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Rule 10b-5

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Full-Text Articles in Securities Law

The Myth Of Morrison: Securities Fraud Litigation Against Foreign Issuers, Robert Bartlett, Matthew D. Cain, Jill E. Fisch, Steven Davidoff Solomon Jan 2019

The Myth Of Morrison: Securities Fraud Litigation Against Foreign Issuers, Robert Bartlett, Matthew D. Cain, Jill E. Fisch, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

Using a sample of 388 securities fraud lawsuits filed between 2002 and 2017 against foreign issuers, we examine the effect of the Supreme Court’s decision in Morrison v. National Australia Bank. We find that the description of Morrison as a “steamroller” substantially ending litigation against foreign issuers is a myth. Instead, we find that Morrison did not substantially change the type of litigation brought against foreign issuers, which both before and after Morrison focused on foreign issuers with a U.S. listing and substantial U.S. trading volume. While dismissal rates rose post-Morrison we find no evidence that ...


Like Moths To A Flame - International Securities Litigation After Morrison: Correcting The Supreme Court's Transactional Test, Marco Ventoruzzo Mar 2016

Like Moths To A Flame - International Securities Litigation After Morrison: Correcting The Supreme Court's Transactional Test, Marco Ventoruzzo

Marco Ventoruzzo

Because of the broad jurisdiction American courts have asserted in cases arising under the Securities Exchange Act of 1934, they have been called a Shangri-la for “foreign-cubed” class actions with little connection to the United States. Over the past forty years, the standards used by American courts to determine their jurisdiction in international securities disputes have evolved, culminating in the U.S. Supreme Court’s Morrison decision of 2010. The new transactional test promulgated in Morrison replaced all of its predecessor tests, from a test measuring whether the conduct in question took place in the United States to a test ...


Rebutting The Fraud On The Market Presumption In Securities Fraud Class Actions: Halliburton Ii Opens The Door, Victor E. Schwartz, Christopher E. Appel Feb 2016

Rebutting The Fraud On The Market Presumption In Securities Fraud Class Actions: Halliburton Ii Opens The Door, Victor E. Schwartz, Christopher E. Appel

Michigan Business & Entrepreneurial Law Review

In Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II), the United States Supreme Court reaffirmed the validity of the “fraud on the market” presumption underlying securities fraud class action litigation. This presumption is vital to bringing suits as class actions because it excuses plaintiffs from proving individual reliance on an alleged corporate misstatement on the theory that any public statements made by the company are incorporated into its stock price and consequently relied upon by all investors. Thus, the Court’s decision to uphold the validity of the presumption has been hailed as a significant victory for those ...


Beyond Dirks: Gratuitous Tipping And Insider Trading, Donna M. Nagy Jan 2016

Beyond Dirks: Gratuitous Tipping And Insider Trading, Donna M. Nagy

Articles by Maurer Faculty

Did an investment banker who gratuitously shared material nonpublic information with his brother, with no expectation of receiving anything in return, commit securities fraud? And is the investment banker's brother-in-law jointly liable for trading securities on the basis of what he knew to be gratuitous tips? The Supreme Court is poised to answer those questions in Salman v. United States, after steering clear of insider trading law for nearly two decades. It has been even longer still since the Court last addressed securities fraud liability relating to stock trading tips-it articulated a "personal benefit" test for joint tipper-tippee liability ...


Plausible Cause: Exploring The Limits Of Loss Causation In Pleading And Proving Market Fraud Claims Under Securities Exchange Act Section 10(B) And Sec Rule 10b-5, Robert N. Rapp May 2015

Plausible Cause: Exploring The Limits Of Loss Causation In Pleading And Proving Market Fraud Claims Under Securities Exchange Act Section 10(B) And Sec Rule 10b-5, Robert N. Rapp

Robert N Rapp

This article explores the critical role of loss causation in pleading and proving fraud-on-the-market claims in private actions under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 thereunder. Loss causation is a separate, essential, element of any private action under these provisions, and weighs heavily on securities fraud class actions brought under the fraud-on-the-market theory. Claims in these cases are based on a security market price said to be made artificial by reason of materially false or misleading information disseminated into an efficient market, and which resets to a correct level when a disclosure ...


Better Bounty Hunting: How The Sec's New Whistleblower Program Changes The Securities Fraud Class Action Debate, Amanda M. Rose Jan 2015

Better Bounty Hunting: How The Sec's New Whistleblower Program Changes The Securities Fraud Class Action Debate, Amanda M. Rose

Northwestern University Law Review

No abstract provided.


Disaggregated Classes, Benjamin P. Edwards Jan 2015

Disaggregated Classes, Benjamin P. Edwards

Faculty Scholarship

No abstract provided.


The Sitting Ducks Of Securities Class Action Litigation: Bio-Pharmas And The Need For Improved Evaluation Of Scientific Data, Stuart R. Cohn, Erin M. Swick Nov 2014

The Sitting Ducks Of Securities Class Action Litigation: Bio-Pharmas And The Need For Improved Evaluation Of Scientific Data, Stuart R. Cohn, Erin M. Swick

Stuart R. Cohn

Rule 10b-5, a powerful weapon against any publicly-listed company whose share price drops on adverse news, is particularly skewed against pharmaceutical and other bio-technology companies (bio-pharmas). It is not a coincidence that there is a disproportionate number of class actions filed against bio-pharmas. The volume and complexity of data underlying most bio-pharma cases create enormous outcome uncertainties, settlement pressures, and potentially huge contingent liabilities over substantial periods of time. The vulnerability and risks that bio-pharmas face in Rule 10b-5 class actions are unique among all publicly-traded industries, yet many cases proceed along traditional grounds without courts employing either their statutory ...


Halliburton, Basic And Fraud On The Market: The Need For A New Paradigm, Charles W. Murdock Sep 2014

Halliburton, Basic And Fraud On The Market: The Need For A New Paradigm, Charles W. Murdock

Charles W. Murdock

Summary: Halliburton, Basic and Fraud on the Market: The Need for a New Paradigm

If defrauded securities plaintiffs cannot bring a class-action lawsuit, there often will be no effective remedy since the amount at stake for individual plaintiffs is not sufficient to warrant the substantial costs of litigation. To surmount the problem of individualized reliance and establish commonality, federal courts for twenty-five years have been employing the Basic fraud-on-the-market theory which posits that, in an efficient market, investors rely on the integrity of the market price.

While class certification at one time was a matter of course, today it is ...


Janus Capital Group, Inc. V. First Derivative Traders: The Culmination Of The Supreme Court’S Evolution From Liberal To Reactionary In Rule 10b-5 Actions, Charles W. Murdock Feb 2013

Janus Capital Group, Inc. V. First Derivative Traders: The Culmination Of The Supreme Court’S Evolution From Liberal To Reactionary In Rule 10b-5 Actions, Charles W. Murdock

Charles W. Murdock

“Political” decisions such as Citizens United and National Federation of Independent Business (“Obamacare”) reflect the reactionary bent of several Supreme Court justices. But this reactionary trend is discernible in other areas as well. With regard to Rule 10b-5, the Court has handed down a series of decisions that could be grouped into four trilogies. The article examines the trend over the past 40 years which has become increasingly conservative and finally reactionary.

The first trilogy was a liberal one, arguably overextending the scope of Rule 10b-5. This was followed by a conservative trilogy which put a brake on such extension ...


The Tips Are For The Taking: The Supreme Court Limits Third Party Liability In Dirks V. Securities And Exchange Commission, W. Steven Shayer Jan 2013

The Tips Are For The Taking: The Supreme Court Limits Third Party Liability In Dirks V. Securities And Exchange Commission, W. Steven Shayer

Pepperdine Law Review

No abstract provided.


The Supreme Court And The Shareholder Litigant: Basic, Inc. V. Levinson In Context, Jayne W. Barnard Jan 2013

The Supreme Court And The Shareholder Litigant: Basic, Inc. V. Levinson In Context, Jayne W. Barnard

Pepperdine Law Review

No abstract provided.


The "In Connection With" Requirement Of Rule 10b-5, C. Edward Fletcher Iii Jan 2013

The "In Connection With" Requirement Of Rule 10b-5, C. Edward Fletcher Iii

Pepperdine Law Review

No abstract provided.


The Trouble With Basic: Price Distortion After Halliburton, Jill E. Fisch Jan 2013

The Trouble With Basic: Price Distortion After Halliburton, Jill E. Fisch

Faculty Scholarship at Penn Law

Many commentators credit the Supreme Court’s decision in Basic, Inc. v. Levinson, which allowed courts to presume reliance rather than requiring individualized proof, with spawning a vast industry of private securities fraud litigation. Today, the validity of Basic’s holding has come under attack as scholars have raised questions about the extent to which the capital markets are efficient. In truth, both these views are overstated. Basic’s adoption of the Fraud on the Market presumption reflected a retreat from prevailing lower court recognition that the application of a reliance requirement was inappropriate in the context of impersonal public ...


“Fine Distinctions” In The Contemporary Law Of Insider Trading, Donald C. Langevoort Jan 2013

“Fine Distinctions” In The Contemporary Law Of Insider Trading, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

William Cary’s opinion for the SEC in In re Cady, Roberts & Co. built the foundation on which the modern law of insider trading rests. This paper—a contribution to Columbia Law School’s recent celebration of Cary’s Cady Roberts opinion, explores some of these—particularly the emergence of a doctrine of “reckless” insider trading. Historically, the crucial question is this: how or why did the insider trading prohibition survive the retrenchment that happened to so many other elements of Rule 10b-5? It argues that the Supreme Court embraced the continuing existence of the “abstain or disclose” rule, and ...


Mapping The Future Of Insider Trading Law: Of Boundaries, Gaps, And Strategies, John C. Coffee Jr. Jan 2013

Mapping The Future Of Insider Trading Law: Of Boundaries, Gaps, And Strategies, John C. Coffee Jr.

Faculty Scholarship

The current law on insider trading is remarkably unrationalized because it contains gaps and loopholes the size of the Washington Square Arch. For example, if a thief breaks into your office, opens your files, learns material nonpublic information, and trades on that information, he has not breached a fiduciary duty and is presumably exempt from insider trading liability. But drawing a line that can convict only the fiduciary and not the thief seems morally incoherent. Nor is it doctrinally necessary.

The basic methodology handed down by the Supreme Court in SEC v. Dirks and United States v. O'Hagan dictates ...


Lies Without Liars? Janus Capital And Conservative Securities Jurisprudence, Donald C. Langevoort Jan 2013

Lies Without Liars? Janus Capital And Conservative Securities Jurisprudence, Donald C. Langevoort

Washington University Law Review

In Janus Capital Group, Inc. v. First Derivative Traders, the Supreme Court held that even if a mutual fund advisory firm had caused a lie about its late trading and market timing policies to appear in a prospectus issued by a mutual fund that it managed, it did not make a misrepresentation within the meaning of Rule 10b-5 because the prospectus in which the lie appeared was filed by and in the name of the mutual fund, not the adviser. According to the Court, the word “make” in Rule 10b-5 refers only to a statement by the person with ultimate ...


The New Uniform Statute Of Limitations For Federal Securities Fraud Actions: Its Evolution, Its Impact, And A Call For Reform, Anthony Michael Sabino Nov 2012

The New Uniform Statute Of Limitations For Federal Securities Fraud Actions: Its Evolution, Its Impact, And A Call For Reform, Anthony Michael Sabino

Pepperdine Law Review

No abstract provided.


Determining The Proper Pleading Standard Under The Private Securities Litigation Reform Act Of 1995 After In Re Silicon Graphics , Erin Brady Jul 2012

Determining The Proper Pleading Standard Under The Private Securities Litigation Reform Act Of 1995 After In Re Silicon Graphics , Erin Brady

Pepperdine Law Review

No abstract provided.


Bien Venue: Sec V. Johnson And The Policy For Broad Procedural Requirements In Public Securities Actions, Kelly Kylis Jan 2012

Bien Venue: Sec V. Johnson And The Policy For Broad Procedural Requirements In Public Securities Actions, Kelly Kylis

Catholic University Law Review

No abstract provided.


Like Moths To A Flame - International Securities Litigation After Morrison: Correcting The Supreme Court's Transactional Test, Marco Ventoruzzo Jan 2012

Like Moths To A Flame - International Securities Litigation After Morrison: Correcting The Supreme Court's Transactional Test, Marco Ventoruzzo

Journal Articles

Because of the broad jurisdiction American courts have asserted in cases arising under the Securities Exchange Act of 1934, they have been called a Shangri-la for “foreign-cubed” class actions with little connection to the United States. Over the past forty years, the standards used by American courts to determine their jurisdiction in international securities disputes have evolved, culminating in the U.S. Supreme Court’s Morrison decision of 2010. The new transactional test promulgated in Morrison replaced all of its predecessor tests, from a test measuring whether the conduct in question took place in the United States to a test ...


Martha Stewart Saved! Insider Violations Of Rule 10b-5 For Misrepresented Or Undisclosed Personal Facts, Joan Heminway Oct 2011

Martha Stewart Saved! Insider Violations Of Rule 10b-5 For Misrepresented Or Undisclosed Personal Facts, Joan Heminway

Joan M Heminway

This article analyses the criminal securities fraud charges brought against Martha Stewart. Stewart was acquitted of these charges by a federal district court judge in February 2004. Specifically, the article initially focuses on whether the securities fraud charges brought against Stewart were valid as a matter of prosecutorial discretion and substantive law and whether the court was correct in granting Stewart's motion for acquittal before handing the rest of her case to the jury for deliberation. The article then offers substantive and procedural observations about Rule 10b-5 cases like the one brought against Stewart.


Hell Hath No Fury Like An Investor Scorned: Retribution, Deterrence, Restoration, And The Criminalization Of Securities Fraud Under Rule 10b-5, Joan Heminway Oct 2011

Hell Hath No Fury Like An Investor Scorned: Retribution, Deterrence, Restoration, And The Criminalization Of Securities Fraud Under Rule 10b-5, Joan Heminway

Joan M Heminway

This brief article focuses attention on the ineffectual nature of prosecutions of corporations and their insiders - generally, officers and directors - for securities fraud under Rule 10b-5. Specifically, the article begins by briefly summarizing the nature of enforcement actions and related penalties under Rule 10b-5. Next, the article argues that, as currently conceived and executed, criminal enforcement actions under Rule 10b-5 are ineffective as a means of achieving retribution, as deterrents of undesirable behavior, and as enforcement vehicles that vindicate the policies underlying Rule 10b-5. As a means of addressing these criticisms, the article suggests possible enhancements to Rule 10b-5 prosecutions ...


Insider Trading, Congressional Officials, And Duties Of Entrustment, Donna M. Nagy Jan 2011

Insider Trading, Congressional Officials, And Duties Of Entrustment, Donna M. Nagy

Articles by Maurer Faculty

This article refutes what has become the conventional wisdom that insider trading by members of Congress and legislative staffers is “totally legal” because such congressional officials are immune from federal insider trading law. It argues that this well-worn claim is rooted in twin misconceptions based on: (1) a lack of regard for the broad and sweeping duties of entrustment which attach to public office and (2) an unduly restrictive view of Supreme Court precedents, which have interpreted Rule 10b-5 of the Securities Exchange Act to impose liability whenever a person trades securities on the basis of material nonpublic information in ...


The Sitting Ducks Of Securities Class Action Litigation: Bio-Pharmas And The Need For Improved Evaluation Of Scientific Data, Stuart R. Cohn, Erin M. Swick Jan 2010

The Sitting Ducks Of Securities Class Action Litigation: Bio-Pharmas And The Need For Improved Evaluation Of Scientific Data, Stuart R. Cohn, Erin M. Swick

UF Law Faculty Publications

Rule 10b-5, a powerful weapon against any publicly-listed company whose share price drops on adverse news, is particularly skewed against pharmaceutical and other bio-technology companies (bio-pharmas). It is not a coincidence that there is a disproportionate number of class actions filed against bio-pharmas. The volume and complexity of data underlying most bio-pharma cases create enormous outcome uncertainties, settlement pressures, and potentially huge contingent liabilities over substantial periods of time. The vulnerability and risks that bio-pharmas face in Rule 10b-5 class actions are unique among all publicly-traded industries, yet many cases proceed along traditional grounds without courts employing either their statutory ...


When The Corporate Luminary Becomes Seriously Ill: When Is A Corporation Obligated To Disclose That Illness And Should The Securities And Exchange Commission Adopt A Rule Requiring Disclosure?, Allan Horwich Jan 2009

When The Corporate Luminary Becomes Seriously Ill: When Is A Corporation Obligated To Disclose That Illness And Should The Securities And Exchange Commission Adopt A Rule Requiring Disclosure?, Allan Horwich

Faculty Working Papers

Recent speculation and rumors about the health of senior corporate executives of public companies (most notably Steve Jobs of Apple Inc.) and the advanced age of many leaders in the corporate community prompt a consideration of when, if at all, there must be public disclosure of the ill health of a person whose involvement in a corporation is perceived as vital to the continued financial success or independence of that company. This Article addresses the application of various disclosure requirements under the Securities Exchange Act of 1934 to facts regarding the health of a corporate "luminary." An adverse development in ...


The Missing Link Between Insider Trading And Securities Fraud, Richard A. Booth Mar 2007

The Missing Link Between Insider Trading And Securities Fraud, Richard A. Booth

Faculty Scholarship

In a recent article, I argued that diversified investors - the vast majority of investors - would prefer that securities fraud class actions under the 1934 Act and Rule 10b-5 be dismissed in the absence of insider trading or similar offenses during the fraud period. See Richard A. Booth, The End of the Securities Fraud Class Action as We Know It, 4 Berk. Bus. L. J. 1 (2007), http://ssrn.com/abstract=683197. In this article, I draw on the classic case, SEC v. Texas Gulf Sulfur Company, to show that the federal courts originally viewed securities fraud as inextricably connected to ...


Darn Your Sox: Exploring Retroactive Application Of Extended Statutes Of Limitation And Repose In Securities Fraud Litigation, Sarah J. Greenberg May 2006

Darn Your Sox: Exploring Retroactive Application Of Extended Statutes Of Limitation And Repose In Securities Fraud Litigation, Sarah J. Greenberg

ExpressO

Unintended and unanticipated consequences of the 2002 enactment of Sarbanes Oxley are only recently making themselves known. One of these consequences includes differing interpretations of the section of Act which extends the statute of limitations for Sec. 10(b) securities fraud actions. The remedial nature and plain language of the Act call for retroactive application of the extended limitations period to revive previously time barred claims. The SEC has argued vigorously for such an interpretation, but, unfortunately, the majority of circuit courts analyzing the matter oppose this interpretation.

In my piece, Darn Your SOX: Exploring Retroactive Application of Extended Statutes ...


Merrill Lynch V. Dabit: Federal Preemption Of Holders' Class Actions, Mark J. Loewenstein Jan 2006

Merrill Lynch V. Dabit: Federal Preemption Of Holders' Class Actions, Mark J. Loewenstein

Articles

No abstract provided.


The Supreme Court, Rule 10b-5, And The Federalization Of Corporate Law, Mark J. Loewenstein Jan 2005

The Supreme Court, Rule 10b-5, And The Federalization Of Corporate Law, Mark J. Loewenstein

Articles

This Article examines Supreme Court jurisprudence since 1997 under the federal securities laws in light of the Court's earlier securities law decisions and in light of its recent decisions construing the Constitution and federal statutes as they relate to the regulation of business. These post-1977 cases strongly suggest that the much-heralded new federalism philosophy of the Supreme Court is not a factor in securities law cases or in business cases generally. Indeed, the opposite seems to be the case. In this context, new federalism cases appear to be an anomaly, with the reality being that the Court is still ...