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Full-Text Articles in Securities Law
An Inquiry Into The Perception Of Materiality As An Element Of Scienter Under Sec Rule 10b-5, Allan Horwich
An Inquiry Into The Perception Of Materiality As An Element Of Scienter Under Sec Rule 10b-5, Allan Horwich
Faculty Working Papers
In any private action or enforcement proceeding based on SEC Rule 10b-5 the plaintiff, including the Securities and Exchange Commission, must prove that the defendant engaged in deception or manipulation with scienter, that is, an intent to deceive (which lower courts have held encompasses reckless conduct). Where the gravamen of the claim is deception, the deception must have been material. A fact, including forward-looking information, is material if there is a substantial likelihood that a reasonable shareholder would consider the fact important in making his investment decision. This Article demonstrates that in an appropriate case an assessment of whether the …
Cleaning The Murky Safe Harbor For Forward-Looking Statements: An Inquiry Into Whether Actual Knowledge Of Falsity Precludes The Meaningful Cautionary Statement Defense, Allan Horwich
Faculty Working Papers
Congress included a safe harbor for forward-looking statements in the 1995 Private Securities Litigation Reform Act. This affords certain issuers and other specified persons limited protection from civil liability for damages under the Securities Act of 1933 and the Securities Exchange Act of 1934 when the projections or objectives in a forward-looking statement are not realized, i.e., turn out to be false. The safe harbor contains two principal elements, in addition to protection for "immaterial" statements: one prong where projections are accompanied by "meaningful cautionary statements," the second prong where the plaintiff fails to prove that the speaker made the …
"Controlling" Securities Fraud: Proposed Liability Standards For Controlling Persons Under The 1933 And 1934 Securities Acts, Nancy Staudt
"Controlling" Securities Fraud: Proposed Liability Standards For Controlling Persons Under The 1933 And 1934 Securities Acts, Nancy Staudt
Faculty Working Papers
This Student Note investigates the history and intent underlying the controlling person liability provisions of the 1933 and 1934 Securities Act. It notes that courts have adopted a ranges of standards for holding controlling persons liability, but whichever standard is chosen--that standard is applied to both Acts. This note argues that courts should impose unique liability standards for each statute in order to fully realize Congress' purpose in adopting the laws.
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 …
Gatekeeper Incentive Compensation, Sharon Hannes
Gatekeeper Incentive Compensation, Sharon Hannes
Faculty Working Papers
A massive wave of corporate fraud at the beginning of the twenty first century exposed the failure of corporate gatekeepers. The Sarbanes-Oxley legislation accordingly targeted gatekeepers, primarily auditors, by imposing strict regulation and enhanced independence guidelines. This legislative remedy is of disputable benefit while its costs have been huge. This paper maintains that a certain type of auditor incentive compensation could work better than regulation. Under such an alternative scheme, auditors would defer a portion of the payment they receive from the client firm, which would be used to purchase shares in the client after their tenure as auditor has …
Shock Therapy' For Aktiengesellschaften: Can The Sarbanes-Oxley Certification Requirements Transform German Corporate Culture, Practice And Prospects?, Hudson T. Hollister
Shock Therapy' For Aktiengesellschaften: Can The Sarbanes-Oxley Certification Requirements Transform German Corporate Culture, Practice And Prospects?, Hudson T. Hollister
Northwestern Journal of International Law & Business
The Sarbanes-Oxley Act (Act) of 20021 was the U.S. Congress's hasty response to the wave of corporate scandals that had begun to devastate U.S. investor confidence during the previous year. Its sixty-six pages contain a wide range of measures designed to enhance the quality and independence of corporate audits and disclosure under the U.S. securities-regulation regime. The Act applies to public corporations-corporations that are required to file regular financial reports under the Securities Exchange Act of 1934 (Exchange Act). Objections from German corporations and observers were particularly vigorous. At least one German foreign private issuer registered with the SEC has …
A Securities Regulator Looks At Onvergence, Donald T. Nicolaisen
A Securities Regulator Looks At Onvergence, Donald T. Nicolaisen
Northwestern Journal of International Law & Business
For many years there has been a dedicated group of practitioners, standard setters, business leaders and others from around the world who have worked to establish a single set of globally accepted accounting standards for the benefit of the capital markets. These people clearly had their hearts in the right place but, absent a binding mandate to apply the standards, it seemed largely a labor of love. Now I expect those pioneering initiatives and the many years of effort to pay off because in 2005 a large number of companies are joining what up to now has been a limited …