Securities Law Commons^™

Special Purpose Acquisition Companies (Spacs) And The Sec, Neal Newman, Lawrence J. Trautman

Faculty Scholarship

Special Purpose Acquisition Companies (SPACs) are simply enterprises that raise money from the public with the intention of purchasing an existing business and becoming publicly traded in the securities markets. If the SPAC is successful in raising money and the acquisition takes place, the target company takes the SPAC’s place on a stock exchange in a transaction that resembles a public offering. Also known as “blank-check” or “reverse merger” companies, this process avoids many of the pitfalls of a traditional initial public offering.

During late 2020 and 2021 an unprecedented surge in the popularity and issuance of Special Purpose Acquisition …

Hidden Agendas In Shareholder Voting, Scott Hirst, Adriana Z. Robertson

Faculty Scholarship

Nothing in either corporate or securities law requires companies to notify investors what they will be voting on before the record date for a shareholder meeting. We show that, overwhelmingly, they do not. The result is “hidden agendas”: for 88% of shareholder votes, investors cannot find out what they will be voting on before the record date. This poses an especially serious problem for investors who engage in securities lending: they must decide whether the expected benefit of voting exceeds the expected benefit of continuing to lend their shares (or making them available for lending) without knowing what they will …

The Sec Adds A New Weapon: How Does The New Admission Requirement Change The Landscape?, Paul Radvany

Faculty Scholarship

Over the past several years, the Securities and Exchange Commission (the “SEC”) has settled the vast majority of the cases it has brought. Some people have suggested, however, that settlements by public agencies such as the SEC should be scrutinized more closely. For instance, in a series of recent opinions, Judge Jed S. Rakoff of the Southern District of New York has “question[ed] the wisdom” of the SEC’s well-established practice of permitting defendants to enter into consent judgments while neither admitting nor denying the allegations. During the past two years, the SEC has implemented new policies that have altered its …

Taking Section 10(B) Seriously: Criminal Enforcement Of Sec Rules, Steve Thel

Faculty Scholarship

The Supreme Court has determined the scope of federal securities laws in a series of cases in which it has read section 10(b) of the Securities Exchange Act as either prohibiting certain misconduct or authorizing the SEC to regulate that conduct and only that conduct. Judging by the language, structure and history of the Exchange Act, the Court’s reading is wrong. Section 10(b) does not prohibit anything, and it neither grants the SEC rulemaking power nor limits the rulemaking power granted to the SEC elsewhere in the Exchange Act. Instead, section 10(b) simply triggers criminal sanctions for certain rule violations. …

Fee-Shifting Bylaw And Charter Provisions: Can They Apply In Federal Court? – The Case For Preemption, John C. Coffee Jr.

Faculty Scholarship

In the first months after a decision of the Delaware Supreme Court upholding a fee-shifting bylaw under which the unsuccessful plaintiff shareholder was required to reimburse all defendants for their legal and other expenses in the litigation, some 24 public companies adopted a similar provision – either by means of a board-adopted bylaw or by placing such a provision in their certificate of incorporation (in the case of companies undergoing an IPO). In effect, private ordering is introducing a one-sided version of the “loser pays” rules. Indeed, as drafted, these provisions typically require a plaintiff who is not completely successful …

Below Investment Grade And Above The Law: A Past, Present And Future Look At The Accountability Of Credit Rating Agencies, Marilyn Blumberg Cane, Adam Shamir, Tomas Jodar

Faculty Scholarship

This article covers the evolution of the credit rating industry, in particular, the noteworthy shift from purchaser-subscriber to issuer pay model. It then describes the history of SEC CRA regulatory measures, most notably the adoption of SEC Rule 436(g), adopted in 1982, which specifically eliminated liability for the big CRAs (Moody’s, Standard & Poor’s, Fitch’s and Duff and Phelps) as “experts” under Sections 7 and 11 of the Securities Act of 1933. The article then covers the Credit Rating Agency Reform Act of 2006 and the adoption of SEC Rule 17g-5 in an attempt to control conflicts of interest within …

What Happened To The "Up-Tick" Rule?, Constantine N. Katsoris

Faculty Scholarship

No abstract provided.

From Federal Rules To Intersystemic Governance In Securities Regulation, Robert B. Ahdieh

Faculty Scholarship

In this brief essay, prepared as part of a symposium on The New Federalism: Plural Governance in a Decentered World, I explore the regulatory dynamics at work: (1) in the operation of Securities Exchange Act Rule 14a-8, (2) in the interventions of then-Attorney General Eliot Spitzer in the national securities markets, and (3) in recent steps by the Securities and Exchange Commission to reconcile U.S. and international accounting standards. In each case, a distinct dynamic of regulatory interaction - what I term intersystemic governance - can be observed. In such cases, overlapping jurisdiction combines with various sources of interdependence to …

Dialectical Regulation, Robert B. Ahdieh

Faculty Scholarship

While theories of regulation abound, woefully inadequate attention has been given to growing patterns of "intersystemic" and "dialectical" regulation in the world today. In this rapidly expanding universe of interactions, independent regulatory agencies, born of autonomous jurisdictions, nonetheless face a combination of jurisdictional overlap with, and regulatory dependence on, one another. Here, the cross-jurisdictional interaction of regulators is no longer the voluntary interaction embraced by transnationalists; it is, instead, an unavoidable reality of acknowledgement and engagement, potentially culminating in the integration of discrete sets of regulatory rules into a collective whole.

Such patterns of regulatory engagement are increasingly evident, across …

Reinventing The Outside Director: An Agenda For Institutional Investors, Ronald J. Gilson, Reinier Kraakman

Faculty Scholarship

Managerialist rhetoric puts the institutional investor between a rock and a hard place. The institutional investor is depicted as a paper colossus, alternatively greedy and mindless, but in all events a less important corporate constituency than that other kind of investor, the "real" shareholder. The unspoken corollary is that, regardless of the institution's investment strategy, its interests may appropriately be ignored.

An institution that trades stock frequently is considered a short-term shareholder without a stake in the future of the corporation. According to the familiar argument, the short-term shareholder has no more legitimate claim on management's attention than does a …