Digital Commons Network^™

Let The Securities And Exchange Commission Outsource Enforcement By Litigation: A Proposal, Tamar Frankel

Faculty Scholarship

The stories of Stanford's suspected Ponzi scheme, and Madoff s proven scheme, as well as the Securities and Exchange Commission's lenient settlements with very large suspected violators, and its focus on the numerous, small accused, have raised questions about the Commission's enforcement resources. This Article suggests that the Commission outsource civil cases against very large defendants when the examination of the defendant finds signs of wrongdoing under the securities acts. The Commission already outsources two types of legal services and the United States government practices extensive outsourcing. This article suggests that with appropriate limitations and controls outsourcing of enforcement litigation …

Pleading A Loss Cause: Resolving The Pleading Standard For The Element Of Loss Causation In A Private Securities Fraud Claim And A Plaintiff's Heavy Burden Pleading It Under Iqbal, Jason N. Haycock

American University Law Review

No abstract provided.

Personal Jurisdiction Over Foreign Directors In Cross-Border Securities Litigation, Hannah L. Buxbaum

Articles by Maurer Faculty

No abstract provided.

The Legitimate Rights Of Public Shareholders, Lawrence E. Mitchell

Washington and Lee Law Review

In recent years there has been significant ongoing academic debate over the expansion ofpublic shareholders 'participation rights in corporate governance. The debate has accompanied a dramatic increase in institutional shareholder and hedge fund activism attempting to influence the conduct ofcorporate affairs. The legitimacy ofshareholderp articipationr ights depends upon the actual role public shareholders play in contributing to the corporation's function of providing goods and services and, ultimately, to economic growth and social welfare. Few in the debate have stopped to examine this question. This Article presents original empirical evidence that demonstrates that public shareholders do not, on net, contributec apitalt …

The Unaccountability Of The Accounting Regulators: Analyzing The Constitutionality Of The Public Company Accounting Oversight Board, 42 J. Marshall L. Rev. 1019 (2009), Whitney Innes

UIC Law Review

No abstract provided.

Reinventing The Sec By Staring Into Its Past, James D. Cox

Faculty Scholarship

No abstract provided.

Mapping The American Shareholder Litigation Experience, Randall Thomas, James D. Cox

Vanderbilt Law School Faculty Publications

In this paper, we provide an overview of the most significant empirical research that has been conducted in recent years on the public and private enforcement of the federal securities laws. The existing studies of the U.S. enforcement system provide a rich tapestry for assessing the value of enforcement, both private and public, as well as market penalties for fraudulent financial reporting practices. The relevance of the U.S. experience is made broader by the introduction through the PSLRA in late 1995 of new procedures for the conduct of private suits and the numerous efforts to evaluate the effects of those …

Coping In A Global Marketplace: Survival Strategies For A 75-Year-Old Sec, James D. Cox

Faculty Scholarship

Notwithstanding cynicism to the contrary, data bears witness to the fact that government agencies come and go. There are multiple causes that give rise to their disappearance but among the most powerful is that conditions that first gave rise to the particular agency's creation no longer exist so that the regulatory needs that once prevailed are no longer present or that there is a better governmental response than Congress' earlier embraced when it initially created an independent regulatory agency to address the problems needing to be addressed. Certainly the more rigid the regulatory authority conferred on an agency has much …

Reforming Securities Litigation Reform: Restructuring The Relationship Between Public And Private Enforcement Of Rule 10b-5, Amanda A. Rose

Vanderbilt Law School Faculty Publications

Commentators have long debated how to reform the controversial Rule 10b-5 class action without pausing to ask whether the game is worth the candle. Is private enforcement of Rule lOb-5 worth preserving, or might we be better off with exclusive public enforcement? This fundamental but neglected question demands attention today more than ever. An academic consensus has emerged that the typical Rule 1Ob-5 class action cannot be defended on compensatory grounds. That leaves the oft-cited, but undertheorized, rationale that private enforcement is a "necessary supplement" to the securities fraud deterrence efforts of the SEC. When this justification is critically examined, …

Too Close For Comfort: The Potential Dilemma Facing The Securities And Exchange Commission And The Public Accounting Oversight Board, David H. Roberts

Pace Law Review

No abstract provided.

Should The Sec Be A Collection Agency For Defrauded Investors?, Barbara Black

Faculty Articles and Other Publications

One of the important functions of the U.S. Securities and Exchange Commission ("the SEC") is enforcing the securities laws and punishing violators. Collecting damages for defrauded investors was not, historically, an important part of the agency's mission; rather that was the function of private securities fraud class actions. Section 308 (the "Fair Fund provision") of the Sarbanes-Oxley Act of 2002 gives the SEC a more prominent role in compensating investors and allows the agency, in some circumstances, to distribute civil penalties to defrauded investors. The SEC has established Fair Funds in a number of high-profile cases and has taken pride …

Corporate America Fights Back: The Battle Over Waiver Of The Attorney-Client Privilege, Michael L. Seigel

UF Law Faculty Publications

This Article addresses a topic that is the subject of an on-going and heated contest between the business lobby and its lawyers, on the one side, and the U.S. Department of Justice on the other. The fight is over federal prosecutors' escalating practice of requesting that corporations accused of criminal wrongdoing waive their attorney-client privilege as part of their cooperation with the government. The Department of Justice views privilege waiver as a legitimate and critical tool in its post-Enron battle against white collar crime. The business lobby views it as encroaching on corporations' fundamental right to protect confidential attorney-client communications. …

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 …

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

Faculty Scholarship

No abstract provided.

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 …

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

Cardozo 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 …

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 …

The Role Of Financial Journalists In Corporate Governance, Michael J. Borden

Law Faculty Articles and Essays

This Article pursues the important theme of disclosure, but focuses on a feature that has remained almost entirely overlooked by corporate and securities law scholars: the role of financial journalists in corporate governance. This omission is perhaps due to the fact that journalists do not fit easily into a legal discussion because they are largely unregulated. They are, in a sense, not legal actors, and, therefore do not comfortably become the subject of a legal prescription. Nevertheless, journalists contribute in many ways to the legal system at large and the system of corporate governance in particular.This Article uses case studies …

The Rise Of Independent Directors In The United States, 1950-2005: Of Shareholder Value And Stock Market Prices, Jeffrey N. Gordon

Faculty Scholarship

Between 1950 and 2005, the composition of large public company boards dramatically shifted towards independent directors, from approximately 20% independents to 75% independents. The standards for independence also became increasingly rigorous over the period. The available empirical evidence provides no convincing explanation for this change. This Article explains the trend in terms of two interrelated developments in U.S. political economy: first, the shift to shareholder value as the primary corporate objective; second, the greater informativeness of stock market prices. The overriding effect is to commit the firm to a shareholder wealth maximizing strategy as best measured by stock price performance. …

Reforming Punishment Of Financial Reporting Fraud, Samuel W. Buell

Faculty Scholarship

Present sentencing law in criminal cases of financial reporting fraud is embarrassingly flawed. The problem is urgent given that courts are now regularly sentencing corporate offenders, sometimes (but sometimes not) to extremely punitive terms of imprisonment. Policing of fraud by multiple jurisdictions in a federal system means that principled sentencing law is necessary not only for first-order policy reasons but also for coordination of sanctioning efforts. Proportionality and rationality demand that sentencing law have an agreed scale for measuring cases of financial reporting fraud in relation to each other, a sound methodology for fixing a given case on that scale, …

A Social Defense Of Sarbanes-Oxley, James A. Fanto

Faculty Scholarship

No abstract provided.

Laws Against Bubbles: An Experimental-Asset-Market Approach To Analyzing Financial Regulation, Erik F. Gerding

Publications

This article analyzes the effectiveness of proposed and actual securities, financial, and tax laws designed to prevent, or dampen the severity of asset price bubbles, including laws designed to mitigate excessive speculation. The article employs experimental asset market research to measure the effectiveness of these anti-bubble laws in correcting mispricings. Experimental asset markets represent complex simulations of stock markets in which subjects trade securities over a computer network. These markets allow scholars to test causal links between legal policies and market effects in ways that empirical research alone cannot. With these virtual markets, researchers can identify asset price bubbles - …

A Social Defense Of Sarbanes-Oxley, James Fanto

NYLS Law Review

No abstract provided.

From Lapdog To Watchdog: Sarbanes-Oxley Section 307 And A New Role For Corporate Lawyers, Peter C. Kostant

NYLS Law Review

No abstract provided.

Internal Whistleblowing And Sarbanes-Oxley Section 806: Balancing The Interests Of Employee And Employer, Kevin Rubinstein

NYLS Law Review

No abstract provided.

The Corporate/Securities Attorney As A 'Moving Target' - Client Fraud Dilemmas, Marc I. Steinberg

Faculty Journal Articles and Book Chapters

This Paper analyzes the enhanced responsibilities and liability concerns that corporate/securities attorneys have in the post-Enron era. State ethical rules, SEC pronouncements, and court decisions are addressed. The ramifications of the Sarbanes-Oxley Act with respect to its impact on legal counsel also are explored. The Paper also provides insight focusing on the business attorney's role as counselor and gatekeeper when faced with the prospect of client fraud.

Responses By The Federal Communications Commission To Worldcom's Accounting Fraud, Warren G. Lavey

Federal Communications Law Journal

WorldCom's disclosure of billions of dollars of financial fraud on June 25, 2002 challenged the Federal Communications Commission ("FCC") in several major ways. The FCC proclaimed its commitment to enforce its rules to protect consumers against service discontinuance as well as the priority of rooting out corporate fraud. The FCC's rules required WorldCom to file accurate financial information and to show that it had financial and character qualifications necessary to hold FCC licenses. Despite numerous related proceedings and other actions in 2001 and early 2002, the FCC had not detected nor deterred WorldCom's fraud. After the disclosure, WorldCom continued its …

Enron And The Special Purpose Entity. Use Or Abuse? The Real Problem - The Real Focus, Neal F. Newman

ExpressO

In December of 2001, Enron Corporation filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code; one of the largest corporate bankruptcy filings at that time. When the investigations commenced and the tangled Enron web was unraveled, it was discovered that Enron had perpetrated a very sophisticated form of accounting fraud through its repeated use of what are referred to as Special Purpose Entities (“SPEs”). In their most basic forms, SPEs are business entities formed for the purpose of conducting a well specified activity such as construction of a gas pipeline, or collection of a specific group of accounts …

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

ExpressO

Legislation and Legitimation:

Congress and Insider Trading in the 1980s

Abstract

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 …