Securities Law Commons^™

The Panuwat Snowball: Correlation Does Not Equal Materiality, Tanner Gattuso

Catholic University Law Review

Insider trading is a term of art referencing the fraudulent practice of trading securities in a company on the basis of material, nonpublic information about that same company in breach of some duty owed to another. The practice erodes the public’s trust in the integrity of our capital markets for a reason that is rather intuitive: it is inherently unfair to allow an individual to make a quick and certain profit by exploiting material, nonpublic information to which he privy due solely to his position in a company or some other relationship of trust and confidence. In this context, unrelenting …

The Solution To Shadow Trading Is Not Found In Current Insider Trading Law: A Proposed Amendment To Rule 10b5-2, Jamel Gross-Cassel

Fordham Journal of Corporate & Financial Law

Shadow trading is a lucrative way to exploit a loophole in insider trading law. Insiders abuse this loophole to make six-figure profits and escape liability when done at the right companies. Those who shadow trade use material, nonpublic information to trade not in the securities of their own company, which would be illegal, but in the securities of a closely related company where the information is just as impactful. Efforts to close this loophole rely on the individual insider trading policies of the involved companies. These policies vary in language, making liability for shadow trading dependent on specific language or …

The Insider Trading Prohibition Act: A Small Step Towards A Codified Insider Trading Law, Kayla Quigley

Fordham Journal of Corporate & Financial Law

Many have called for reform to insider trading law, as the current judge-made doctrine is ambiguous, complicated, and ultimately permissive of many instances of trading on nonpublic information. Indeed, Congress has attempted several times to pass a uniform insider trading statute. Most recently, in December 2019, the House of Representatives passed the Insider Trading Prohibition Act (“ITPA”). The legislation codifies many current principles of insider trading jurisprudence while also expanding potential insider trading liability. Moreover, it attempts to fix gaps in the law that various cases, such as United States v. Newman, have declined to address.

Among other flaws, …

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 …

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.

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

Pepperdine Law Review

No abstract provided.

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

Pepperdine Law Review

No abstract provided.

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

Pepperdine Law Review

No abstract provided.

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.

Missing The Mark: Nasd Rule 2711 And Nyse Rule 472 Mistakenly Emphasize Disclosure Rather Than Amending The Pleading Requirements Of Pslra, James J. Barney

NYLS Law Review

No abstract provided.

Defining The Duty: Attorneys' Obligations Under Rule 10b-5, Cynthia A. Bedrick

Indiana Law Journal

No abstract provided.

The Misappropriation Theory Of Insider Trading: Its Past, Present, And Future, Troy Cichos

Seattle University Law Review

In this Comment, I discuss the evolution and current application of the misappropriation theory of insider trading and argue that it simply strays too far from the fraud tenets of Section 10(b) and Rule 10b-5. A thorough understanding of the misappropriation theory is possible only if one understands how it diverges from the classic theory of insider trading. Therefore, in Section II, I discuss the evolution and present doctrine of classic insider trading. The discussion in this Section focuses on major cases in the development of this theory. Section III presents the misappropriation theory of insider trading. Section III focuses …

Triggering One-Year Limitations On Section 10(B) And Rule 10b-5 Actions: Actual Or Inquiry Discovery, Charles Benjamin Nutley

San Diego Law Review

Securities fraud lawsuits under Rule 10b-5 are governed by the one and three year limitative period in section 9(e) of the Securities Exchange Act. The one-year period is triggered by the plaintiff's discovery of the facts constituting the violation. Courts differ, however, on the correct discovery standard for section 9(e). This Comment addresses whether courts should apply an inquiry notice standard or an actual notice standard to trigger the one-year limitative period.

Securities: Is "Any Note" Really A "Security"? Supreme Court Says "No" In Reves, John Scribner

Oklahoma Law Review

No abstract provided.

Looking A Gift Of Stock In The Mouth: Donative Transfers And Rule 10b-5, Carol J. Sulcoski

Michigan Law Review

This Note explores whether a gift of stock can constitute a "sale" for the purposes of section lO(b) of the 1934 Act and rule lOb-5 promulgated thereunder. Part I reviews the relevant 1934 Act provisions, and concludes that although the statute's language and legislative history do not mention gifts of stock as such, they support the inclusion of gifts within the statute's scope. Part II examines a limited line of cases holding that a bona fide charitable gift is not a sale under section 16(b) of the 1934 Act. This Part concludes that section 16(b) cases are not dispositive of …

Damages For Insider Trading In The Open Market: A New Limitation On Recovery Under Rule 10b-5, John B. Grenier

Vanderbilt Law Review

The Elkind court's adoption of a "disgorgement measure" of damages for insider trading on undisclosed misrepresented material information in the open market is basically sound. In allowing compensation to the extent practicable, the Second Circuit chose the best solution among the available alternatives. The decision's paramount problems arise in its shifted emphasis to deterrence; the court has neither provided plaintiffs with a sufficient incentive to sue nor created the level of deterrence that some cases might require. Future courts, however, can remedy this situation if they follow Elkind and also award punitive damages in cases in which plaintiffs' losses exceed …

Rolf V. Blyth, Eastman Dillon & Co., 570 F. 2d 38 (2d Cir. 1978), Michael S. Hawley

Florida State University Law Review

Securities Regulation-THE EXTENSION OF POTENTIAL AIDING AND ABETTING LIABILITY TO BROKER-DEALERS UNDER RULE 10B-5 OF THE SECURITIES AND EXCHANGE COMMISSION.

Federal Statutes And Regulation, Various Editors

Villanova Law Review

No abstract provided.

Codification And Rule 10b-5, Lewis D. Lowenfels

Vanderbilt Law Review

One of the most interesting as well as controversial areas of the securities laws has been the growth of implied liabilities under section 10(b) of the Securities Exchange Act of 1934 and Rule l0(b)-5 promulgated there under. Any attempt to codify the securities laws would probably include an attempt to codify this entire l0b-5 area.' Once the codifiers move into this area, however, there is a strong likelihood that codification will result in reform and revision, and the present scope as well as the future growth and development of "federal corporation law" under Rule l0b-5 will be profoundly altered.' Thus …

Rule 10b-5:The Disclosure Of Finder's Fees In Connection With The Purchase Or Sale Of Securities, David L. Cocanower

Indiana Law Journal

No abstract provided.

Broker-Dealer Disclosure Of Corporate Inside Information, James K. Weeks, Jeffrey V. Mccormick

Cleveland State Law Review

The recent decisions in the field of securities transactions do not significantly change the legal standards, but they do create an increased awareness of the problems and the limits imposed upon the financial community. It is well established now that a broker's duties to the investing public take precedence over any conflicting duties to his customers or advisees to whom he only owes a duty not to defraud them or profit at their expense. The broker further has a duty to prevent his clients from profiting at the expense of the uninformed public.

Sec Enforcement Of The Rule I0b-5 Duty To Disclose Material Information-Remedies And The Texas Gulf Sulphur Case, Edmund B. Frost

Michigan Law Review

On April 16, 1964, the Texas Gulf Sulphur Company announced one of the most significant mineral discoveries of the twentieth century-a major copper and zinc deposit near Timmins, Ontario, found by means of geophysical exploration and exploratory drilling. Unusual market activity prior to this announcement prompted a Securities Exchange Commission (SEC) investigation of insider stock transactions. In April 1965, the SEC brought suit against a group of Texas Gulf insiders, alleging that their purchase of stock on national exchanges before the disclosure of the information concerning the Timmins strike constituted a violation of section 10(b) of the Securities Exchange Act …

Proof Of Scienter Necessary In A Private Suit Under Sec Anti-Fraud Rule 10b-5, Michigan Law Review

Michigan Law Review

Of the vast amounts of statutory and quasi-statutory material governing the securities business, the Securities and Exchange Commission's rule 10b-51 has potentially the greatest direct importance to the largest number of people. While several provisions in the government's regulatory scheme set more or less specific standards of conduct for securities issuers, broker-dealers, or corporate insiders, the anti-fraud provisions of rule 10b-5 apply to all persons directly or indirectly connected with any sale or purchase of securities transacted through a facility of interstate commerce, the mails, or on a national exchange. In its three clauses, rule 10b-5 forbids any person (1) …

Securities Regulation-Sec Rule 10b-5-Recovery By Corporation Induced By Fraud Of Insider To Issue Shares, Charles K. Dayton

Michigan Law Review

Trustees in reorganization of a corporation brought suit on its behalf to recover damages under section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 of the Securities and Exchange Commission, alleging that the corporation had been fraudulently induced by defendant, its comptroller, to issue stock for inadequate consideration. Also named as defendants were the American Stock Exchange and several banks and brokers, whose alleged complicity in the improper public distribution of the shares made them parties to the scheme to defraud the corporation. On a motion by all defendants but the comptroller to dismiss the complaint for …

Securities Regulation-Federal Anti-Fraud Provisions-Applicability Of Insider Responsibility To Broker In Possession Of Inside Corporate Information, John A. Krsul Jr.

Michigan Law Review

During a period of upward movement in the price of Curtiss-Wright common stock, the corporation's board of directors voted to reduce the stock dividend by forty percent, an action certain to have an immediate adverse effect upon the stock's market price. Although the board immediately authorized the transmission of information concerning its action to the New York Stock Exchange, an inadvertent delay of forty-five minutes ensued. Unaware of the delay, C, a director of Curtiss-Wright and a registered representative of Cady, Roberts & Co. (registrant) , a registered broker-dealer, telephoned registrant to inform G, one of its partners, …