Enforcing The Bargain V. Materiality Requirement: The Future Of Disclosure-Only Settlements Post-Trulia, Hao Jiang
Pace Law Review
In In re Trulia, Inc. Stockholder Litigation, the Delaware Court of Chancery broke away from its tradition of routinely approving disclosure-only settlements and required disclosures to be material in order to cure the conflict of interest between plaintiff’s counsel and the plaintiff class. I argue that fairness of settlement is the only standard in approving class action settlements and fairness will not be achieved by requiring materiality. Shareholders are legally entitled to all material information, as the board’s fiduciary duty dictates. Thus, material disclosures are enforcement of a legal duty that is no consideration for the release of ...
Class Actions, Statutes Of Limitations And Repose, And Federal Common Law, 2018 University of Pennsylvania Law School
Class Actions, Statutes Of Limitations And Repose, And Federal Common Law, Stephen B. Burbank, Tobias Barrington Wolff
After more than three decades during which it gave the issue scant attention, the Supreme Court has again made the American Pipe doctrine an active part of its docket. American Pipe addresses the tolling of statutes of limitations in federal class action litigation. When plaintiffs file a putative class action in federal court and class certification is denied, absent members of the putative class may wish to pursue their claims in some kind of further proceeding. If the statute of limitations would otherwise have expired while the class certification issue was being resolved, these claimants may need the benefit of ...
Ethereum And The Sec: Why Most Distributed Autonomous Organizations Are Subject To The Registration Requirements Of The Securities Act Of 1933 And A Proposal For New Regulation, 2018 Texas A&M University School of Law
Ethereum And The Sec: Why Most Distributed Autonomous Organizations Are Subject To The Registration Requirements Of The Securities Act Of 1933 And A Proposal For New Regulation, Tiffany L. Minks
Texas A&M Law Review
In a world full of new technology, the risk of fraud is constantly increasing. In the securities industry, this risk existed long before the use of technology. Congress enacted the Securities Act of 1933 to combat the risk of fraud and misrepresentation in the sale of securities. By requiring full disclosure, investors have the opportunity to make informed decisions prior to investing. However, Distributed Autonomous Organizations (“DAOs”), through the use of blockchains and smart-contracts, engage in the sale of securities without fully disclosing the risks or complying with the registration requirements of the Securities Act of 1933. Compliance with the ...
China's Anti-Corruption Crackdown And The Foreign Corrupt Practices Act, 2018 Ohio State University Moritz College of Law
China's Anti-Corruption Crackdown And The Foreign Corrupt Practices Act, Daniel C.K. Chow
Texas A&M Law Review
China’s highly publicized crackdown on corruption may affect the type and number of cases in China that arise under the Foreign Corrupt Practices Act (“FCPA”), but it should not be assumed that the crackdown will necessarily lead to fewer FCPA prosecutions. Although there is some overlap of the goals of China’s corruption crackdown and the goals of the FCPA, China’s crackdown also serves important goals of the ruling Communist Party. The main goal of the current crackdown is to reinforce the Party’s power by targeting enemies and rivals of the current leadership. The crackdown is not ...
Reconciling The Volcker Rule With The Dodd-Frank Act’S Objectives: How To Best Combat Systemic Risk, 2018 Fordham University School of Law
Reconciling The Volcker Rule With The Dodd-Frank Act’S Objectives: How To Best Combat Systemic Risk, Michael Leonidas Nester
Fordham Law Review
This Note examines the Dodd-Frank Act’s ban on proprietary trading and on banks sponsoring hedge funds and private equity funds, known as the Volcker Rule. This Rule has been a point of contention since the Act was passed in 2010. Some argue that the ban is either a detriment to bond market liquidity or is unnecessary because a tenuous nexus exists between proprietary trading and true causes of the 2008 financial crisis. Proponents cite the role of proprietary trading in the crisis and the inherent risk that banks accept when engaging in such trading. The controversy surrounding the Volcker ...
Kokesh V. Sec: The Supreme Court Redefines An Effective Securities Enforcement Tool, 2018 University of Maryland Francis King Carey School of Law
Kokesh V. Sec: The Supreme Court Redefines An Effective Securities Enforcement Tool, Conor Daly
No abstract provided.
What Would We Do Without Them: Whistleblowers In The Era Of Sarbanes-Oxley And Dodd-Frank, 2018 T.J. Maloney Chair in Business Law and the Director of the Fordham Corporate Law Center, Fordham University School of Law
What Would We Do Without Them: Whistleblowers In The Era Of Sarbanes-Oxley And Dodd-Frank, Sean Griffith, Jane A. Norberg, Ian Engoron, Alice Brightsky, Tracey Mcneil, Jennifer M. Pacella, Judith Weinstock, Jason Zuckerman
Fordham Journal of Corporate & Financial Law
No abstract provided.
Perfect Hedge: Adding Precision To The Proposed Sec Rule On Investment Company Use Of Derivatives With A Hedging Exception, 2018 Boston College Law School
Perfect Hedge: Adding Precision To The Proposed Sec Rule On Investment Company Use Of Derivatives With A Hedging Exception, David Miller
Boston College Law Review
Derivatives are complex financial instruments that derive their value from an underlying asset. Used and valued by commercial and financial institutions, derivatives are booming. Indeed, the growing $600 trillion derivative market dwarfs the $67 trillion stock market. Yet, the magnification effect of derivative leverage on losses has well-documented ties to the 2008 Financial Crisis when AIG, Lehman Brothers, and other financial institutions found themselves indebted on hundreds of billions of dollars in derivative transactions. Since the crisis, investment companies and funds constrained by the Investment Company Act to protect unsophisticated and vulnerable investors have increased their use of derivatives. In ...
Securities Fraud Embedded In The Market Structure Crisis: High-Frequency Traders As Primary Violators, 2018 College of William & Mary Law School
Securities Fraud Embedded In The Market Structure Crisis: High-Frequency Traders As Primary Violators, Stanislav Dolgopolov
William & Mary Business Law Review
This Article analyzes approaches to attaching liability for securities fraud to high-frequency traders as primary violators in connection with the current market structure crisis. One of the manifestations of this crisis pertains to inadequate disclosure of advanced functionalities offered by trading venues, as exemplified by the order type controversy. The Article’s analysis is applied to secret arrangements between trading venues and preferred traders, glitches and gaming, and the reach of the doctrine of market manipulation, and several relevant issues are also viewed from the standpoint of the integrity of the trading process. The Article concludes by arguing for a ...
Reputational Economies Of Scale, 2018 USC Law School
Reputational Economies Of Scale, Daniel M. Klerman
University of Southern California Legal Studies Working Paper Series
For many years, most scholars have assumed that the strength of reputational incentives is positively correlated with the frequency of repeat play. Firms that sell more products or services were thought more likely to be trustworthy than those that sell less because they have more to lose if consumers decide they have behaved badly. That assumption has been called into question by recent work that shows that, under the standard infinitely repeated game model of reputation, reputational economies of scale will occur only under special conditions, such as monopoly, because larger firms not only have more to lose from behaving ...
Insider Trading Law And The Ambiguous Quest For Edge, 2018 University of Michigan Law School
Insider Trading Law And The Ambiguous Quest For Edge, A. C. Pritchard
Michigan Law Review
A review of Sheelah Kolhatkar, Black Edge.
Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, 2018 University of Michigan Law School
Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, Matthew Fagan
University of Michigan Journal of Law Reform
With the rise of institutional activist investors in recent decades—including a purported 495 activist campaigns against U.S. corporations in 2016 alone—the role that third-party institutional proxy advisors play in corporate governance has greatly increased. The United States Office of Government Accountability estimates that clients of the top five proxy advisory firms account for about $41.5 trillion in equity throughout the world. For several years, discussions have developed regarding conflicts of interest faced by proxy advisors. For example, Institutional Shareholder Services, the top proxy advisory firm in the world, frequently provides advice to institutional investors on how ...
The Shadow Of Free Enterprise: The Unconstitutionality Of The Securities & Exchange Commission’S Administrative Law Judges, Linda D. Jellum, Moses M. Tincher
Journal of the National Association of Administrative Law Judiciary
Six years ago, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), for the first time giving the Securities and Exchange Commission (SEC) the power to seek monetary penalties through its in-house adjudication. The SEC already had the power to seek such penalties in federal court. With the Dodd-Frank Act, the SEC’s enforcement division could now choose between an adjudication before an SEC Administrative Law Judge (ALJ) or a civil action before an Article III judge. With this new choice, the SEC realized a significant home-court advantage. For example, in 2014, the SEC’s enforcement ...
Unicorns, Guardians, And The Concentration Of The U.S. Equity Markets, 2018 University at Buffalo Law School
Unicorns, Guardians, And The Concentration Of The U.S. Equity Markets, Amy Deen Westbrook, David A. Westbrook
No abstract provided.
Selective Disclosure And Insider Trading, 2018 University of Florida Levin College of Law
Selective Disclosure And Insider Trading, Michael Guttentag
Florida Law Review
Determining when the selective disclosure of material nonpublic information should trigger insider trading liability is a deeply problematic aspect of insider trading doctrine.
The current rule is that a selective disclosure can only trigger insider trading liability if “the insider [making the selective disclosure] personally will benefit, directly or indirectly, from his disclosure.” Dirks v. SEC introduced this “personal benefit” test in 1983 to balance four competing rationales for determining when a tip should trigger insider trading liability. Two developments since Dirks have made problems with this personal benefit test insurmountable. First, the SEC’s enactment of Regulation Fair Disclosure ...
International Crowdfunding: Did The Sec Get It Right When Promulgating Regulation Crowdfunding Relative To Other Leading G20 Crowdfunding Regulations?, Robert A. Dixon Jr.
Robert A. Dixon Jr.
Mom Approval In A World Of Active Shareholders, 2018 NYU School of Law
Mom Approval In A World Of Active Shareholders, Edward Rock
New York University Law and Economics Working Papers
Majority of Minority (MOM) approval is a common mechanism used in many jurisdictions to control conflicts of interest in related party transactions. Recently, in M & F Worldwide, the Delaware Supreme Court held that MOM approval in a controlling shareholder freezeout shifted the standard of review from Entire Fairness to Business Judgement Rule. In this article, I investigate how MOM approval functions in the presence of active shareholders (both hedge funds and actively managed mutual funds).
After reviewing the potential benefits and problems with MOM approval, I review the use of MOM provisions in controlling shareholder freezeouts in the U.S. between 2010 and 2017. I combine this with three case studies involving MOM approval: the Dell MBO; the Oracle/NetSuite merger; and the unsuccessful effort by the Dolan family to take Cablevision private in 2007. I then briefly consider a quite different sort of MOM approval: the EU Takeover Directive’s requirement that conditions mandatory freezeouts on achieving a very high level of ownership (90-95%), typically through a tender offer.
The principal lessons of this investigation are ambiguous. First, I do not find significant evidence that the use of MOM conditions in ...
Insider Tainting: Strategic Tipping Of Material Nonpublic Information, 2018 Northwestern Pritzker School of Law
Insider Tainting: Strategic Tipping Of Material Nonpublic Information, Andrew Verstein
Northwestern University Law Review
Insider trading law is meant to be a shield, protecting the market and investors from unscrupulous traders, but it can also be a sword. Insofar as we penalize trading on the basis of material, nonpublic information, it becomes possible to share information strategically in order to disable or constrain innocent investors. A hostile takeover can be averted, or a bidding war curtailed, because recipients of such information must then refrain from trading. This Article offers the first general account of “insider tainting,” an increasingly pervasive phenomenon of weaponizing insider trading law.
The Risk Of Regulatory Arbitrage: A Response To Securities Regulation In Virtual Space, 2018 University of Idaho College of Law
The Risk Of Regulatory Arbitrage: A Response To Securities Regulation In Virtual Space, Wendy Gerwick Couture
Washington and Lee Law Review Online
In Securities Regulation in Virtual Space, Eric. C. Chaffee explores the potential applicability of the securities laws to virtual transactions based on virtual activity and argues that, although many of these transactions likely qualify as “investment contracts” under S.E.C. v. W.J. Howey Co., they should be excluded under the context clause because, among other reasons, application of the securities laws would stifle creativity within this innovative space. This Response proposes a reframing of the Howey test as a response to the risk of regulatory arbitrage, argues that the context clause should only exclude transactions that do not ...
Decentralized Public Ledger Systems And Securities Law: New Applications Of Blockchain Technology And The Revitalization Of Sections 11 And 12(A)(2) Of The Securities Act Of 1933, 2018 Washington University School of Law
Decentralized Public Ledger Systems And Securities Law: New Applications Of Blockchain Technology And The Revitalization Of Sections 11 And 12(A)(2) Of The Securities Act Of 1933, Kelsey Bolin
Washington University Law Review
When Bitcoin launched in 2009, it was the first virtual cryptocurrency to gain popularity and attain widespread use. Much attention has been paid to Bitcoin’s well-publicized advances and setbacks as the world’s foremost virtual currency. Less attention has been paid, however, to the decentralized public ledger technology that enables Bitcoin to function. That technology is just as innovative as Bitcoin itself. Decentralized public ledgers are a revolution in digital data storage and have the “potential to fundamentally shift the way in which society operates.”
This Note will examine one such societal shift—a change in how shareholders access ...