals involving WorldCom, Enron, and Global Crossing demonstrate, corporate managers were not always honest with employees or public investors about the company's true value. Public investors can seek civil remedies for securities fraud through a private action under the Securities and Exchange Commission's Rule 10b-5. The Rule's purchase or sale requirement, …

Panel Presentation: Securities Regulation And Corporate Responsibility, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

What I want to do is talk about the big picture, as John suggested, and consider the likely spillover effects of Sarbanes-Oxley. I want to do this in a discretely administrative law-oriented way, taking two themes that were very visible and driving forces behind the legislation. The first, as Mary suggested in her opening remarks, is a question about federalism. It has been common for the last twenty years, at least, to trot out - as John just did - a distinction between federal and state spheres of competency. The SEC is on the disclosure side, while the substance of …