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Articles 1 - 25 of 25
Full-Text Articles in Securities Law
Hidden Agendas In Shareholder Voting, Scott Hirst, Adriana Z. Robertson
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 …
Deterring Algorithmic Manipulation, Gina-Gail S. Fletcher
Deterring Algorithmic Manipulation, Gina-Gail S. Fletcher
Faculty Scholarship
Does the existing anti-manipulation framework effectively deter algorithmic manipulation? With the dual increase of algorithmic trading and the occurrence of “mini-flash crashes” in the market linked to manipulation, this question has become more pressing in recent years. In the past thirty years, the financial markets have undergone a sea change as technological advancements and innovations have fundamentally altered the structure and operation of the markets. Key to this change is the introduction and dominance of trading algorithms. Whereas initial algorithmic trading relied on preset electronic instructions to execute trading strategies, new technology is introducing artificially intelligent (“AI”) trading algorithms that …
Short And Distort, Joshua Mitts
Short And Distort, Joshua Mitts
Faculty Scholarship
Pseudonymous attacks on public companies are followed by stock price declines and sharp reversals. These patterns are likely driven by manipulative stock options trading by pseudonymous authors. Among 1,720 pseudonymous attacks on mid- and large-cap firms from 2010 to 2017, I identify over $20.1 billion in mispricing. Reputation theory suggests these reversals persist because pseudonymity allows manipulators to switch identities without accountability.
Revolving Elites: The Unexplored Risk Of Capturing The Sec, James D. Cox, Randall S. Thomas
Revolving Elites: The Unexplored Risk Of Capturing The Sec, James D. Cox, Randall S. Thomas
Faculty Scholarship
Fears have abounded for years that the sweet spot for capture of regulatory agencies is the "revolving door" whereby civil servants migrate from their roles as regulators to private industry. Recent scholarship on this topic has examined whether America's watchdog for securities markets, the Securities and Exchange Commission (SEC), is hobbled by the long-standing practices of its enforcement staff exiting their jobs at the Commission and migrating to lucrative private sector employment where they represent those they once regulated. The research to date has been inconclusive on whether staff revolving door practices have weakened the SEC' s verve. In this …
Seeking An Objective For Regulating Insider Trading Through Texas Gulf Sulphur, James D. Cox
Seeking An Objective For Regulating Insider Trading Through Texas Gulf Sulphur, James D. Cox
Faculty Scholarship
Data summarized in the opening of this article document that inside trading is a growth industry. And, as deals get ever bigger, the growth curve becomes steeper as more the data confirms intuition that the more who know about a good thing the more who will seek to harvest its benefits. Even though insider trading appears to have thrived during the fifty years after Texas Gulf Sulphur, we gather in this symposium to celebrate the decision. But why? As developed below, the Second Circuit’s landmark decision gave way to the Supreme Court’s erection of a fiduciary framework that this article …
The Deregulation Of Private Capital And The Decline Of The Public Company, Elisabeth De Fontenay
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 …
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
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 …
Quieting The Sharholders' Voice: Empirical Evidence Of Pervasive Bundling In Proxy Solicitations, James D. Cox, Fabrizio Ferri, Colleen Honigsberg, Randall S. Thomas
Quieting The Sharholders' Voice: Empirical Evidence Of Pervasive Bundling In Proxy Solicitations, James D. Cox, Fabrizio Ferri, Colleen Honigsberg, Randall S. Thomas
Faculty Scholarship
The integrity of shareholder voting is critical to the legitimacy of corporate law. One threat to this process is proxy “bundling,” or the joinder of more than one separate item into a single proxy proposal. Bundling deprives shareholders of the right to convey their views on each separate matter being put to a vote and forces them to either reject the entire proposal or approve items they might not otherwise want implemented.
In this Paper, we provide the first comprehensive evaluation of the anti-bundling rules adopted by the Securities and Exchange Commission (“SEC”) in 1992. While we find that the …
Let Sleeping Regs Lie: A Diatribe On Regulation A'S Futility Before And After The J.O.B.S. Act, Neal F. Newman
Let Sleeping Regs Lie: A Diatribe On Regulation A'S Futility Before And After The J.O.B.S. Act, Neal F. Newman
Faculty Scholarship
Did Congress do the right thing when it attempted to revise Regulation A through Title IV of the J.O.B.S. Act or was their legislative effort an exercise in futility?
On April 4 2012, President Obama signed into law the J.O.B.S. (Jumpstart Our Business Startups) Act. The Act’s intent is to ease the regulatory burden on smaller companies when issuing securities in both private and public offerings. This paper’s specific focus is on the Act’s Title IV. Title IV makes revisions to Regulation A, a private securities offering exemption promulgated under the Securities Act of 1933.
A big problem with Regulation …
Brief Of Prof. Steven L. Schwarcz As Amicus Curiae, Steven L. Schwarcz
Brief Of Prof. Steven L. Schwarcz As Amicus Curiae, Steven L. Schwarcz
Faculty Scholarship
No abstract provided.
"We're Cool" Statements After Omnicare: Securities Fraud Suits For Failures To Comply With The Law, James D. Cox
"We're Cool" Statements After Omnicare: Securities Fraud Suits For Failures To Comply With The Law, James D. Cox
Faculty Scholarship
As part of a symposium celebrating the multiple contributions of the late Alan Bromberg, this article examines implications flowing from the Supreme Court’s recent decision in Omnicare Inc. v. Laborers District Council Construction Industry Pension Fund. Because Omnicare lands so squarely on the Court’s earlier opaque opinion in Virginia Bankshares, Inc. v. Sandberg addressing the treatment of the materiality of opinion statements, Omnicare is the new currency in the realm that will have far-reaching implications. In Virginia Bankshares, the Supreme Court quickly concluded shareholders would attach significance to the board of directors’ statement that the cash-out merger …
Putting The Securities Laws To The Test: The Long-Standing Approach To Federal Securities Regulation Is Not Working, Elisabeth De Fontenay
Putting The Securities Laws To The Test: The Long-Standing Approach To Federal Securities Regulation Is Not Working, Elisabeth De Fontenay
Faculty Scholarship
No abstract provided.
Brief Of Financial Economists As Amici Curiae In Support Of Respondents, Ernest A. Young
Brief Of Financial Economists As Amici Curiae In Support Of Respondents, Ernest A. Young
Faculty Scholarship
No abstract provided.
Brief Of Common Law Scholars As Amici Curiae In Support Of Respondents, Samuel W. Buell, Deborah A. Demott, James D. Cox, Ernest A. Young, Ann Lipton
Brief Of Common Law Scholars As Amici Curiae In Support Of Respondents, Samuel W. Buell, Deborah A. Demott, James D. Cox, Ernest A. Young, Ann Lipton
Faculty Scholarship
No abstract provided.
Do The Securities Laws Matter? The Rise Of The Leveraged Loan Market, Elisabeth De Fontenay
Do The Securities Laws Matter? The Rise Of The Leveraged Loan Market, Elisabeth De Fontenay
Faculty Scholarship
One of the enduring principles of federal securities regulation is the mantra that bonds are securities, while commercial loans are not. Yet the corporate bond and loan markets in the U.S. are rapidly converging, putting significant pressure on the disparity in their regulatory treatment. As securities, corporate bonds are subject to onerous public disclosure obligations and liability regimes, which corporate loans avoid entirely. This longstanding regulatory distinction between loans and bonds is based on the traditional conception of a commercial loan as a long-term relationship between the borrowing company and a single bank, in contrast to bonds, which may be …
The 2011 Diane Sanger Memorial Lecture Protecting Investors In Securitization Transactions: Does Dodd–Frank Help, Or Hurt?, Steven L. Schwarcz
The 2011 Diane Sanger Memorial Lecture Protecting Investors In Securitization Transactions: Does Dodd–Frank Help, Or Hurt?, Steven L. Schwarcz
Faculty Scholarship
Securitization has been called into question because of its role in the recent financial crisis. Schwarcz examines the potential flaws in the securitization process and compare how the Dodd–Frank Act treats them. Although Dodd–Frank addresses one of the flaws, it underregulates or fails to regulate other flaws. It also overregulates by addressing aspects of securitization that are not flawed.
Reinventing The Sec By Staring Into Its Past, James D. Cox
Reinventing The Sec By Staring Into Its Past, James D. Cox
Faculty Scholarship
No abstract provided.
Keynote Address: The Conflicted Trustee Dilemma, Steven L. Schwarcz
Keynote Address: The Conflicted Trustee Dilemma, Steven L. Schwarcz
Faculty Scholarship
No abstract provided.
Codes Of Ethics And State Fiduciary Duties: Where Is The Line?, Z. Jill Barclift
Codes Of Ethics And State Fiduciary Duties: Where Is The Line?, Z. Jill Barclift
Faculty Scholarship
The important function of disclosure under federal securities laws and regulations, and the role of management in running the affairs of the corporation consistent with state fiduciary principles have a history of discord. The recent mandates of the Sarbanes-Oxley Act (“SOX Act” or “SOX”), and the Security and Exchange Commission’s (“SEC”) implementing regulations continue to increase the disclosure obligations of public companies. This article examines the implementation of code of ethics requirements under SOX. It examines the SEC’s regulations, which implement SOX requirements on the disclosure of codes of ethics, and self-regulatory agency (“SRO” or “listing agency”) rules on codes …
Dialectical Regulation, Robert B. Ahdieh
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 …
An Empirical Study Of Securities Disclosure Practice, Mitu Gulati, Stephen J. Choi
An Empirical Study Of Securities Disclosure Practice, Mitu Gulati, Stephen J. Choi
Faculty Scholarship
Using a dataset of sovereign bond offering documents and underlying bond contracts for ten sovereign issuers from 1985-2005, we examine the securities disclosure practices of issuers and attorneys. The sovereign bond market is comprised of sophisticated issuers with highly paid law firms. If anyone complies fully with federal securities disclosure requirements, we expect sovereign issuers and their attorneys to do so. On the other hand, network effects that determine what information issuers chose to disclose as well as the high cost of determining what information is required for disclosure may lead issuers to fail to meet their disclosure duties. We …
Law's Signal: A Cueing Theory Of Law In Market Transition, Robert B. Ahdieh
Law's Signal: A Cueing Theory Of Law In Market Transition, Robert B. Ahdieh
Faculty Scholarship
Securities markets are commonly assumed to spring forth at the intersection of an adequate supply of, and a healthy demand for, investment capital. In recent years, however, seemingly failed market transitions - the failure of new markets to emerge and of existing markets to evolve - have called this assumption into question. From the developed economies of Germany and Japan to the developing countries of central and eastern Europe, securities markets have exhibited some inability to take root. The failure of U.S. securities markets, and particularly the New York Stock Exchange, to make greater use of computerized trading, communications, and …
The Muddled Duty To Disclose Under Rule 10b-5, Donald C. Langevoort, G. Mitu Gulati
The Muddled Duty To Disclose Under Rule 10b-5, Donald C. Langevoort, G. Mitu Gulati
Faculty Scholarship
No abstract provided.
The Internet, Securities Regulation, And Theory Of Law, Tamar Frankel
The Internet, Securities Regulation, And Theory Of Law, Tamar Frankel
Faculty Scholarship
Rarely has a change in the environment affected society as dramatically as the Internet. It has transformed the way we retain, transfer, and exchange information. At minimal cost, the Internet offers us far more information at a faster pace than ever before. It enables us to interact around the globe with more people than at any time in the past. When such dramatic environmental changes occur, drastic changes in the law often follow. 1 The Internet affects the environment in which securities markets operate, and the laws that govern them. 2 The use of the Internet has already begun to …
Accountable Accountants: Is Third-Party Liability Necessary?, Victor P. Goldberg
Accountable Accountants: Is Third-Party Liability Necessary?, Victor P. Goldberg
Faculty Scholarship
Should accountants be liable to third parties if they conduct an audit in negligent manner? A half century ago, in Ultramares Corporation v. Touche, Niven & Co., Cardozo argued that they should not, unless their performance could be characterized as fraud. In recent years, courts in a minority of jurisdictions have concluded that Cardozo's argument is no longer compelling and they have found that "foreseeable" third parties could bring a tort action for ordinary negligence against the accountants. In addition to being subject to tort actions, accountants may also be liable under federal and state securities laws.
Suits against …