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Sarbanes-Oxley, Kermit The Frog, And Competition Regarding Audit Quality, Matthew J. Barrett

Journal Articles

The regulatory scheme after Sarbanes-Oxley has significantly improved public company audits in the United States, or at least has demonstrated the potential to do so, but the obligation to preserve client confidentially still prevents auditors from competing for new clients on the basis of audit quality. This paper suggests a simple way for the SEC to facilitate such competition within the existing regulatory framework. The SEC should require issuers and registrants to disclose whether their independent audits uncovered any financial fraud and, within specified ranges, the number and amount of all audit adjustments incorporated into the financial statements filed with …

Class Action Criminality, Lisa L. Casey

Journal Articles

This paper examines the criminal prosecution of Milberg Weiss, formerly the most successful plaintiffs’ securities class action firm in the country, for allegedly making undisclosed incentive payments to class representatives. In particular, the article examines the government’s primary charge - that the firm’s practice violated the “honest services” theory of mail and wire fraud. The government’s application of this theory presumes a fiduciary relationship between the class representatives and the class which has never been clearly delineated and, indeed, is against the weight of case law and the realities of class action litigation.

The Article proceeds on two different levels. …

Rediscovering Board Expertise: Legal Implications Of The Empirical Literature, Lawrence A. Cunningham

GW Law Faculty Publications & Other Works

This paper reviews and draws insights from recent empirical research in financial accounting on the value of director expertise for financial reporting quality. Among important consequences of Sarbanes-Oxley is an increase in the percentage of accounting experts on boards of directors, particularly on audit committees.

The research reviewed here documents the value of this expertise in promoting financial reporting quality measured in terms of "accounting earnings management" (artificial bookkeeping manipulations). These findings contrast with well-known evidence showing little value arising from director independence.

The research holds numerous implications and raises important questions, including the following:

1. It shows that accounting …

International Trafficking In Persons: Suggested Responses To A Scourge Of Humankind, Franklyn M. Casale

Intercultural Human Rights Law Review

"International Trafficking in Persons: Suggested Responses to a Scourge of Humankind", a statement presented by Rev. Monsignor Franklyn M. Casale (St. Thomas University President) to the Distinguished Members of the United States House of Representatives Committee on Foreign Affairs.

New Legal Frontier: Mass Information Loss And Security Breach, Chad Pinson

SMU Science and Technology Law Review

No abstract provided.

Data Mining Techniques In Fraud Detection, Rekha Bhowmik

Journal of Digital Forensics, Security and Law

The paper presents application of data mining techniques to fraud analysis. We present some classification and prediction data mining techniques which we consider important to handle fraud detection. There exist a number of data mining algorithms and we present statistics-based algorithm, decision treebased algorithm and rule-based algorithm. We present Bayesian classification model to detect fraud in automobile insurance. Naïve Bayesian visualization is selected to analyze and interpret the classifier predictions. We illustrate how ROC curves can be deployed for model assessment in order to provide a more intuitive analysis of the models.

Information Security Breaches: Looking Back & Thinking Ahead, Fred H. Cate

Articles by Maurer Faculty

No abstract provided.

Prosecuting Elder Abuse: Setting The Gold Standard In The Golden State, Arthur Meirson

UC Law Journal

This Note proposes amending California's elder abuse law. Currently, California Penal Code sections 368(b) and (c) allow the prosecution of any person who willfully causes or permits a person they know to be an elder or dependent adult "to suffer, or inflicts thereon unjustifiable physical pain or mental suffering." The failing of this law is its focus on the subjective experience of the elder or dependent adult victim. Because the law only allows punishment where the victim suffers or experiences unjustifiable physical pain or mental suffering, there are numerous circumstances that allow a perpetrator of abuse to escape prosecution. These …

Of Breaches Of The Peace, Home Invasions, And Securities Fraud, A. Christine Hurt

Faculty Scholarship

No abstract provided.

Betting On The Wrong Horse: The Detrimental Effect Of Noncompliance In The Internet Gambling Dispute On The General Agreement On Trade In Services (Gats), Kathryn B. Codd

William & Mary Law Review

No abstract provided.

The Competing Paradigms Of Securities Regulation, James J. Park

Duke Law Journal

Although the securities industry is primarily regulated by specific rules, it is also governed by general principles. When conduct violates a rule, the regulatory response is obvious-enforce the rule. The issue is more difficult when conduct does not violate a rule but violates a principle. A regulator can excuse the conduct on the ground that the law is unclear and prohibit the conduct going forward through rulemaking. Or, the regulator can punish the conduct through what I call a "principles-based" enforcement action. Since 2002, there has been a surge of principles-based enforcement actions, provoking criticism that regulators are engaging in …

What Is A Business Crime?, Richard A. Booth

Working Paper Series

Criminal prosecution has been used with increasing frequency recently in connection with a variety of business failures and other financial offenses. Indeed, it appears that there are few such offenses that cannot be prosecuted criminally even though they also give rise to civil remedies. While some such offenses seem to be quite serious frauds, others seem to be as minor as getting the accounting rules wrong. Thus, the question addressed in this essay is how to define a business crime and what should be the proper role of criminal prosecution in connection with business offenses. I start with the proposition …

Vol. 5, No. 06 (November/December 2007)

Indiana Law Update

No abstract provided.

Sarbanes-Oxley: The Evidence Regarding The Impact Of Sox 404, Robert Prentice

Cardozo Law Review

No abstract provided.

Vol. 33, No. 07 (October 22, 2007)

Indiana Law Annotated

No abstract provided.

Doe V. Sexsearch.Com: Placing Real-Life Liability Back Where It Belongs In A Virtual World, Jon Burns

North Carolina Journal of Law & Technology

No abstract provided.

A Prescription To Retire The Rhetoric Of "Principles-Based Systems" In Corporate Law, Securities Regulation, And Accounting, Lawrence A. Cunningham

Vanderbilt Law Review

This Article corrects widespread misconception about whether complex regulatory systems can be described fairly as either "rules-based" or "principles-based" (also called "standards-based'). Promiscuous use of these labels has proliferated in the years since the implosion of Enron Corp. Users show an increasing habit of celebrating systems dubbed principles-based and scorning those called rules-based. While the concepts of rules and principles (or standards) are useful to classify individual provisions, they are not scalable to the level of complex regulatory systems. The Article uses examples from corporate law, securities regulation, and accounting to illustrate this problematic phenomenon. To describe or design systems …

Missing The Forest For The Trees: The Seventh Circuit’S Refinement Of Bloom 'S Private Gain Test For Honest Services Fraud In United States V. Thompson, Robert J. Lapointe

Seventh Circuit Review

Public officials, as well as public employees, owe the public the fiduciary duty of providing their honest services. The mail fraud statute, 18 U.S.C. § 1341, proscribes using the mails to carry out “any scheme or artifice to defraud.” It further defines, in § 1346, “any scheme or artifice to defraud” to include “a scheme or artifice to deprive another of the intangible right of honest services.” In passing these statutes, Congress never defined the terms “scheme or artifice,” “intangible right” or “honest services.” Because of this failure, the appellate courts have adopted limiting principles to prevent minor breaches of …

Krispy Kreme, Sarbanes-Oxley, And Corporate Greed, Cristina Michelle Decelestino

University of Miami Business Law Review

No abstract provided.

Legislation And Legitimation: Congress And Insider Trading In The 1980s, Thomas W. Joo

Indiana Law Journal

Orthodox corporate law and economics holds that American corporate and securities regulation has evolved inexorably toward economic efficiency. That position is difficult to square with the fact that regulation is the product of government actors and institutions. Indeed, the rational behavior assumptions of law and economics suggest that those actors and institutions would tend to place their own self-interest ahead of economic efficiency. This Article provides anecdotal evidence of such self interest at work. Based on an analysis of legislative history-primarily congressional hearings-this Article argues that Congress had little interest in the economic policy effect of insider trading legislation in …

A Director's Good Faith, Elizabeth A. Nowicki

Buffalo Law Review

No abstract provided.

Rewarding Outside Directors, Assaf Hamdani, Reinier Kraakman

Michigan Law Review

While they often rely on the threat of penalties to produce deterrence, legal systems rarely use the promise of rewards. In this Article, we consider the use of rewards to motivate director vigilance. Measures to enhance director liability are commonly perceived to be too costly. We, however demonstrate that properly designed reward regimes could match the behavioral incentives offered by negligence-based liability regimes but with significantly lower costs. We further argue that the market itself cannot implement such a regime in the form of equity compensation for directors. We conclude by providing preliminary sketches of two alternative reward regimes. While …

The Integration Conunudrum: Debilitating Failures Of The Securities And Exchange Commission Must Be Addressed As Corporate Malfeasance Is 'Getting Serious, So Serious', André Douglas Pond Cummings

Law Faculty Scholarship

The Securities Regulation doctrine of Integration has vexed securities lawyers and academics since its inception in the 1930s. The Securities and Exchange Commission (SEC) has struggled historically to define, refine and manage the securities Integration problem.

This article undertakes an historical analysis of securities integration recognizing both the evolution of the doctrine and the problems that it has engendered. The conclusion therein suggests that the SEC should abandon, if only momentarily, its practice of leaving securities rules undefined or loosely detailed in order to bring reason to the securities integration arena. A new solution is proposed that suggests that in …

Illuminating Secrecy: A New Economic Analysis Of Confidential Settlements, Scott A. Moss

Michigan Law Review

Even the most hotly contested lawsuits typically end in a confidential settlement forbidding the parties from disclosing their allegations, evidence, or settlement amount. Confidentiality draws fierce criticism for harming third parties by concealing serious misdeeds like discrimination, pollution, defective manufacturing, and sexual abuse. Others defend confidentiality as a mutually beneficial pay-for-silence bargain that facilitates settlement, serves judicial economy, and prevents frivolous copycat lawsuits. This debate is based in economic logic, yet most analyses have been surprisingly shallow as to how confidentiality affects incentives to settle. Depicting a more nuanced, complex reality of litigation and settlement, this Article reaches several conclusions …

Reforming Punishment Of Financial Reporting Fraud, Samuel W. Buell

Cardozo Law Review

No abstract provided.

The Distribution Of Fraud Enforcement, Darryl K. Brown

Cardozo Law Review

No abstract provided.

Cyber-Extortion: Duties And Liabilities Related To The Elephant In The Server Room, Adam J. Sulkowski

ExpressO

This is a comprehensive analysis of the legal frameworks related to cyber-extortion – the practice of demanding money in exchange for not carrying out threats to commit harm that would involve a victim's information systems. The author hopes it will catalyze an urgently needed discussion of relevant public policy concerns.

Cyber-extortion has, by all accounts, become a common, professionalized and profit-driven criminal pursuit targeting businesses. 17% of businesses in a recent survey indicated having received a cyber-extortion demand. An additional 13% of respondents were not sure if their business had received such a demand.

Awareness of the risks of cybercrime …

The Sec And The Failure Of Federal, Takeover Regulation, Steven M. Davidoff

Florida State University Law Review

No abstract provided.

Center Of Main Interests, International Insolvency Case Venue, And Equality Of Arms: The Eurofood Decision Of The European Court Of Justice, Samuel L. Bufford

Northwestern Journal of International Law & Business

The European Court of Justice ("E.C.J.") issued a ruling on May 2, 2006 in the Eurofood case, finding that the commencement of an insolvency case for Eurofood in Ireland gave the Irish court priority under E.U. law over a similar insolvency case commenced shortly thereafter in Italy. The E.C.J.'s ruling responded to the Supreme Court of Ireland's referral to the E.C.J. of five questions of E.U. law based on the E.U. Regulation on Insolvency Proceedings ("E.U. Regulation"). The Irish Supreme Court had referred these questions to the E.C.J. preliminary to deciding a pending appeal of the Dublin High Court's decision …

The Search For Greater Accountability Of Nonprofit Organizations: Recent Legal Developments And Proposals For Change, Marion R. Fremont-Smith

Fordham Law Review

No abstract provided.